Phillip Inman Economics correspondent Thursday 11 June 2015
Apparent softening of Berlin’s stance towards Athens cheers investors keen to see sustainable rescue after months of wrangling
Stock markets surged on Wednesday after reports of a German proposal to allow Greece to receive a drip-feed of loans in return for a staggered reform programme.
The softening of the German stance towards Athens cheered investors keen to see a sustainable rescue of the debt-stricken country after more than four months of wrangling.
According to the reports, the chancellor Angela Merkel is prepared to accept a much-reduced reform programme, slimmed down to just one or two areas as part of an initial package, to salvage a deal with Greece and prevent it exiting the Eurozone.
European leaders have met in Brussels for a summit overshadowed by Greece’s debt crisis
Shares on the FTSE 100 moved ahead 76 points or 1.1%, while the German Dax and French CAC jumped 2.4% and 1.75%, respectively.
The European commission, the International Monetary Fund and the European Central Bank, which have lent Greece €240bn (£175bn) between them, had until recently demanded all-encompassing reforms in return for the last tranche of bailout funds worth €7.6bn.
News agency Bloomberg said it spoke to at least two German officials close to the bailout talks who described the compromise deal as a possible way to end the impasse between the radical leftist Greek government and its creditors.
The report, later denied by the German government as official policy, followed statements by Merkel and the French president, François Hollande, that they were ready to meet Greece’s embattled prime minister, Alexis Tsipras, at a summit in Brussels.
Merkel said a solution was possible as she arrived for a summit of EU and Latin American leaders, just hours after the European commission dismissed the latest Athens plan, saying it failed to address the need for deep changes.
“The goal is to keep Greece in the Eurozone. I always approach these things with the attitude, if there is a will there is a way,” Merkel said as she arrived in Brussels.
Europe’s most powerful leader said she was available to meet the radical leftist Greek leader on the sidelines of the summit as he had earlier requested, and Hollande said he was willing to do the same.
After the meeting Merkel, Hollande and Tsipras agreed that negotiations between Greece and its international creditors must be intensified to reach a deal to avert a Greek default.
A German government spokesman said afterwards that the meeting took place in a constructive atmosphere. The spokesman said in a statement: “It was agreed unanimously that the talks between the Greek government and the institutions (IMF, European Commission and European Central Bank) should be pursued with great intensity.”
There had been doubt earlier about whether a meeting would take place, after the European commission rejected the latest Greek proposals as inadequate as a basis for new talks.
A spokesman for the commission president, Jean-Claude Juncker, said the “ball is clearly in the court of the Greek government”.
“Their latest suggestions do not reflect the state of discussions between President Juncker and prime minister Tsipras on Wednesday night” and further talks in Brussels this week, said Margaritis Schinas.
Juncker has been a key broker in the Greek talks alongside Pierre Moscovici, the commission’s head of economic affairs. His usual diplomatic calm was stretched beyond its limit last week when he accused Tsipras of lying about about his intention to negotiate.
However, Junker’s rejection of a revised offer by Athens infuriated the Syriza government. A spokesman said: “The Greek side finds itself in the unfortunate position to have to point out that it was never informed about its proposals by Mr Pierre Moscovici.”