BFW 07/12 20:40 EU Demands Tsipras’s Capitulation as Greek Bailout Costs Spiral
EU Demands Tsipras’s Capitulation as Greek Bailout Costs Spiral
2015-07-12 20:23:14.860 GMT
(For more on the Greek crisis, click here. For the text
under consideration by euro-area leaders, click here.)
By David De Jong, Mark Deen and Jonathan Stearns
(Bloomberg) -- European leaders gave Greek Prime Minister
Alexis Tsipras a straightforward choice on Sunday: disown his
principles or quit the euro.
Euro-area leaders presented Tsipras with a laundry list of
unfinished business from previous bailouts he’d pilloried in
opposition and during six turbulent months in office. They gave
him three days to enact their main demands into Greek law in
exchange for the third bailout in five years.
With Greece running out of money and its banks shut the
past two weeks, the confrontation came at a summit in Brussels
Sunday that was billed as his last chance to stay in the euro.
Greece missed a payment to the International Monetary Fund June
30 and allowed its second rescue package to lapse the same day.
“The situation is extremely difficult if you consider the
economic situation in Greece and the worsening in the last few
months, but what has been lost also in terms of trust and
reliability,” German Chancellor Angela Merkel told reporters.
While the Greek government has yet to comment on the
conditions, which were detailed by finance ministers in meetings
Saturday and Sunday, an official in Brussels said the document
very bad for Tsipras and the Greek people. Germany also floated
the prospect of suspending Greece from the currency union.
The euro fell as trading opened in Asia, dropping as much
as 0.6 percent and traded 0.5 percent lower at $1.1107 as of
5:08 a.m. in Sydney. The currency rose 0.4 percent last week as
creditors looked to nail down a deal.
Return to Athens
In addition to requirements to cut pensions and raise sales
tax, which Tsipras accepted last week, the memo demanded that
officials from Greece’s creditors return to Athens with full
access to government ministers and a veto over relevant
legislation, according to the document.
Euro-area leaders also want Tsipras to transfer as much as
50 billion euros ($56 billion) of state assets to an independent
Luxembourg-based company for sale and make him fire the workers
he hired in defiance of Greece’s previous bailout commitments.
After putting up with personal attacks, contradictory
messages and an anti-austerity referendum from Athens, euro-area
policy makers are pressing home their advantage with Tsipras’s
resistance running out of fuel.
“I’d like to see them demonstrating starting tomorrow in
their parliament they’re serious about implementing the changes,
legislative and structural, that need to be put in place,”
Irish Prime Minister Enda Kenny said. “Every day that this goes
on, the eventual solutions are more costly.”
‘Punitive’ Demands
Tsipras was elected in January after campaigning to reject
austerity. After routinely calling the conditions demanded in
exchange for aid “blackmail,” he may be forced to organize a
government of national unity or call new elections.
“The costs for Greece of staying in the euro are reaching
a point where the balance could favor grexit,” Daniel Munevar,
who advised former Greek Finance Minister Yanis Varoufakis
before he quit last week. “The costs being demanded of Greece
are so punitive that they are almost impossible to meet.”
Greece needs as much as 86 billion euros in aid, with 22
billion euros required by the middle of August.
Any deal is unlikely to be rubber-stamped before Greece has
to pay the European Central Bank 3.5 billion euros on July 20 and
so creditors are seeking to engineer a mechanism to avert a
default, according to an official from the European Commission.
The deal on offer is “clearly harsher than what Greece
rejected in the referendum last weekend,” Finnish Finance
Minister Alex Stubb told reporters as the leaders talks began.
“It’s a rather black and white choice.”
72-Hour Deadline
European leaders are forcing Tsipras to legislate before
they’ll even consider releasing funds because of the credibility
gap they said was a key hurdle to more aid. They’re no longer
willing to take him at his word.
Creditors are using the calendar as leverage. Tsipras’s
predecessors were given months to enact economic reforms after
tapping the first bailout loans in 2010.
