Tsipras, Merkel fail to agree on key issues

Prime Minister Alexis Tsipras and German Chancellor Angela Merkel had “constructive and positive” talks on the sidelines of an immigration summit in Brussels on Thursday, Greek government sources said, noting that there was a “convergence of views” on the level of Greece’s primary surplus target this year and next year and as regards privatizations.

Tsipras and Merkel, who met for about an hour, were said to have agreed that the primary surplus target should range between 1.2 and 1.5 percent this year and in 2016, significantly below the targets originally proposed by the country’s creditors and that Greece should push forward with privatizing state assets to raise much-needed revenue. The two leaders also agreed on the need to boost the independence of the Finance Ministry’s General Secretariat for Public Revenues and of the Hellenic Statistical Authority (ELSTAT), according to sources who said that Greece remains committed to its so-called red line, namely pension and labor overhauls and value-added tax increases.

The talks came ahead of a summit in Riga, Latvia, on Friday where eurozone finance ministers are to take stock of the progress in slow-moving talks between Greece and its international creditors though no decision is expected on the release of much-needed rescue loans. Tsipras’s meeting with Merkel in Brussels on Thursday was intended to elicit some political support from the German leader as Greek finances run dangerously low and speculation about a possible default is rife. According to sources, the two leaders agreed that efforts should be made to speed up negotiations on reforms with the likelihood of an extraordinary Eurogroup being held next week, rather than May 11, the next scheduled gathering of eurozone finance ministers.

Tsipras has said that he is aiming for a deal by the end of this month. Eurogroup President Jeroen Dijsselbloem said on Thursday that a deal is possible by the end of April, and that sub-tranches of a pending bailout installment could be released in such a scenario, but that this would require “serious work.”

European Commission Vice President Valdis Dombrovskis was less optimistic, saying he no longer saw a deal this month and that he expected an agreement sometime during May. “Progress is not good,” he told ARD German television, adding that Greece would only receive further money if it honors the terms of its second loan program. European Commission Vice President Jyrki Katainen, who was in Athens on Thursday, was also very reserved, noting that trust had “decreased” in the talks between Greece and its creditors. “You cannot negotiate if you don’t trust,” Katainen told a news conference when asked about whether trust in Greece was being restored.

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