Greek Bailout Tranche Deal Eludes as Refugee Challenge Grows

  • Bailout monitors will return to Athens after Easter holidays
  • Indebted nation has key role in EU plan for handling refugees

Greece and its creditors ended the latest round of talks on Sunday without reaching an agreement on the terms attached to the country’s bailout, as Europe’s most-indebted state faces the challenge of handling the continent’s biggest-ever wave of irregular migration.

Work will continue over the Easter break and bailout monitors will return to Athens on April 2 with a view to concluding negotiations as soon as possible, a European Commission spokeswoman said in an e-mail. “Significant progress has been made on outstanding issues as income tax and pension reforms,” according to Dutch finance minister Jeroen Dijsselbloem. “Talks between the Greek government and the institutions have been productive since the mission started after the last Eurogroup,” Dijsselbloem, who also chairs meetings of his euro-area peers, said in an e-mailed statement.

QuickTake Greece's Financial Odyssey

The delay in reaching a deal for the disbursement of the next tranche of emergency loans from the euro area adds to pressure on Greece as its economy struggles under capital controls imposed last year and as crisis-management infrastructure buckles following the arrival of more than a million refugees in 15 months. The country, which first asked for a bailout in 2010, needs to secure agreement with creditors in a variety of policy areas, including taxation, the management of soured bank loans and fiscal measures, in exchange for the release of more funds and additional debt relief.

Uncertainty over the country’s commitment to its bailout clauses has weighed on Greek markets. The Athens Stock Exchange has dropped about 13 percent this year. Yields on 2-year government notes rose 14 basis points to 9.04 percent at 9:45 a.m local time on Monday morning.

Prime Minister Alexis Tsipras’s government has blamed the International Monetary Fund for the stalemate, saying that Greece’s positions have been converging with those of European creditors. A finance-ministry official said in an e-mail to reporters last week that the IMF’s insistence on reducing the income-tax threshold was shocking and that the fund wasn’t negotiating with the appropriate degree of seriousness.

Migrant Crisis

The migrant crisis has added to the challenges facing Greece, with more than 50,000 refugees stranded in the country in temporary facilities, according to government data. A deal struck last week by the European Union should result in all irregular migrants crossing to Greek islands as of March 20 being returned to Turkey. Still, Greece’s strained asylum-applications system will continue processing requests for international protection on a case-by-case basis.

“The implementation of the agreement will require huge operational efforts from all involved, and most of all from Greece,” the EC said in a March 19 statement on its website. EU member states will provide support, including border guards, asylum experts and interpreters, it said. “Greece’s reception conditions and its systems for assessing asylum claims and dealing with people accepted as refugees must be rapidly strengthened,” according to the United Nations refugee agency UNHCR.

The refugee crisis has contributed to the opposition New Democracy party gaining a lead in opinion polls. The conservative opposition has 21.1 percent support, versus 17.3 percent for Tsipras’s Syriza party, according to an Alco poll published in Proto Thema newspaper. The government’s handling of the crisis was said to be unsatisfactory by 67 percent of respondents. The poll surveyed 1,000 adults from March 15 to March 17.

“There’s a lingering sense of deja vu,” Bloomberg Intelligence analyst Maxime Sbaihi said in a report published Monday. “Yet the familiar situation is not as worrying as it seems, and the risk of Grexit is far lower than it was last year.”

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