Greece needs to pass laws by July 15 to raise sales tax,
cut pensions, change the bankruptcy code, safeguard the
independence of the statistics office and make spending cuts
automatic if the budget misses its target, according to the text
presented to leaders.
With Greek banks rationing cash and the ECB reviewing how
long it can keep the country’s financial system alive, Tsipras
won a stay of execution as he arrived at the summit when a
Sunday meeting of the 28 European Union leaders was canceled.
The full group of leaders would only have gathered to discuss
how to handle Greece’s exit from the euro, Maltese Prime
Minister Joseph Muscat said.
“I am ready for an honest compromise,” Tsipras told
reporters as he arrived. “We owe it to the people of Europe
that want a united, not divided, Europe. We can reach an
agreement tonight if the parties involved want it.”
For Related News and Information:
Greece Bailout Optimism Sparks Slump in Europe’s Haven Bonds
Half-Century of European Integration at Stake in Greece Meeting
Euro Climbs Most in Two Years Versus Yen on Greece’s Bailout Bid
Top Stories: TOP <GO>
Most-read Greek news: MNI GRE 1W <GO>
--With assistance from Nikos Chrysoloras and Marcus Bensasson in
Athens, Kevin Costelloe, Rebecca Christie, Patrick Donahue, Ian
Wishart, James G. Neuger, Stephanie Bodoni, Ott Ummelas, Karl
Stagno Navarra, Radoslav Tomek and Esteban Duarte in Brussels,
Angela Cullen in Frankfurt and Elco van Groningen in Amsterdam.
To contact the reporters on this story:
David De Jong in Brussels at +31-20-589-8530 or
ddejong3@bloomberg.net;
Mark Deen in Brussels at +33-1-5365-5066 or
markdeen@bloomberg.net;
Jonathan Stearns in Brussels at +32-2-285-4306 or
jstearns2@bloomberg.net
To contact the editors responsible for this story:
James Hertling at +44-20-3525-9330 or
jhertling@bloomberg.net
Ben Sills
2015-07-12 20:23:14.860 GMT
(For more on the Greek crisis, click here. For the text
under consideration by euro-area leaders, click here.)
By David De Jong, Mark Deen and Jonathan Stearns
(Bloomberg) -- European leaders gave Greek Prime Minister
Alexis Tsipras a straightforward choice on Sunday: disown his
principles or quit the euro.
Euro-area leaders presented Tsipras with a laundry list of
unfinished business from previous bailouts he’d pilloried in
opposition and during six turbulent months in office. They gave
him three days to enact their main demands into Greek law in
exchange for the third bailout in five years.
With Greece running out of money and its banks shut the
past two weeks, the confrontation came at a summit in Brussels
Sunday that was billed as his last chance to stay in the euro.
Greece missed a payment to the International Monetary Fund June
30 and allowed its second rescue package to lapse the same day.
“The situation is extremely difficult if you consider the
economic situation in Greece and the worsening in the last few
months, but what has been lost also in terms of trust and
reliability,” German Chancellor Angela Merkel told reporters.
While the Greek government has yet to comment on the
conditions, which were detailed by finance ministers in meetings
Saturday and Sunday, an official in Brussels said the document
very bad for Tsipras and the Greek people. Germany also floated
the prospect of suspending Greece from the currency union.
The euro fell as trading opened in Asia, dropping as much
as 0.6 percent and traded 0.5 percent lower at $1.1107 as of
5:08 a.m. in Sydney. The currency rose 0.4 percent last week as
creditors looked to nail down a deal.
Return to Athens
In addition to requirements to cut pensions and raise sales
tax, which Tsipras accepted last week, the memo demanded that
officials from Greece’s creditors return to Athens with full
access to government ministers and a veto over relevant
legislation, according to the document.
