Some blame EU Commission for Greek obstinacy in debt talks

Damned if you do, damned if you don’t. Some eurozone countries are accusing the European Commission of giving Greece false hope of new loans for less reform effort, but they still want Brussels to find a way to keep a defiant Athens in the euro.

After four months of talks with scant progress, hawkish governments privately blame Commission President Jean-Claude Juncker and Economics Commissioner Pierre Moscovici for muddying their message by playing >.

Greece is now close to default and still resisting unpopular labour and pension reforms that are conditions for more aid.

Some governments believe the creditors would get faster results if the institutions representing them — the Commission, the European Central Bank and the International Monetary Fund — presented a more united tough front.

> a senior official from a euro zone government said.

> the senior official said. >

Those unhappy with the Commission’s negotiating tactics include Germany, Finland, the Netherlands, Austria, Latvia, Estonia, Lithuania and Slovakia, the official said. Even dovish France was >.

But no government has gone public with this criticism.

Juncker and Commission officials have insisted since talks began after the left-wing government of Alexis Tsipras won power in late January that there was no other solution than Greece remaining in the euro.

Juncker, a former chairman of euro zone finance ministers and veteran EU deal-maker, does not want the euro zone to break up on his watch, officials say.

This limits negotiating options and strengthens the hand of those in Athens gambling that the euro zone would not allow Greece to default, so if the country holds out long enough against unpopular reforms, the euro zone will blink first.

Not all euro zone governments share the Commission’s view that Greece must stay. And it is governments, in the end, that will decide what, if any, deal Greece gets since only they have money. The Commission has no funds of its own.

TACTICS DEFENDED Juncker has defended the differentiated negotiating tactics.

> Juncker told MNI in an interview on Tuesday.

> he said.

Euro zone governments reluctantly bailed Greece out twice before because they felt they had no other choice at the time — a Grexit in 2010 or 2012 would have badly hit all euro zone countries. Not any more, the hawks say.

With the ECB’s government bond-buying plan under way, an operational euro zone bailout fund, euro zone banks under a single supervisor after rigorous stress tests, and three of the five bailed out countries already out of their programmes, many officials believe a Grexit would now cause limited political damage and have manageable economic consequences.

Portugal, Ireland and Spain, all of which had to introduce tough reforms under their own bailout programmes, do not see why Greece should get better treatment then they did. Easier terms for Athens could undermine their governments’ re-election bids.

Juncker admitted that Athens may have misinterpreted his friendliness and as a result made things more difficult.

> he told MNI.

> he said.

IMF > With the Commission taking the soft approach, the IMF has become the > among the three institutions. Its views are more in line with those of hardline governments. The ECB is relatively neutral, but with more inclination towards the IMF’s stance, officials said.

> a senior euro zone official involved in the negotiations said.

> the official said.

An example of confusing negotiating tactics came in February when Moscovici prepared a draft agreement for an extension of the Greek bailout.

He showed it to Greek Finance Minister Yanis Varoufakis before a meeting of euro zone ministers that was to discuss the issue. Greece was happy to sign the Moscovici paper at once.

But on entering the ministerial meeting, Varoufakis was handed a very different text, prepared by the chairman of the meeting Jeroen Dijsselbloem. This Athens could not accept and the meeting ended in acrimony with no agreement.

The Greeks leaked the Moscovici document to the media, embarrassing the Commission, which felt its efforts to facilitate a compromise had been betrayed.

While critical of the EU executive, euro zone officials also say the IMF and the ECB do not have the carry the same political responsibility for brokering a deal as the Commission.

Finding common ground among 19 states and three institutions borders on the impossible, especially since views differ sometimes even within the same government.

> Juncker said.


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