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No Results After Tsipras’ Meeting with Institutions – Greek Talks to Be Repeated on Thursday by A. Makris, The Greek Reporter, June 24 <http://greece.greekreporter.com/2015/06/24/brussels-no-results-after-tsipras-meeting-with-institutions-talks-to-be-repeated-on-thursday> Eurozone Finance Ministers arrived for a Eurogroup meeting on Greece but exited shortly after since talks between Greek Prime Minister Alexis Tsipras and the institutions ended without a conclusive result. . . . Greek positions remain 'firm' after talks end The Greek positions in negotiations remain firm and talks with the international creditors will resume Thursday morning, according to a government official. Times of Change, Greece, June 25 (Reuters) <http://www.thetoc.gr/eng/news/article/greek-positions-remain-firm-after-talks-end> Greece's positions in negotiations for a cash-for-reforms deal remain firm and talks with its international creditors will resume at 0900 Brussels time (0700 GMT) on Thursday, a Greek government official said after late-night discussions ended. Technical teams will meet three hours earlier at 0400 GMT, the official said. Negotiations to avert a Greek debt default had stumbled on Wednesday and euro zone finance ministers accused Athens of refusing to compromise despite a deadline next week that could put it on a path out of the eurozone. "The Greek government remains firm on its positions," [a Greek] official said. With European Union leaders due in Brussels for a summit on Thursday, Prime Minister Alexis Tsipras negotiated into the early hours with heads of creditor institutions to try to thrash out a cash-for-reform deal before the eurozone ministers reconvene at 1 p.m. "Unfortunately we have not reached an agreement yet, but we are determined to continue work, this work will go on during the night if necessary," Eurogroup chairman Jeroen Dijsselbloem told reporters. 1) Greece debt crisis talks end in renewed deadlock Negotiations in Brussels between Athens and its creditors break down again as optimism over new Syriza proposals evaporates by Ian Traynor in Brussels The Guardian, June 24 <http://www.theguardian.com/world/2015/jun/24/greece-debt-crisis-talks-renewed-deadlock> Gruelling negotiations between Greece and its creditors broke up without agreement on Wednesday evening as lenders warned the country that it must accept more austerity if it is to avoid defaulting on its debts. . . . The finance ministers will reassemble on Thursday in a bid to achieve an elusive breakthrough, as Greece strives to meet next Tuesday’s deadline for a €1.6bn (£1.1bn) payment to the International Monetary Fund. A deal could not be reached at the finance minister’s gathering despite six hours of talks earlier in the day between Tsipras and the heads of the IMF, European Central Bank and European Commission. Tsipras met the creditors again on Wednesday night. The meeting ended in the early hours of Thursday with Greece “remaining firm on its position” according to a Greek government official. Tsipras was dressed down at the creditors’ meeting on Wednesday morning, despite having presented new budget proposals on Monday that were generally welcomed as constructive. However, by the time he met the creditors on Wednesday he was being asked to toughen his plans. Tsipras sounded bitter and wounded after the creditors, led by Christine Lagarde of the International Monetary Fund, raised a host of problems with the 11-page policy document he had tabled. A revised version of the Greek proposals, littered with corrections entered in red type by the creditors, was soon leaked to the media. “The repeated rejection of equivalent measures by certain institutions never occurred before, neither in [bailout countries] Ireland nor Portugal,” said Tsipras. “This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed.” Both sides are in a race to cut a deal before five years of bailouts worth €240bn (£171bn) lapse next Tuesday, the same day that Greece must repay the IMF. The Tuesday deadline is doubly pressing because the ECB, which is keeping the Greek banking system on life support, has indicated that it will not support banks if the bailout programme expires without a new agreement in place. Without ECB’s support Greek banks are expected to buckle, which would force the Tsipras government to impose capital controls and threaten the country’s exit from the eurozone. Earlier in the week the Europeans had been unanimous in describing Tsipras’s offer on Monday as the first serious proposal he has delivered since he was elected in January. Senior sources in Brussels had intimated that a lifeline deal was in the offing, which would involve extending Greece’s bailout by six months, doling out €18bn to see it through this year and working on a follow-up package likely to include a form of debt restructuring – Athens’s central demand. But by Wednesday the optimism was fading fast, as the IMF started picking holes in the Greek figures while also concluding that stopgap measures such as VAT hikes and increased pension contributions would not shift the Greek economy into recovery mode, and