To everyone's surprise the European institutions and the Greek government seem to reach an agreement preventing a rapture that seemed possible during the past few days of the negotiations.
An article by the Financial Times concerning the discords between the European Union and the IMF was soon followed by a dramatic non paper issued by the Prime Minister's office which accused the institutions as the sole responsible for the stalemate, while the Greek Prime Minister issued an ultimatum which was published on Tuesday morning at the Avgi Newspaper. Since Tuesday afternoon a major shift was attested, with the Institutions and the Greek government apparently reaching an agreement.
Prime Minister Tsipras' barrage of calls and meetings
On Tuesday afternoon Prime Minister Tsipras had a barrage of meetings while at the same time Brussels were forcing the Greek Prime to overcome his initial constraints so an agreement can be reached. The Greek Prime had phone calls with Jean Clude Juncker, Francois Hollande, while he might soon contact with Angela Merkel and Christine Lagard.
The common statement that opens all current “hot issues”
Nevertheless the joint statement signed by both the Greek Prime and the President of the European Commission took everyone by surprise. In the joint statement there is a clear mention in almost all of the Greek government's previous constraints, such as changes in the insurance and pension system; while the changes in labor issues are expected to be milder there is nonetheless a clear mention to evaluation, a taboo word for the Greek government. It is the first time that the Greek government mentions evaluation, as it has previously clearly stated that it did not recognize the program that was imposed to the past government.
Prime Minister Tsipras and European Commission President Jean Claude Juncker released the following joint statement:
“President Juncker and Prime Minister Tsipras spoke on the phone today.
They took stock of progress made in the talks between Greece and its partners over the last days on a comprehensive set of reforms to achieve a successful completion of the review.
They notably discussed the importance of reforms to modernize the pension system so that it is fair, fiscally sustainable and effective in averting old-age poverty.
They also discussed the need for wage developments and labor market institutions to be supportive of job creation, competitiveness and social cohesion. In this context, they concurred on the role of a modern and effective collective bargaining system, which should be developed through broad consultation and meet the highest European standards.
Constructive talks should continue within the Brussels Group.”
Progress in the negotiations – Main issues where the two parties seem to agree
While Prime Minister Tsipras was having a barrage of phone calls, inside information from the Brussels Group stated clearly that the Greek government and its creditors seemed to reach an agreement in important issues that previously seemed to be major obstacles in the negotiation process.
The two parties seemed to reach an agreement on the following issues:
- VAT
- Privatizations
- Fiscal system
- the so called “Red” loans
A potential breath of liquidity from the ECB
The decision of the ECB to increase the ELA for the Greek banks to 2 billion Euros contributed significantly to the general climate of optimism and brought a limited uplift to the Athens Stock Exchange.
Meanwhile in Frankfurt a heated discussion was taking place on whether the ECB should impose new restrictions to the Greek banks. For the time being the deadline was postponed for a week.
The EU,ECB,IMF joint statement
It was the first time that the institutions issued a common statement concerning Greece. This was interpreted by many as an answer to the Greek Prime Minister's Office which made a statement about disagreements between the institutions. Nevertheless the general feeling of the joint statement confirms the prevailing optimism:
“The European Commission, the European Central Bank and the International Monetary Fund share the same objective of helping Greece achieve financial stability and growth.
The institutions continue to work closely together toward that goal.
All three institutions are working hard to achieve concrete progress on 11 May.”
The intense negotiations continue
It is also possible that a preparatory EuroWorking Group will take place on Friday before Monday's main EuroWorking Group meeting. Nevertheless intense negotiations are expected to continue as it is not entirely clear if the two parties will reach agreement or not.