Greece under pressure as another debt deadline missed

The European Union is pressuring Greece to resolve outstanding pension and labour-market issues with its bailout creditors, as the country missed yet another deadline for unlocking funds this week.

Euro area finance ministers meeting in Brussels on Monday said the government of Alexis Tsipras had yet to comply with the terms attached to the emergency loans that have kept the country afloat since 2010.

It also emerged that the ministers are to discuss whether whether Jeroen Dijsselbloem can complete his term as their chairman after his party lost heavily at the Dutch elections, putting in doubt its participation in the next government.

The Greek finance minister, Euclid Tsakalotos, will stay in Brussels this week to continue negotiations with representatives of creditor institutions, in a sign of increasing urgency after months of talks failed to break the deadlock.

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“All the stakeholders emphasised today that we have to avoid delays,” EU economic affairs commissioner Pierre Moscovici told a news conference after the meeting. “That would be very harmful. That would impair the confidence of investors and consumers. That would be detrimental to economic recovery.”

Mr Moscovici added: “Everyone wants to reach a conclusion as swiftly as possible.”

Greece is edging closer to a repeat of the 2015 drama that pushed Europe’s most indebted state to the edge of economic collapse. A Greek government official in Brussels declined on Monday to say whether the country can meet debt payments due this July.

Bailout auditors

The Greek government, which has more than €7 billion in bond payments due in July, has baulked at implementing mandated reforms to its energy and labour markets while also resisting calls for additional pension cuts. A meeting between Mr Tsakalotos and representatives of creditor institutions before the Brussels meeting didn’t yield sufficient progress for bailout auditors to agree to return to Athens and complete the review, according to an official, who asked not to be named as negotiations aren’t public.

Greece’s creditors “must conclude in its review that the conditions are met and they’re laid down precisely in the agreement,” German finance minister Wolfgang Schäuble told reporters before the meeting. “Apparently it’s still difficult between the institutions and the Greek government to put the general agreement in concrete terms.”

Stalled bailout reviews and acrimony between successive governments and auditors representing creditor institutions are all too familiar themes in the seven-year crisis that has reduced the Greek economy by a quarter. And while discussions continue on how to overhaul the labour market, a finance ministry official said in an email to reporters on Friday that the issue can’t be solved in talks with technocrats.

Meanwhile there is doubt over whether Jeroen Dijsselbloem can complete his term as the chairman of the euro zone finance ministers after his party lost heavily at the Dutch elections, putting in doubt its participation in the next government.

Dijsselbloem’s future

Mr Dijsselbloem, whose term as euro group chairman ends in January, is highly regarded by the other 18 euro zone finance ministers and by the EU institutions. But his Labour party suffered heavy losses in parliamentary elections in the Netherlands last week. Mr Dijsselbloem said chances that his party will remain in the government of liberal Mark Rutte after talks on the coalition were “extremely slim”. He said this would mean he would not maintain his post as Dutch finance minister, but left his chances open on whether he would be able to stay on as euro group chairman, at least until the end of his mandate in January.

“My mandate runs until January. The formation of a new coalition government in the Netherlands may take some months. Whether there is a gap between the arrival of a new minister and the end of my mandate is too early to say,” Mr Dijsselbloem said, hinting at the possibility that coalition talks may last until next year. Other finance ministers, including Mr Schäuble, praised the work of Mr Dijsselbloem as head of the euro group, but fell short of saying whether he would stay until the end of his mandate. – (Bloomberg/Reuters)