Saturday, February 21, 2015

Greece achieves bailout extension deal in tough Euro group talks


By dpa correspondents

Brussels (dpa) - Greece achieved a breakthrough Friday in talks with Eurozone partners to extend its bailout, but must now explain how it will meet its reform commitments, only days before the European part of its financial lifeline expires.
If approved, Greece's reform programme will be extended for four months until June 30 - less than the six months Athens had sought but long enough to pull its economy back from the precipice and seek to negotiate new agreements with its creditors.
"We have avoided a choking deadline," Greek Finance Minister Yanis Varoufakis said. "As of today, we are beginning to be co-authors of our destiny."
Euro group chief Jeroen Dijsselbloem described the agreement as a "first step" in the process of "rebuilding trust" between Greece and its creditors.
The breakthrough follows a fierce standoff between Greece and its Eurozone partners, after the new leftist government in Athens pledged to ease the tough austerity the country had signed up to in return for bailouts totalling 240 billion dollars (274 billion euros).
Germany initially rejected Greece's bailout extension request, arguing Thursday that the country was seeking a bridging loan without committing fully to its reform agenda. Other capitals insisted that Greece cannot single-handed rewrite the rules.
"We have tried to make the arrangements in a way that Greece can cope with them, but we also do justice to our responsibility," German Finance Minister Wolfgang Schaeuble said, noting that the ministers were acting "in the interest of Greece and ... Europe."
Loans and conditions "always go hand in hand," Dijsselbloem said.
Under the deal, on Monday Athens must present a list of reforms that it plans to undertake to meet existing bailout commitments. These will be reviewed by Greece's creditors next week, before the Eurozone members can formally approve the extension request.
Eurozone finance ministers plan to hold a telephone conference on Tuesday, said Austria's Hans Joerg Schelling.
A handful of Eurozone members, including fiscally conservative Germany and Finland, must seek the approval of their parliaments before giving the formal go-ahead needed to prevent the financial taps from being turned off on February 28.
Once the extension is agreed, Greece must continue to consolidate its reform plans, which will be assessed by the end of April.
Greece pledged to successfully complete its bailout programme by June 30 - a step that would trigger payouts of around 7.2 billion euros.
In return, the ministers agreed to show "flexibility" over the measures demanded of Athens. Greece's 2015 primary surplus target will be reviewed to "take the economic circumstances" into account, according to their joint statement.
This four-month window will provide an opportunity to discuss future arrangements between Greece and its creditors which "might be slightly different going forward," according to International Monetary Fund chief Christine Lagarde.
Friday's deal was brokered during informal talks among the key parties, sources said, while the formal meeting was delayed for three-and-a-half hours.
Euro group chief Jeroen Dijsselbloem presented Greece with a draft document summarizing the demands of the 18 other Eurozone countries, according to sources close to the negotiations. He then told Greek Prime Minister Alexis Tsipras: "It's this, or it's over."
Earlier Friday, German Chancellor Angela Merkel had struck a conciliatory tone, stressing that German policymakers are "very much geared towards Greece remaining in the Eurozone," following talks in Paris with French President Francois Hollande.
"Greece is in the Eurozone, and it should remain in the Eurozone," Hollande said.
Adding urgency to the talks, more than 2 billion euros were withdrawn from Greek bank accounts in the last 48 hours alone, with local media reporting that the government might soon be forced to introduce capital controls.
The euro reacted positively to Friday's breakthrough, rising to its highest point of the day, at 1.143 dollars.
Analysts said Greece's economic future is far from certain, arguing that it could be "problematic" for the government to stick to its part of the deal.
"This is going to be a major test on the domestic front," political commentator Pavlos Tzimas told Skai television.
Varoufakis admitted that the job would not be easy.
"Our big anxiety now is whether we can enforce these reforms," he said. "That is the huge national bet."

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