could worsen a debt burden that the IMF already views as unsustainable. Athens has proposed raising more money from VAT, making more changes to the pension system, ending early retirement and raising corporate taxes. Tsipras’s proposals would have delivered almost €8bn in reduced government spending. According to Greek state television on Wednesday, the heavily revised IMF version raised that figure to €11bn. Most economists have already dismissed the deal being discussed as ruinous and reckless. But all the signs were that the negotiations could go almost right down to next Tuesday’s deadline. Senior German officials warned that the talks could last beyond the full two-day summit of leaders on Thursday and Friday. The leaders instructed Jeroen Dijsselbloem, who chairs the “eurogroup” of eurozone finance ministers, to work non-stop if necessary in order to secure a deal that could be presented to eurozone leaders. “[The leaders’] expectation is not to negotiate. Their expectation is to welcome an agreement in the eurogroup,” said a senior EU source. The IMF has told Tsipras and his team that the Greek plan is too reliant on tax increases, which have failed to deliver anticipated revenue streams in the past. The fund has also criticised what it sees as only half-hearted measures to reform the Greek economy by tearing down hundreds of regulatory barriers. Greece’s creditors are also demanding faster and more sweeping reforms to the Greek pension system. Tsipras, who has vowed not to cut wages and pensions, is now under pressure to bring forward plans to raise the statutory retirement age to 67 and scale back pensioner benefits further. Pensions is one of the most fraught areas for the Greek negotiators, who are already under fire for offering more limited concessions. Tsipras told his cabinet that a rejection of the Greek plan would be unprecedented. Investors’ spirits sank as Tsipras’s criticism of Greece’s creditors leaked out, prompting a fall in eurozone stock markets. Greek stocks slipped 1.8% on Wednesday, while shares in Greek banks fell by up to 10%. Austria’s finance minister, Hans Jörg Schelling, said a cut-and-dried solution must be found by Sunday. “If there is no real solution by Sunday this week, it is not foreseeable what the next step will be,” he told Austrian radio. A former Greek prime minister, Antonis Samaras – Tsipras’s centre-right predecessor in office – also arrived in Brussels where he was expected to see Juncker, inevitably feeding conspiracy theories and speculation about EU interference in Greek politics. Samaras, who in his seven months in office before his defeat by Tsipras also refused to countenance many of the policies being urged on Tsipras by the troika of creditors, said Greece was being forced to choose “between catastrophe and a very bad solution”. Even if a deal is finally struck in Brussels, Tsipras has to get his promises through a rebellious and recalcitrant parliament, and then the German and other eurozone parliaments also have to legitimise the package before it can be implemented, raising questions as to whether all this can be accomplished before the Tuesday deadline. 2) Meeting of Eurozone Finance Ministers on Greece Ends Abruptly by James Kanter New York Times, June 24 <http://www.nytimes.com/2015/06/25/business/international/long-greek-debt-talks-may-finally-come-to-a-head.html> BRUSSELS — A meeting of eurozone finance ministers, hoping to end the impasse in Greece’s bailout negotiations, unexpectedly broke up Wednesday after only about an hour. The quick ending to what had been billed as a make-or-break meeting highlights the acute challenges to keeping Greece from going bankrupt and potentially becoming the first country to be forced out of the eurozone. . . . Dogging progress at this critical stage was the inability of Prime Minister Alexis Tsipras of Greece to have resolved anything in earlier meetings with crucial deal brokers: Christine Lagarde, the managing director of the International Monetary Fund; Mario Draghi, president of the European Central Bank; and Jean-Claude Juncker, the president of the European Commission. Alexander Stubb, the Finnish finance minister, wrote on his Twitter account that eurozone ministers would meet again at 1 p.m. Brussels time on Thursday. That makes it likely that the latest crisis over Greece will dominate a summit meeting of all 28 European Union leaders scheduled to begin later that afternoon. A key sticking point was that, according to creditors, the latest Greek proposals did not go far enough. Mr. Tsipras has proposed measures that rein in pensions and raise taxes as a way to meet creditors’ budget targets. The Greek proposals could potentially deliver savings of about €8 billion, in part by shifting tax burdens to higher earners and companies. But Greece has a spotty record of collecting taxes, and carrying out the plan could pinch economic growth, raising additional concerns for creditors. Further complicating matters, Mr. Tsipras has insisted that the creditors grant some debt relief to Greece. A win here could help Mr. Tsipras head off a potential rebellion in the Greek Parliament. But Chancellor