New Greek Budget Plan Falls Short of Last Week’s Pledge

Updated on
Does Tsipras Still Have the Support of Greeks?

Greece pulled back on budget concessions to its creditors in new proposals Tuesday, as German Finance Minister Wolfgang Schaeuble said it would be “daft” to accept blame for Prime Minister Alexis Tsipras’s predicament.

The latest plan falls short of the budget targets that Tsipras agreed on in a June 3 meeting with European Commission President Jean-Claude Juncker, a European Union official said. Greece didn’t dispute those objectives in any of its subsequent meetings with creditor institutions last week, according to the official.

As a result, Greece is sliding backward in its negotiations as it enters the last weeks of its bailout deal. On June 30, Greece’s financial safety net is set to expire, putting any remaining funds off limits unless Tsipras can reach an accord with creditors before then.

“It’s not possible that the borrower decides under what conditions the lender kindly gives his money,” Volker Kauder, caucus leader of Chancellor Angela Merkel’s bloc in parliament, said Tuesday in Berlin. “We want Greece to stay in the euro, but whether this is achievable depends entirely on Greece.”

The Commission pledged to review Greece’s new plans with “care and diligence,” neither rejecting them nor committing to further meetings. Commission Vice President Valdis Dombrovskis, who handles euro-related issues, said a deal remains in reach if all sides can summon enough political will.

Targeting a Deal

“Reaching the agreement within the coming days is possible,” Dombrovskis told reporters in Strasbourg, France. He said Greece could find “fiscally equivalent measures” to replace some of the more controversial demands from creditors, adding that “during the last days really intensive technical work has been done, so it is possible to move forward.”

http://www.bloomberg.com/graphics/2015-greece-default/embed20150609.html

Merkel and French President Francois Hollande will meet Tsipras on the sidelines of an EU summit in Brussels on Wednesday, according to a German official. The session is a show of their continuing support after Greece’s proposals provoked skepticism earlier on Tuesday.

Dutch Finance Minister Jeroen Dijsselbloem, who leads euro-area finance ministers, said in a Dutch television interview that experts are examining the new plan “to see whether that’s substantial enough to come closer to a solution.”

Almost four months after Greece agreed to an extension of its rescue agreement, the standoff between creditors and the anti-austerity coalition led by Tsipras’s party, Syriza, risks leaving Europe’s most-indebted state unable to meet payments. Greece has used a series of maneuvers to stay afloat, yet may be reaching the end of the line unless it accepts creditors’ conditions.

Greek Proposals

Under the latest Greek plan, Tsipras wants access to bailout funds left in the European Financial Stability Facility and for the country’s banks to be allowed to buy more of the state’s short-term debt, an international official said. Greece also requested funds from the European Stability Mechanism to repay about 6.7 billion euros of bonds held by the European Central Bank that come due in July and August.

The official described the revised Greek plan as a vague rehash of earlier proposals and said it is not credible.

Last week’s Greece meetings appeared to make progress toward a deal, only to be followed by mutual recriminations, with Tsipras calling the creditors’ proposal absurd, and Juncker saying the Greek leader had misrepresented the creditors’ position.

For more, read this QuickTake: Greece’s Fiscal Odyssey

Greece’s negotiating moves have opened up differences within the governments of some creditor nations. Merkel has been adopting a softer stance than Schaeuble, according to people familiar with discussions within the German government.

Austrian Finance Minister Hans Joerg Schelling said Tuesday that creditors can’t make any further concessions, adding that “there’s a high-stake gamble being played” which Greece could also lose. Less than an hour later, his boss, Chancellor Werner Faymann, said Greece needs a deal now.

“Syriza has tried to some extent to play a blame-game against Germany,” Schaeuble said Tuesday in Berlin. “We’d be pretty daft if we were engaging in it.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE