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Tsipras Signals Greece May Accept Bailout Terms Tsipras Budges on Greece’s Debt, but Meets a Cool Response
(about 3 hours later)
ATHENS — An unexpected new effort by Greece to compromise with its creditors on a bailout package prompted a cool response from most of the rest of Europe on Wednesday as the financial pressures on Athens intensified and efforts to find a way out of the crisis remained chaotic. ATHENS — An unexpected new effort by Greece to compromise with its creditors on a bailout package prompted a cool response from most of the rest of Europe on Wednesday as efforts to find a way out of the financial crisis confronting Athens remained chaotic.
On another day of twists and turns, Prime Minister Alexis Tsipras’s government reversed course and said it would be willing to accept many of the terms of a bailout package that it had previously rejected, if they are part of a broader deal to address the country’s funding needs for the next two years. On another day of twists and turns, Prime Minister Alexis Tsipras’s government said it would be willing to accept many of the terms of a bailout package that it had previously rejected, if they are part of a broader deal to address the country’s funding needs for the next two years.
While reviving hopes for a deal to end Greece’s latest financial crisis, the seeming reversal by Mr. Tsipras further underscored the confusion over his strategy as well as over where the monthslong muddle of negotiations now stood. The sudden turn of events raised questions about what offer was actually still on the table for Greece, whether Mr. Tsipras would still go ahead with a referendum scheduled for Sunday on a deal and, if so, what deal Greeks would actually be voting on. While reviving hopes for a deal to end Greece’s financial crisis, the seeming reversal by Mr. Tsipras underscored the confusion over his strategy and the status of the negotiations. The sudden turn of events raised questions about what offer was still on the table for Greece, whether Mr. Tsipras would go ahead with a referendum scheduled for Sunday and, if so, what deal Greeks would actually be voting on.
In a letter sent on Tuesday to the creditors — the European Central Bank, the International Monetary Fund and other eurozone countries — Mr. Tsipras said Greece was “prepared to accept” a deal set out publicly over the weekend by the creditors, with small modifications to some of the central points of contention: pension cuts and tax increases. In the letter, released publicly on Wednesday, Mr. Tsipras linked Greece’s acceptance of the terms to a new package of bailout aid that would need to be negotiated. In a letter sent on Tuesday to the European Central Bank, the International Monetary Fund and other eurozone countries, Mr. Tsipras said Greece was “prepared to accept” a deal set out over the weekend by the creditors, with small modifications to some points of contention: pension cuts and tax increases. In the letter, released publicly on Wednesday, Mr. Tsipras linked Greece’s acceptance of the terms to a new package of aid that would need to be negotiated.
The development initially raised the prospect of progress in resolving a financial crisis that has sent shudders through global markets and deeply strained European unity. President François Hollande of France called for talks in the hopes of getting a deal by the weekend, saying, according to Agence-France Presse: “We need to be clear. The time for a deal is now.” Mr. Tsipras went on television Wednesday afternoon, telling Greeks that they should vote no on the referendum to improve his negotiating position.
But other European leaders, fed up with Mr. Tsipras and in no mood for quick compromise, dashed any hopes of an immediate breakthrough. But European leaders fed up with Mr. Tsipras and in no mood for quick compromise, dashed any hopes of an immediate breakthrough.
Chancellor Angela Merkel of Germany responded by repeating her position that there should be no further negotiations until Greece holds the referendum on Sunday — a vote that many European leaders hoped would amount to a rebuke of Mr. Tsipras. Jeroen Dijsselbloem, the Dutch finance minister, said in a statement after a conference call of the Eurogroup of finance ministers that there would be no more discussion with Greece until after the referendum on Sunday.
Any further talks are likely to be complex and contentious. An existing bailout agreement expired at midnight Tuesday, meaning that Greece and its creditors would have to start over in assembling a package of aid and budget cuts. Moreover, many European officials remain deeply skeptical about whether Mr. Tsipras’s leftist government would implement the more painful elements of any agreement. The initial responses from European officials to the latest Greek proposal ranged from cautious to dismissive. “We see no grounds for further talks at this point,” he said.
The European Union’s executive arm, which has played a central role in trying to broker a settlement between Greece and its creditors, dampened hopes of a swift deal by stressing that the revised terms offered by Greece addressed issues that had been raised during months of fruitless haggling over an old bailout program that is no longer under discussion as it expired at midnight and Tuesday. Chancellor Angela Merkel of Germany, who met Wednesday with Prime Minister Matteo Renzi of Italy, repeated her position that there should be no negotiations until after Greece holds its referendum — a vote that many European leaders hoped would amount to a rebuke of Mr. Tsipras.
Valdis Dombrovskis, a vice president of the European Commission who is responsible for the euro, said that the expiration of the old bailout program meant that “we are now in a new situation,” with far worse conditions than before. Greece’s decision to close banks and impose other capital controls, he said, “make the situation much more problematic.” “The overarching goal has always been to create a union of stability in Europe, with responsibility and corresponding rewards,” the chancellor said.
At a news conference in Berlin, Mr. Renzi appeared even more impatient with Greece than his German host did, calling the decision to hold a referendum an “error.”
Whenever further talks resume, they are likely to be complex and contentious. An existing bailout agreement expired at midnight Tuesday, meaning that Greece and its creditors would have to start over in assembling a package of aid and budget cuts. Moreover, many European officials remain deeply skeptical about whether Mr. Tsipras’s leftist government would implement the more painful elements of any agreement.
The European Union’s executive arm, which has played a central role in trying to broker a settlement between Greece and its creditors, dampened hopes of a swift deal by stressing that the revised terms offered by Greece addressed issues that had been raised during months of fruitless haggling over an old bailout program that is no longer under discussion.
Valdis Dombrovskis, a vice president of the European Commission, said that the expiration of the old bailout program meant that “we are now in a new situation.” Greece’s decision to close banks and impose other capital controls, he said, “make the situation much more problematic.”
He added, “Now much more damage has been done and much more effort will be needed to restore the situation.”He added, “Now much more damage has been done and much more effort will be needed to restore the situation.”
The European Commission, he said, still hopes for an agreement so that Greece can meet loan payments to the European Central Bank that are due in late July. The European Commission, he said, still hopes for an agreement so that Greece can meet a 3.5 billion euro loan payment to the European Central Bank that is due in late July.
“The doors for talks are open,” Mr. Dombrovskis said, blaming Greece for upending previous negotiations with its decision early Saturday to call a referendum. “There is certainly a possibility to reach an agreement before the next payments come due, but it is important that both sides have a willingness” to reach an accord, he added. “The doors for talks are open,” Mr. Dombrovskis said, blaming Greece for upending previous negotiations with its decision to call a referendum. “There is certainly a possibility to reach an agreement before the next payments come due, but it is important that both sides have a willingness” to reach an accord, he added.
Mr. Tsipras went on public television Wednesday afternoon, telling Greeks that they should vote no on the referendum to improve his negotiating position. In his televised address to Greek voters, Mr. Tsipras said that despite European characterizations, the vote Sunday was simply about a deal on how to manage the country’s debt crisis and not a vote on whether to leave the euro as the country’s currency.
He said that despite European characterizations, the vote was simply about a deal on how to manage the country’s debt crisis and not a vote on whether to leave the euro as the country’s currency.
“No does not mean a rift with Europe,” he said. “But a return to a Europe with principles.”“No does not mean a rift with Europe,” he said. “But a return to a Europe with principles.”
With shelves full of leather-bound books in the background, he also assured his country that he would continue to negotiate this week and after the referendum. And he thanked Greeks for staying calm in hard times. “This situation is short term and will not go on for long,” he said. He also assured his country that he would continue to negotiate this week and after the referendum. And he thanked Greeks for staying calm in hard times. “This situation is short term and will not go on for long,” he said.
Finance ministers from the countries using the euro decided in a conference call on Wednesday to wait for the outcome of the referendum before any further negotiations. They had turned aside a last-minute plea for help on Tuesday night.
The change of tone from Mr. Tsipras, who in recent days had vehemently opposed the terms sought by the creditors, came hours after Greece missed a debt payment to the I.M.F., leaving Greece effectively in default and raising the pressure on the country to find a solution to its rapidly escalating financial squeeze. With its banking system shut down and access to more aid cut off, Greece faced the prospect of further debt defaults and the possibility of being forced to abandon the euro as its currency.The change of tone from Mr. Tsipras, who in recent days had vehemently opposed the terms sought by the creditors, came hours after Greece missed a debt payment to the I.M.F., leaving Greece effectively in default and raising the pressure on the country to find a solution to its rapidly escalating financial squeeze. With its banking system shut down and access to more aid cut off, Greece faced the prospect of further debt defaults and the possibility of being forced to abandon the euro as its currency.
