Deal no closer following PM’s meetings in Riga

Athens believes that Greece could still clinch an agreement with its lenders but probably at the start of June, rather than by the end of this month as it had previously hoped, following the meetings Prime Minister Alexis Tsipras held on the sidelines of the European Union leaders’ summit in Riga, Latvia.

Tsipras met with German Chancellor Angela Merkel and French President Francois Hollande for more than two hours on Thursday night. He held talks with European Commission President Jean-Claude Juncker on Friday. Neither of the meetings produced the kind of political breakthrough or boost that the Greek side had hoped for, leading to officials from Athens stressing that it will be difficult to break the deadlock in talks on the country’s bailout program quickly.

Tsipras said on Friday morning he was “very optimistic” of soon reaching a “long-term, sustainable and viable solution without the mistakes of the past” but Merkel and Hollande made it clear in their comments that the Greek government needs to focus on the technical deliberations taking place in Brussels so it can reach a deal before it runs out of money.

“It was a very friendly and constructive exchange,” Merkel said. “But it is clear, the work with the three institutions has to go on. There is still a lot to do.”

“Everyone knows the deadline, because it’ll be around June 6 or 7 that Greece will need liquidity to meet certain repayments,“ Hollande said. “That doesn’t mean that other phases cannot be prepared but what interests the Chancellor and I is what responses Greece can make to release the funds which would give Greece the means to pay the amounts it owes in June.”

The German and French leaders reaffirmed during the meeting that any agreement needs to have the approval of the International Monetary Fund. Speaking in Rio de Janeiro, IMF chief Christine Lagarde agreed that a lot remained to be done for a deal. “It has to be a comprehensive approach, not a quick and dirty job,” she said of a potential deal.

Juncker did not make any comments after his relatively brief meeting with Tsipras on Friday, although Greek officials claimed that the European Commission president believes Athens and its creditors can arrive at a compromise in the coming days.

Talks in Brussels are due to continue until Sunday and then resume again on Tuesday. Sources said that considerable distance remains between Greece and the institutions on a range of key issues.

There is still no agreement on fiscal targets for this year and coming years, nor on changes to value-added tax. Lenders insist that there should be two rates, while Athens wants to retain three, as is the case now. Creditors also seem to be insisting that the government adopt the zero deficit rule for supplementary pension funds, which would lead to auxiliary retirement pay being slashed.

Details also have to be ironed out on other significant issues, such as privatizations, labor reform, non-performing loans and the product market.

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