Athens expects proposal from creditors on Wednesday
Representatives of Greece’s lenders were finalizing a set of proposed reforms for Greece on Tuesday, aimed at breaking an impasse in negotiations and allowing crucial rescue loans to be unlocked, even as Greece said it had submitted its own proposal.
The creditors were expected to submit their proposal to Greece on Wednesday, though it remained unclear whether they would do it by teleconference or deliver it to a government official.
Sources in Brussels, where technical teams have been locked in negotiations for months, indicated that Greece’s proposal to the creditors was too vague and light on detail to form the basis for an agreement.
Earlier in the day, Prime Minister Alexis Tsipras suggested that Greece has made enough compromises and put the onus for concessions on creditors. “We have submitted a realistic plan for an agreement,” Tsipras said during a visit to the Education Ministry. “It is now up to the political leadership of Europe to decide,” he said.
The immediate reaction in Brussels was less than encouraging, with sources saying the Greek proposal was “vague” and not as detailed as the one being drawn up by creditors. Eurogroup President Jeroen Dijsselbloem was characteristically blunt. “In Greece, they must realize that drastic measures are necessary,” he told Dutch broadcaster RTL, noting that creditors could not disburse more loans to Greece without the approval of the Eurogroup. “There is some progress, but it’s really not enough,” he said.
The so-called Euro Working Group is expected to convene by teleconference on Wednesday afternoon to discuss Greece. It remained unclear whether talks would focus on just the creditors’ proposal or the Greek blueprint too.
According to sources, the creditors started drafting their proposal on Monday morning. The draft is said to have been examined during a scheduled meeting between German Chancellor Angela Merkel, French President Francois Hollande and European Commission President Jean-Claude Junker in Berlin later that day which also included European Central Bank President Mario Draghi and International Monetary Fund Managing Director Christine Lagarde. Sources said there were some disagreements at the Berlin meeting with the IMF chief retaining her skepticism about the viability of Greece’s debt if the reform program agreed upon is not bold enough.
There was much speculation on Tuesday about the content of Greece’s proposal to creditors. According to sources, it proposes a low primary surplus target for this year of between 0.3 and 0.8 percent of gross domestic product as well as retaining three value-added tax rates – at 6 percent, 11 percent and 23 percent – but varying the goods and services assigned to each rate. But the Greek proposal for VAT foresees 1 billion euros in revenue being raised, around half of the creditors’ desired target. Other measures are said to include the gradual abolition of early retirements, from 2020, which is unlikely to be a bold enough intervention to satisfy creditors. A proposal to restore collective labor contracts is unlikely to go down well either.
