Representatives of Greece’s international creditors were expected to leave the capital on Friday without having reached an agreement with government officials on contentious issues including pension reform and overhauls to labor rights and the tax system.
Despite the insistence by European officials that a conclusion of the bailout review is unlikely before May, the Greek government indicated that there is enough time for an agreement significantly sooner than that though probably not in time for a March 20 Eurogroup.
Government spokesman Dimitris Tzanakopoulos spoke of convergence between the two sides as regards “positive measures” – referring to a raft of so-called countermeasures including reductions to value-added tax rates and property levies – though he was vague about the progress on controversial austerity measures that form the main body of the discussion, namely cuts to pensions and the lowering of the tax-free threshold.
Sources indicated on Thursday night that the key sticking point is labor reforms, with Greek officials said to be reluctant to yield to creditors’ demands for more flexibility in the private labor market.
Prime Minister Alexis Tsipras, who was in Brussels on Thursday for a European Union leaders’ summit, has sought to shift to a positive narrative over the past week, heralding a growth fund for businesses in northern Greece and the launch of a public consultation for a review of the Constitution.
Tsipras was not expected to reach out to his European peers for a political agreement to break the deadlock in bailout negotiations as he has done in the past. In fact it appears that key EU leaders are frustrated with Greece for several reasons, including what they regard as its failure to adequately tackle the bloc’s refugee crisis.
Speaking in Brussels on Thursday, German Chancellor Angela Merkel described the situation on the Aegean islands, where thousands of migrants remain cooped up in overcrowded reception centers, as “not at all satisfactory.”
“The agreement between the EU and Turkey is still not being implemented by the Greek side as it should be,” Merkel said, referring to a deal signed between Brussels and Ankara this time last year to curb human smuggling across the Aegean.