Eurogroup meeting adjourns without reaching Greek deal

Finnish threat leaves bailout talks in Brussels on knife edge

Euro zone finance ministers expect a difficult meeting before they can decide if the Greek government can be trusted to implement the reforms it promised in exchange of a third bailout programme. Video: Reuters

 

The meeting of euro zone finance ministers in Brussel has adjourned for the night without a final decision on opening talks with Greece on a third bailout.

The meeting will resume at 11am, and it is also expected that the leaders of the euro zone countries will hold a summit in Brussels on Sunday afternoon.

The Eurogroup talks ran into difficulty after signals that eurosceptic populists in Finland’s ruling coalition will bring down the two-month-old government if Helsinki backs a third aid package for Greece.

Irish sources earlier said it was “increasingly difficult to reach common ground” as the talks between the 19 finance ministers progressed.

Leaving the meeting, Eurogroup president Jeroen Dijsselbloem said: “It’s still very difficult but work is still in progress. That’s all I can say.”

Also leaving the meeting, Finnish finance minister Alexander Stubb said the Eurogroup was adjourning for the the night and “continuing discussions in the morning”.

Mr Stubb admitted he had a very narrow mandate from the Finnish parliament - a nod to his Finns coalition partner - but added that Helsinki was “not alone” at the negotiating table.

Rather, he said Finland belonged to the Eurogroup mainstream with its concerns over backing talks for a third Greek bailout.

Finnish opposition would prevent the Eurogroup from reaching a unanimous decision to open negotiations for a third Greek programe.

That raises the stakes for a planned meeting of EU leaders, scheduled for Sunday to sign off on - or bury - the prospect of further assistance for Greece.

The Greek parliament on Friday night backed government proposals for economic reforms in the hope of staving off bankruptcy and the possibility of exiting the euro. In Athens overnight, Mr Tsipras had to rely on opposition votes from the right after some of his leftist allies opposed spending cuts, tax rises and other measures he proposed in order to unlock €54 billion in three-year credit and save Greece from a bankruptcy that would force it out of the euro zone.

The True Finns party joined a three-way centre-right coalition in May but its leader Timi Soini, now foreign minister, has maintained that bailouts in general, and particularly bailouts to Greece, are a “pyramid scheme”.

Given the refusal of the Finns to back any third bailout in a parliamentary vote in Helsinki, liberal finance minister Alexander Stubb reportedly told his euro colleagues he could not agree to a third bailout as applied for by Athens. Government sources contacted in Finland declined to comment on the reports.

It was the second twist of the euro group meeting after reports that German finance minister Wolfgang Schäuble has flagged a five-year Greek exit from the euro zone as one option for resolving the five-year crisis in the country.

Germany’s Frankfurter Allgemeine’s Sunday edition has published extracts from a leaked finance ministry paper that raises a so-called Grexit as one of two options to prevent further deterioration of Greece’s situation with respect to the euro zone.

The paper reportedly views the latest proposals from Athens, the basis for Saturday’s talks about a third aid programme, as failing to address “central, important reform areas to modernise the country and bring sustainable development”.

Thus the FAS says the Berlin finance ministry concludes in its analysis that the proposals “cannot be the basis for a completely new ESM [European Stability Mechanism] programme on a three-year basis”.

The ministry paper reportedly sketches out two possible scenarios should Berlin gain support for its opinion.

The first would see Greece, with parliamentary support, hand over assets worth €50 billion to a trustee fund which would sell them and set off the proceeds against Greek debt.

The second Berlin proposal involves the EU agreeing a temporary Grexit of at least five years to allow Athens restructure its debts.

The country would remain a full EU member and would be given technical and financial support for measures to boost growth and address humanitarian needs.

A spokesman for the German finance ministry said: “We have no comment on the report.”

An EU official dismissed the suggestion of a temporary exit from the euro as a suggestion that had been floated in the past and dismissed as legally and economically unworkable.

Greece has received bailouts totaling €240 billion in return for deep spending cuts, tax increases and reforms from successive governments.