Angela Merkel of Germany, Greece’s biggest eurozone lender, indicated on Monday night that Athens must make concessions first. In reply to Greece’s proposals, creditors sought further tightening of pensions and higher value-added taxes. Mr. Tsipras and his top advisers said those revisions were unacceptable. . . . The creditors’ new demands included further tightening of Greece’s pension payouts. They also called for an increase in annual revenue equal to 1 percent of gross domestic product from changes to the value-added tax system — compared with the figure of 0.74 percent of G.D.P. that Greece had offered. The creditors also demanded that Greece increase the value-added taxes in various ways, including raising the sales tax in restaurants to 23 percent, from the current 13 percent. That would be a strong blow to the tourism sector. The I.M.F. is seen as the main proponent of tougher measures. The Washington-based fund’s involvement in eurozone bailouts is a source of frustration for the Greek government, which would prefer to deal directly with European institutions that promote a more flexible approach. But in any case, Greece owes the I.M.F. money from the current bailout program — including a €1.6 billion, or $1.8 billion, payment due on June 30, the same day the European part of its bailout program expires. And eurozone lenders like Finland and Germany have insisted on a continued role for the I.M.F. as a way to ensure adherence to the bailout terms and a hard line in negotiations. For the government in Athens, the urgent goal is to unlock frozen payments from the eurozone and the I.M.F. that are worth €7.2 billion before the end of the month. But for any deal to stick, Mr. Tsipras must be able to convince Greek lawmakers that he has not abandoned his election pledge to end the grinding austerity that Greeks have endured since their economy imploded at the start the decade. Persuading the more radical members of his leftist Syriza party is proving difficult. For powerful creditors like Germany and the I.M.F., a deal must force Greece to make far-reaching changes to its sclerotic economy so the country can return to growth and pay back its debt. The leaders of smaller eurozone countries like Ireland, Lithuania and Portugal are particularly wary of a deal, because their citizens have already weathered years of austerity and could punish their governments for making too many concessions. Niki Kitsantonis contributed reporting from Athens. 3.a) Greece's bailout talks with creditors stall by Mark Thompson and Chris Liakos CNNMoney, June 24 <http://money.cnn.com/2015/06/24/news/economy/greece-europe-bailout-imf> The great European standoff is not over yet. A key meeting between Greece and its creditors broke up without a deal on Wednesday, EU officials said. The talks are scheduled to resume Thursday. . . . The stakes couldn't be higher. Without a deal this week, the country won't be able to repay the International Monetary Fund 1.5 billion euros due June 30. . . . If it misses the payment, Greece may have to introduce capital controls to prevent a run on its banks. Leaving the euro -- the feared Grexit -- would then loom large. Markets surged earlier this week on optimism that a deal could be brokered after Greece submitted new proposals to put its finances in order. But that plan has since been put under the microscope, and run into opposition from Europe and the IMF. "The [creditor] institutions, on their part, submitted a new proposal which transfers the burden [of austerity] to wage earners and pensioners in a way which is socially unfair," Greece's radical left-wing government said in a statement. "The Greek side cannot agree with such change of direction." . . . The Greek government was offering gradually to raise the retirement age to 67, set the main rate of sales tax at 23%, while continuing to levy lower rates on energy, basic food, medicine and books. It also proposed raising the rates of income and corporate taxes above certain thresholds. Economists say the measures don't do enough to encourage growth, because they place too much emphasis on raising taxes, rather than cutting spending. That means the country could struggle to generate the budget surpluses it needs to service its enormous debts -- a key concern of the IMF. IMF backing for the deal is crucial -- without its blessing, lawmakers in Germany and other European countries may block the release of the 7.2 billion euros that remains of Greece's 240 billion euro international bailout. Europe and the IMF want Greece to spend less on pensions, raise more money from sales taxes, and scale back a planned increase in tax on business. IMF Chief Economist Olivier Blanchard set out the hard choices facing Greece and its creditors in a blog last week. "We believe a reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and that it can be done while protecting the poorest pensioners," he wrote. "We are open to alternative ways for designing both the [sales tax] and the pension reforms, but these alternatives have to add up and deliver the required fiscal adjustment." In return, he said, Europe should offer Greece more debt relief -- by reducing further the interest rates on its emergency loans, and pushing back the dates at which they need to be repaid. That's an issue Europe, so far, has not been willing to discuss. 