The letter from Mr. Tsipras was first reported by The Financial Times. The report sent stock prices in Europe higher. The European Central Bank left the amount of emergency credit available to Greek banks at 89 billion euros after a regularly scheduled meeting that ended Wednesday, a central bank spokesman said.
News of the letter emerged ahead of a meeting of the European Central Bank’s Governing Council to consider whether to cut off entirely the line of credit that has kept the Greek banking system from collapsing. An increase in the level would have exposed the European Central Bank to even greater losses if the banks are unable to repay. A decrease would have created an even more serious cash crunch and possibly caused some banks to fail.
In the letter, Mr. Tsipras said he was prepared to accept the European Commission’s proposal last Sunday, with five amendments on issues that had been particular sticking points. Further action by the European Central Bank may come on Sunday after the referendum. If Greeks vote not to accept the conditions, the central bank might have no choice but to stop lending to Greek banks.
He continued to ask for a lower value-added tax on Greek islands, for instance, to help bolster tourism and compensate for the high price of delivering goods to such areas. And he still objected to a system of automatically adjusting pension payments according to the financial strength of the underlying pension funds rather than relying on government assistance to maintain the payments. The situation left unclear what Greeks would be voting on in Sunday’s referendum. The wording was to ask Greeks to vote yes or no on whether they supported the terms offered by creditors last week — an offer that in effect expired with the existing bailout package on Tuesday night, and that appears to have been supplanted in any case by the offer put forward by Mr. Tsipras.
But he accepted the bulk of what the Europeans had asked for in their last proposal, including creating strong disincentives to early retirement.
The situation left unclear what Greeks would be voting on in Sunday’s referendum, assuming it goes ahead as planned. The wording was to ask Greeks to vote yes or no on whether they supported the terms offered by creditors last week — an offer that in effect expired with the existing bailout package on Tuesday night, and that appears to have been supplanted in any case by the offer put forward by Mr. Tsipras.
A recent poll found majority support for Mr. Tsipras’s call to vote no in the referendum, though that support shrank after the banks were closed and a cap of 60 euros per day was put on the amount that Greeks could withdraw from A.T.M.s.A recent poll found majority support for Mr. Tsipras’s call to vote no in the referendum, though that support shrank after the banks were closed and a cap of 60 euros per day was put on the amount that Greeks could withdraw from A.T.M.s.
The poll, by ProRata, conducted from Sunday to Tuesday, found 57 percent of Greeks said they would vote against the deal the creditors proposed, with about 30 percent saying they would vote for it, and about 13 percent saying they were not sure. After the banks closed on Monday, the gap narrowed, with about 46 percent saying they would vote against the proposals, 37 percent said they would vote yes, and 17 percent said they were not sure.The poll, by ProRata, conducted from Sunday to Tuesday, found 57 percent of Greeks said they would vote against the deal the creditors proposed, with about 30 percent saying they would vote for it, and about 13 percent saying they were not sure. After the banks closed on Monday, the gap narrowed, with about 46 percent saying they would vote against the proposals, 37 percent said they would vote yes, and 17 percent said they were not sure.
In Berlin, Ms. Merkel indicated that Germany no longer considered the offer that the Eurogroup of eurozone finance ministers made to Greece over the weekend to be valid, telling lawmakers in an address to Parliament that the proposal had been coupled to the aid program that expired at midnight on Tuesday.
“With the expiration of the program, the basis for the offer has been removed,” Ms. Merkel said.
The chancellor repeated her view that Europe depends on trust and compromise, but said that Germany was not willing to make concessions at any price.
She emphasized that Europe’s strength meant that it was in a position to take time to hammer out a new aid program for Greece, and said that the International Monetary Fund, the European Commission and the European Central Bank would all have to be involved.
“The overarching goal has always been to create a union of stability in Europe, with responsibility and corresponding rewards,” the chancellor said.
Wolfgang Schäuble, Germany’s finance minister, backed the chancellor’s remarks, telling reporters that additional talks would be necessary before a new assistance program could be considered for Greece.
He said the process had been made more difficult by a breakdown of trust.
The first step toward a resumption of negotiations, Mr. Schäuble said, would be clarity from Athens about its aims and goals. “The Greek government needs to clarify what it wants,” he said.
“It’s not just about Greece,” Mr. Schäuble said. “We need to make sure the basis of people’s trust in Europe is not completely destroyed. We are defending Europe.”