As talks drag, no deal in sight

As Greece’s cash reserves continue to dwindle, European officials indicated Tuesday that a lack of progress in negotiations between the Greek government and the country’s creditors meant it was unlikely a deal could be reached in time for a Eurogroup summit scheduled for April 24.

European Commission Vice President Valdis Dombrovskis told Germany’s Handelsblatt that next Friday’s Eurogroup in Riga, Latvia, will not approve aid for Greece. “There will only be a look at the progress in talks,” he said, adding that Athens should submit a list of updated reform proposals by April 20. The head of the European Stability Mechanism (ESM), Klaus Regling, struck a similar note in comments to Portuguese media, saying the government has not yet submitted a “coherent” list of proposals and noting that the country’s “liquidity buffers are becoming very, very small.”

European Economic and Monetary Affairs Commissioner Pierre Moscovici also underlined that creditors were awaiting a list of “precise reforms” from Greece.

Greece appears to be far from fulfilling that demand, with officials said to be resisting calls for proposals on how to reduce spending, restart a stalled privatizations program and overhaul an overburdened pension system. Representatives of Greece’s creditors are said to be frustrated with what they regard as “unilateral actions” as most reforms the government has pushed into law, such as the poverty benefits which were detailed Tuesday, involve public spending. Labor Minister Panos Skourletis insisted Tuesday that Greece will not cut pensions while Alternate Finance Minister Dimitris Mardas indicated that value-added tax might be raised on some goods.

Finance Minister Yanis Varoufakis is to travel to Washington on Wednesday, where he is to have several important meetings, notably with US President Barack Obama on Thursday. On Friday, Varoufakis is to meet European Central Bank President Mario Draghi, US Treasury Secretary Jack Lew and Italian Finance Minister Pier Carlo Padoan.

The visit comes at a critical time for Greece as speculation that Greek authorities are preparing for snap elections or bankruptcy, and a eurozone exit, have dominated the foreign media.

ECB Governing Council member Klaas Knot warned that a Greek default may have a contagion effect. “The already shaky liquidity position of Greek banks will worsen if deposits continue to flow out,” Knot said in the Dutch central bank’s semi-annual Financial Stability Report. “An unhoped-for bankruptcy of the government would heavily derail the Greek economy,” he said, adding that “the impact of such an event on other countries in the euro area is still uncertain.”

The EU’s foreign policy chief Federica Mogherini said Europe must show flexibility in dealing with the Greek debt crisis “not just out of a sense of solidarity but most of all for sake of the common interest.” “If one falls, the whole system falls, I’m very much convinced of that,” she said. German Foreign Minister Frank-Walter Steinmeier meanwhile advised against “frivolous” talk of a Greek eurozone exit.

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