Eurogroup meeting: it’s going to be hot
The euro area finance ministers will meet in Brussels on Wednesday to discuss Greece's situation. According to Bloomberg, the nation’s Finance Minister Yanis Varoufakis will present proposals seeking about 10 billion euros in short-term financing. Greece will ask for a right to issue about 8 billion euro of further short-term debt above the current 15 billion euro limit and for a disbursement of 1.9 billion euros of profits that euro area central banks made on their Greek bonds holdings.
The country will soon need cash and the only source to get it is from its European partners. The problem is that Greece doesn’t want money in return for austerity measures – that isn’t what Syriza has promised to the voters. Greece wants money to gain time to rethink its relations with creditors – the majority of the population approves the government’s negotiating tactics.
French Finance Minister Michel Sapin admitted that it’s necessary to provide Greece with a bridge credit in the short term. German policymakers, however, are against giving money to Greece without the conditions of the bailout program agreed to in 2012 to come with the funding. Michael Fuchs, a deputy caucus chairman for Merkel’s Christian Democratic Union in parliament said that Germany and Greece have “a full disagreement at the moment”.
So is a compromise possible?
The answer is yes. Greek government is clearly trying to be more cooperative with creditors. As for the European and German officials, although so far they have shown little willingness to make concessions to Greece, they actually have little choice, as they clearly don’t want to create a precedent of a nation going bankrupt and leaving the euro area.
According to an unnamed official, Greece will reject the harshest austerity conditions attached to the bailout loans, but will propose retaining about 70% of the terms. To replace 30% of the austerity conditions Greece may propose new reforms that the Greek government will devise together with the Organization for Economic Cooperation and Development. Greece can also ask for more time to reach a “new contract” with its creditors by asking for a bridge-financing program through the end of August, instead of the May as was previously discussed.