Greece Crisis: Eurozone Not Certain to Agree on New Bailout Proposals

European Union officials meeting to discuss whether proposals can be basis for new negotiations

Thomson Reuters Posted: Jul 11, 2015 6:45 AM ET Last Updated: Jul 11, 2015 6:45 AM ET

2015-0713 Greece Crisis Eurozone Not Certain to Agree on New Bailout Proposals

Greek Prime Minister Alexis Tsipras, centre, is congratulated by legislators after they voted in favour of authorizing the government to negotiate with international creditors on the basis of a reform program unveiled this week. (REUTERS)

Eurozone finance ministers meeting in Brussels on Saturday have serious doubts about Greece’s request for a bailout and a deal to start negotiating on the basis of Athens’ proposals is far from certain, sources close to the talks said.

Overnight, the European Commission, European Central Bank and International Monetary Fund gave a positive assessment of the cash-for-reforms plan put forward on Thursday by Greek Prime Minister Alexis Tsipras, according to EU officials.

France, Greece’s most powerful ally in the Eurogroup of finance minister, also welcomed the proposals on Friday, raising expectations that ministers would agree to open negotiations over the weekend. That could avert bankruptcy and prevent Greece running out of euros and falling out of the currency bloc.

But Germany and other governments have remained sceptical and two eurozone sources said on Saturday that the demands for new financing from Athens had alarmed some Eurogroup members.

One source, who told Reuters that he was almost certain late on Friday that a deal would be agreed on Saturday, said he was now not so sure, four hours before ministers meet at 1300 GMT.

Financing needs too much?

Senior officials in the Euro Working Group were still in talks in Brussels on Saturday morning to prepare the Eurogroup.

“The high figures for financing needs over the next three years may be too high and too sudden,” the first source said.

The second said he now put the chances against reaching a deal in the Eurogroup meeting to open negotiations at 60-40.

The sources said experts reckoned that Greece, which asked for a three-year credit from the eurozone’s European Stability Mechanism of 53.5 billion euros, would need 82 billion euros to meet its obligations. It could hope for some 16 billion still due from the IMF before March and could also hope to receive nearly 8 billion in other EU funding that it lost its claim to when it failed to complete an earlier bailout deal last month.

However, further funding from the IMF would depend on eurozone governments offering Greece substantial debt relief, the first source said — something Germany has been very wary of.

A German Finance Ministry spokesman declined comment on a Bild newspaper report that Finance Minister Wolfgang Schaeuble, disenchanted with Greece’s presence in the euro, saw Tsipras’s proposals as inadequate and opposed opening new talks.

“The minister will this afternoon discuss with his eurozone colleagues the assessment of the institutions,” the spokesman said. “The result of the discussion is completely open.”

Germany has been the biggest contributor to two previous bailouts worth 240 billion euros to Greece since 2010.


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