After fears of a new obstacle in ongoing negotiations between Greece and its creditors, a joint statement issued on Wednesday by Prime Minister Alexis Tsipras and European Commission President Jean-Claude Juncker pointed to a will to converge on contentious issues.
Tsipras and Juncker discussed the two major stumbling blocks in talks – pension system and labor sector reforms – and agreed on the need for an overhaul of the pension system and the creation of a “modern and effective collective bargaining system.” The statement said the two leaders “took stock of progress” in negotiations. But it remained unclear whether officials involved in those talks have started grappling with the thorny issues that must be resolved before creditors can unlock crucial rescue funding.
The move by the two leaders appeared to be aimed at appeasing tensions which peaked after Athens blamed the lack of progress in talks on divisions between the European Commission and the International Monetary Fund. Sources said Tsipras had been uncertain what approach to take vis-a-vis the creditors as some of his ministers had pressed for a hard line, including a possible refusal to pay Greece’s next installment to the IMF. Instead Tsipras’s office issued a non-paper accusing Greece’s creditors of “blatant inconsistency” that was undermining negotiations.
Responding to the dig from Athens, Greece’s creditors also issued a joint statement on Wednesday, saying that they “share the same objective of helping Greece achieve financial stability and growth.” “All three institutions are working hard to achieve concrete progress on May 11,” the statement added, referring to a Eurogroup meeting due to take place on Monday in Brussels.
Most European officials have said that a deal unlocking funding will not be reached then. The meeting could serve as a “platform” for an eventual accord with creditors, Finance Minister Yanis Varoufakis said during an official visit to Rome. A European official told Kathimerini that for this to happen the pace of progress in talks must speed up significantly over the next few days. “We’re not there yet,” he said.
One area where Greece appears ready to make some concessions is pensions. Alternate Social Security Minister Dimitris Stratoulis told Kathimerini that some changes are possible with early retirements and that funds may be merged but that this will not affect payouts. According to sources, creditors are insisting that Greece implements the zero deficit clause with auxiliary pensions, meaning that their shortfalls will no longer be subsidized by the state.
It remains unclear whether the concessions Greece appears ready to make will be adequate to win round creditors as state coffers run low. In a bid to secure a liquidity injection, Deputy Prime Minister Yiannis Dragasakis and alternate foreign minister Euclid Tsakalotos, who is coordinating Greek negotiations, held talks with European Central Bank President Mario Draghi on Tuesday. As expected, however, the ECB is not prepared to approve an increase in the amount of treasury bills that Greece can issue. At a meeting of its governing council on Wednesday, no decision was taken to increase the haircut on collateral provided by Greek banks in exchange for liquidity. What the council did do was to approve increasing emergency funding to Greek banks by 2 billion euros.