Euro-area leaders also want Tsipras to transfer as much as
50 billion euros ($56 billion) of state assets to an independent
Luxembourg-based company for sale and make him fire the workers
he hired in defiance of Greece’s previous bailout commitments.
After putting up with personal attacks, contradictory
messages and an anti-austerity referendum from Athens, euro-area
policy makers are pressing home their advantage with Tsipras’s
resistance running out of fuel.
“I’d like to see them demonstrating starting tomorrow in
their parliament they’re serious about implementing the changes,
legislative and structural, that need to be put in place,”
Irish Prime Minister Enda Kenny said. “Every day that this goes
on, the eventual solutions are more costly.”
‘Punitive’ Demands
Tsipras was elected in January after campaigning to reject
austerity. After routinely calling the conditions demanded in
exchange for aid “blackmail,” he may be forced to organize a
government of national unity or call new elections.
“The costs for Greece of staying in the euro are reaching
a point where the balance could favor grexit,” Daniel Munevar,
who advised former Greek Finance Minister Yanis Varoufakis
before he quit last week. “The costs being demanded of Greece
are so punitive that they are almost impossible to meet.”
Greece needs as much as 86 billion euros in aid, with 22
billion euros required by the middle of August.
Any deal is unlikely to be rubber-stamped before Greece has
to pay the European Central Bank 3.5 billion euros on July 20 and
so creditors are seeking to engineer a mechanism to avert a
default, according to an official from the European Commission.
The deal on offer is “clearly harsher than what Greece
rejected in the referendum last weekend,” Finnish Finance
Minister Alex Stubb told reporters as the leaders talks began.
“It’s a rather black and white choice.”
72-Hour Deadline
European leaders are forcing Tsipras to legislate before
they’ll even consider releasing funds because of the credibility
gap they said was a key hurdle to more aid. They’re no longer
willing to take him at his word.
Creditors are using the calendar as leverage. Tsipras’s
predecessors were given months to enact economic reforms after
tapping the first bailout loans in 2010.
Greece needs to pass laws by July 15 to raise sales tax,
cut pensions, change the bankruptcy code, safeguard the
independence of the statistics office and make spending cuts
automatic if the budget misses its target, according to the text
presented to leaders.
With Greek banks rationing cash and the ECB reviewing how
long it can keep the country’s financial system alive, Tsipras
won a stay of execution as he arrived at the summit when a
Sunday meeting of the 28 European Union leaders was canceled.
The full group of leaders would only have gathered to discuss
how to handle Greece’s exit from the euro, Maltese Prime
Minister Joseph Muscat said.
“I am ready for an honest compromise,” Tsipras told
reporters as he arrived. “We owe it to the people of Europe
that want a united, not divided, Europe. We can reach an
agreement tonight if the parties involved want it.”
For Related News and Information:
Greece Bailout Optimism Sparks Slump in Europe’s Haven Bonds
Half-Century of European Integration at Stake in Greece Meeting
Euro Climbs Most in Two Years Versus Yen on Greece’s Bailout Bid
Top Stories: TOP <GO>
Most-read Greek news: MNI GRE 1W <GO>
--With assistance from Nikos Chrysoloras and Marcus Bensasson in
Athens, Kevin Costelloe, Rebecca Christie, Patrick Donahue, Ian
Wishart, James G. Neuger, Stephanie Bodoni, Ott Ummelas, Karl
Stagno Navarra, Radoslav Tomek and Esteban Duarte in Brussels,
Angela Cullen in Frankfurt and Elco van Groningen in Amsterdam.
To contact the reporters on this story:
David De Jong in Brussels at +31-20-589-8530 or
ddejong3@bloomberg.net;
Mark Deen in Brussels at +33-1-5365-5066 or
markdeen@bloomberg.net;
Jonathan Stearns in Brussels at +32-2-285-4306 or
jstearns2@bloomberg.net
To contact the editors responsible for this story:
James Hertling at +44-20-3525-9330 or
jhertling@bloomberg.net
Ben Sills