European Commission plays down Greek breakthrough

Greek Prime Minister Alexis Tsipras to meet Jean-Claude Juncker in Brussels

Greece says it has submitted a 'realistic' plan to international creditors, in a bid to prevent the country from defaulting on its debt and potentially leaving the euro zone. Video: Reuters

 

The European Commission has played down expectations of a breakthrough on the Greek impasse tonight, warning that this evening’s meeting between European Commission president Jean-Claude Juncker and Greek prime minister Alexis Tsipras in Brussels would not yield a “final outcome.”

The Greek prime minister will meet with Mr Juncker tonight at 8.30 pm in Brussels.

“We do not expect any final outcome tonight. This is a first discussion, not a concluding one,” a European Commission spokesman said this morning in Brussels. The trio of international lenders who have been leading discussions with Greek officials over the past few months is due to present a reform proposal to the Greek government this afternoon, with the Greek government submitting its own 47-page proposal on Monday evening. Speaking ahead of his visit to Brussels this evening, Greek prime minister Alexis Tsipras said he had not received any proposal from Brussels as he urged the EU and other lenders to show the “political leadership” needed to clinch a deal. “It is necessary the institutions, and mainly the political leadership of Europe, adopt the realism that the Greek side has been showing for the past three months.”

Greek has been locked in standoff with its three international creditors –the European Commission, European Central Bank and IMF – over a new reform plan for Greece as it seeks to unlock up to €7.2 billion due to it under its current bailout.

While Greece has been given until the end of June to strike an interim agreement, it faces a €305 million repayment to the IMF on Friday, the first of a number of payments this month to the Washington-based fund totalling €1.6 billion.

With indications that a number of eastern European countries, as well as traditional hardliners such as Germany, the Netherlands and Spain, are firm in their resolve not to yield significant ground to Greece, European Commissioner Kristalina Georgieva said that all 19 euro zone member states needed to agree to the proposal.

“We are at a critical juncture and we have to look for ways to bridge across differences,” the Commissioner said.

The European Central Bank, which meets today for its regular interest rate-setting meeting, agreed to raise the ceiling of emergency liquidity assistance (ela) it offers to the Greek banks to €80.7 billion yesterday, an increase of about €500 million.

Tonight’s meeting in Brussels follows a late-night meeting in Berlin on Monday evening hosted by German Chancellor Angela Merkel and attended by French President Francois Hollande, European Commission president Jean-Claude Juncker, IMF managing director Christine Lagarde and the president of the European Central Bank, Mario Draghi.

But it remains unclear whether the Greek government’s proposal has made sufficient concessions on issues such as pension and labour market reforms, and the VAT system - key stumbling-blocks in the negotiations over the last four months.

Amid reports of divisions between the IMF and the European Commission in their approach to the Greek bailout discussions, the Berlin meeting was perceived as an attempt by Greece’s lenders to present a united front on Greece. Yesterday, the US reiterated its concern over the continuing Greek standoff.. In a speech in Washington yesterday, Federal Reserve board member Lael Brainard specifically referenced the Greek situation warning that the situation could deteriorate further. He said the Fed was “very attentive” to potential volatility should the Greek talks end without agreement.