EU lenders continue to back Greece into a corner

To end one emergency euro group meeting in disarray could be regarded as a misfortune, but for two meetings to break down without agreement looks like carelessness.

Monday evening’s euro group meeting on Greece ended without agreement on the deepening crisis as once again euro zone finance ministers emerged from a Brussels room unable to decide even on a basic roadmap.

Even before the euro group ended, Greek officials on the fringes of the euro group meeting in the Justus Lipsius building in Brussels were briefing journalists on what had happened in the room.

The euro group had presented officials with a document that they deemed as "totally unacceptable." A furious Yanis Varoufakis held a press conference more than an hour after the end of the meeting, in which he said that Greece had been willing to sign up to a communiqué drafted by EU Economics Commissioner Pierre Moscovici, but this had been changed ahead of the euro group .

While Jeroen Dijsselbloem, as president of the euro group of 19 euro zone finance ministers, technically presented the amended document, the suggestion coming from Greek sources is that German finance Wolfgang Schauble was behind the changes.

Three drafts

At least three drafts of the disputed document are in circulation which was first drawn up on Sunday following meetings between representatives of the European Commission, ECB and IMF and the Greek authorities on Friday and Saturday in Athens.

On the surface, the changes appear relatively minor. Greece is unhappy in particular with a reference to Greece requesting “a six months technical extension of the current programme as an intermediate step.” An earlier version of the document contains no reference to Greece “requesting” an extension, and also eschews the use of the word “programme.” Rather it states that the document “forms a basis for an extension of the current loan agreement.”

Mr Varoufakis, and Greek media, insist that Athens was prepared to sign up to the initial draft, but EU officials point out that a substantive discussion of the document did not take place during the euro group.

They point out – correctly – that pre-prepared drafts of ‘conclusions’ are always discussed and disseminated ahead of EU Council meetings, with details and changes negotiated during the meeting itself. As a result, the existence of a number of amended documents does not suggest that a definitive ‘conclusion’ was ever put on the table.

As recriminations intensified overnight, focus has turned to possible divisions between the different elements of the Troika and in particular between the European Commission, headed by Jean-Claude Juncker and supported by his economics commissioner Pierre Moscovici, and the euro group, heading by Dutch finance minister Jeroen Dijsselbloem which represents the interests of euro zone member states via their finance ministers.

Back demands

Greek finance minister Yanis Varoufakis insinuated on Monday that the European Commission was prepared to back Greece’s demands, but was scuppered by the euro group, led by Germany.

The perception that the European Commission is the real champion of Greece has been gaining traction in Greek media outlets over the past few days, following reports of a ‘10-point plan’ presented by Mr Juncker earlier this month.

EU sources have insisted that there are no divisions between the commission and the euro group on Greece.

Though Jean-Claude Juncker held a number of phonecalls with Greek prime minister Alexis Tsipras on Sunday and Monday and European Commission officials contributed to the drafting of the proposed communiqué discussed in advance of the euro group, officials say this was done in conjunction with Mr Dijsselbloem and the euro group.

‘No Plan B’

Speaking to reporters this morning in Brussels, commissioner Moscovici said that the commission contributed to a “collective process led by the euro group.” “There is no good cop, bad cop game. We are fully united,” he said.

Worryingly for Greece he also said that there was “no Plan B” for Greece. “The ball is in the camp of the Greek government. They need to send a request, call it technical if you want.”

However, he added that there was “only one plan: Greece in the euro zone.”

The commitment by the European Commission to keep Greece within the euro area may give comfort to markets, but the question remains on whose conditions. By refusing to consider anything except an extension to the programme, Greece’s EU lenders are essentially backing Athens into a corner.

Mr Varoufakis last night pleaded for an “honourable agreement” for Greece. It was a pitiful statement, but an accurate one. It may simply come down to a difference in language, as Mr Dijsselbloem claimed on Monday evening, but in the current Greek standoff semantics do matter.

The political realities of the Greek situation means that Mr Varoufakis needs to get a deal that will be politically palatable to the Greek public, his Syriza party and their junior coalition partner, the Independent Greeks. The question over the next few days will be how far its European lenders are prepared to help it in this regard.