Financial meltdown: Greece faces ‘difficult’ eurozone judgement day

Parliament approves reforms package ahead of make-or-break EU summit

BRUSSELS:

Greece’s eurozone partners were doubtful of a last-ditch bailout deal on Saturday, saying talks to stop it crashing out of the euro would be tough because trust in Athens had collapsed.

Hardline German Finance Minister Wolfgang Schaeuble led a chorus of scepticism about Greek Prime Minister Alexis Tsipras’s new reform plan aimed at a third debt rescue package worth more than 80 billion euros.

Parliament approved the leftist leader’s package of pension cuts and tax hikes in the early hours of Saturday, but there are doubts that finance ministers meeting in Brussels will back them ahead of a make-or-break EU summit on Sunday.

“We will have extremely difficult negotiations,” Schaeuble told reporters in Brussels. “In the last months hope has been destroyed in an incredible way, even up to just a few hours ago. Definitely we cannot trust promises,” he added.

Minister after minister insisted on the need to rebuild trust with Athens after six months of torturous debt deal negotiations and a sudden referendum in which Greeks overwhelmingly rejected creditors’ bailout terms.

“We are not there yet. There is a major issue of trust. Can the Greek government be trusted to do what they are promising in coming weeks, months and years?” asked Eurogroup chief Jeroen Dijsselbloem.

Irish finance minister Michael Noonan said it ‘would build trust’ if the Greeks legislate as soon as next week on some of the reform plans, especially after Tsipras’s majority was ‘eroded’ by the parliament vote.

Tsipras won the backing of 251 out of 300 deputies for his reform plans, even though they are similar to the ones that Greeks rejected in the referendum after he branded them ‘humiliating’. Despite roundly voting ‘No’ last Sunday to accepting tough austerity terms for a bailout that expired June 30, Greeks are alarmed at capital controls that have closed banks and rationed cash at ATMs for nearly two weeks.

Queueing Saturday at a cash machine in Athens, Vassilis Papoutsoglou, 52, said: “We still don’t know what will happen tomorrow. Can we expect something better, or is it Armageddon?”

In Brussels there were some more hopeful voices. IMF chief Christine Lagarde was more positive, saying she hoped for ‘a lot of progress’.

EU economic affairs commissioner Pierre Moscovici said that rapidly putting reforms in action was “key to getting a programme, to be able to tackle the debt.”

EU sources who asked not to be named put the probability of a deal at no more than 50-50.

If eventually approved, Greece could receive between 74 billion and 82 billion euros from its EU-IMF creditors, including 16 billion euros from the IMF that is part of an old programme due to expire next March, sources close to the negotiations said.

EU President Donald Tusk has said the 28-nation European summit he will host in Brussels on Sunday is a ‘last chance’ for Greece to seal a deal and avoid a disastrous ‘Grexit’.

And even if the leaders agree a deal, at least eight parliaments will have to weigh in, with Germany’s Bundestag having to vote twice.

Published in The Express Tribune, July 12^th, 2015.