3.b) Full document with counter-proposals put forward by Greece's lenders [pdf] I Kathimerini 6/24 <http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/06/2015_551455> Here is a link to the 5-page document containing the counter-proposals put forward by Greece's lenders on Wednesday. The document, first revealed by The Wall Street Journal, was met with profound skepticism from Greek officials. Click here for the full text. http://s.kathimerini.gr/resources/article-files/062415greek.pdf 4) Alexis Tsipras's homework has been thrown back in his face by Larry Elliott Judging by the angry red amendments all over Greece’s proposals, its creditors are in no mood whatsoever to compromise The Guardian, June 24 <http://www.theguardian.com/business/2015/jun/24/alexis-tsipras-homework-thrown-back-in-face-greece> The red ink told its own story. Greece’s creditors looked at the plan submitted by Alexis Tsipras to end his country’s debt crisis and found it wanting. Like a teacher dealing with an obtuse pupil, the message in the revised document sent back to the Greeks was simple: this is a shoddy piece of work. Do it again. Without question, this makes life tough for the Greek prime minister, who thought the concessions offered on Monday were as much as he could deliver politically. Tsipras bridled at the demands from the troika to cross all his red lines and that means the crisis is back on again. Athens should not have been entirely surprised by the response given that the International Monetary Fund – one third of the troika – thinks a repair job on the public finances should be structured so that 80% of the improvement comes through spending cuts and 20% from tax increases. The plan put forward by Tsipras was skewed in the other direction. Of the €7.9bn (£5.6bn) that the Greek government said the plan would raise, 92% came from tax increases. In the unlikely event that the extra revenues were collected in full, the IMF believes the one-off levy on bigger businesses coupled with the increases in corporation tax would hinder growth. It thinks the Greek plan will only add up if there are immediate cuts in pensions and higher VAT on restaurants and medical supplies. Olivier Blanchard, the IMF’s chief economist, explained its reasoning earlier this month. Greece’s creditors, he said, were prepared to accept that the state of the economy meant it was now impossible to meet the target of running a 3% primary budget surplus (revenues minus spending, excluding debt interest payments) in 2015, and that a lower 1% goal would now be acceptable to creditors. “We believe that even the lower new target cannot be credibly achieved without a comprehensive reform of the VAT – involving a widening of its base – and a further adjustment of pensions”, Blanchard said in a blogpost. “Why insist on pensions? Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone. Pension expenditures account for over 16% of GDP, and transfers from the budget to the pension system are close to 10% of GDP. We believe a reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and that it can be done while protecting the poorest pensioners. We are open to alternative ways for designing both the VAT and the pension reforms, but these alternatives have to add up and deliver the required fiscal adjustment.” The response from the Greek government is that the Fund’s sums don’t add up either, and won’t add up unless budget savings are accompanied by a hefty dollop of debt relief. Analysis by the London-based consultancy Capital Economics suggests that Tsipras is right. When the IMF reviewed its programme in Greece in July 2014 it assumed that Greek debt would fall from its current 175% of GDP to 120% of GDP by 2020, a level considered sustainable. For that to happen, though, the Greek economy would need to grow by 3% this year and at similar level for the rest of the decade, inflation would have to average between 1% and 2% a year, and Athens would need to run a primary budget surplus of 4% a year. None of these assumptions looks remotely plausible. Greece’s economy will contract this year; it has deflation, not inflation; and it can only run primary surpluses of 4% a year by keeping the economy in permanent recession. Using a different – perhaps more realistic – set of assumptions (1% average growth, 0.5% inflation, 2% primary budget surplus), Greece’s debt to GDP ratio would continue rising. Debt relief would help square the circle. It would limit the need for further austerity, and it would be less politically toxic in Greece. The IMF knows this and has been pressing for it. But debt relief is being resisted by Greece’s European partners, who think it would mean their taxpayers paying for a writedown. Nor do they want anti-austerity parties in Spain and Portugal to be emboldened. So they have left Tsipras with a choice: surrender unconditionally or walk. _________________________________________________________ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
