Kathimerini understands that German Chancellor Angela Merkel is prepared to do whatever it takes to conclude the second review of Greece’s third bailout so that it can join the European Central Bank’s quantitative easing program (QE), on the condition that the government agrees to a package of pension cuts and a reduced tax threshold – amounting to roughly 2 percent of GDP.
According to sources, Merkel has, to this end, already seized the initiative and met with ECB head Mario Draghi.
The German chancellor is also expected to bypass any objections that may be raised by her finance minister, Wolfgang Schaeuble, and will push for a specific outline of what midterm measures for debt relief will look like – once Greece agrees to measures demanded by the International Monetary Fund.
Draghi, as well as ECB executive board member Benoit Coeure, have already made it clear that Greece can only join the QE mechanism if it concludes the review, and midterm measures for debt relief are in place – which is something that, so far, Schaeuble has opposed.
Merkel’s plan stipulates that after a staff level agreement is reached, the Greek Parliament will vote through the measures. When this is done, the specifics of the debt relief measures will be presented as a carrot to Athens. This will open the way for it to join the QE scheme and the IMF to rejoin the Greek program.
Meanwhile, government ministers and experts resumed talks with Greece’s lenders in Athens Tuesday.
The negotiations seek to break the months-long deadlock, stemming primarily from the inability of the European Union and the IMF to agree over Greece’s fiscal goals beyond 2018, when the current bailout program expires.
“Today we will be examining the fiscal gap and any steps which should be taken after 2018,” a government official said Tuesday.
The impasse in the talks has reignited fears of another financial crisis – along the lines of 2015 – ahead of election races in the Netherlands, France and Germany.