Stepped up negotiations between institutional creditors and a delegation of top Greek ministers wrapped up in Brussels at midnight on Thursday without a final agreement but with progress reported, at least, on fiscal measures.
By N. Bellos
Stepped up negotiations between institutional creditors and a delegation of top Greek ministers wrapped up in Brussels at midnight on Thursday without a final agreement but with progress reported, at least, on fiscal measures.
A staff-level agreement, in this case, aims to finally conclude the second review of the Greek program (third bailout), as successive deadlines have come and gone for a year now, with the most recent "unofficial deadline" being last Monday's Eurogroup meeting.
While progress was reported over fiscal measures, reforms demanded by creditors in Greece's state-dominated energy sector and labor market reforms and liberalization remain as obstacles.
"Fiscal measures" is the catchphrase for creditors' demands, especially the IMF, that the current government spell out and enact precautionary austerity measures -- in the present -- in order to guarantee that benchmarks are met after 2019, namely, the annual primary budget surplus target of 3.5 percent as a percentage of GDP.
The week's unscheduled negotiations were decided in the wake of Monday's Eurogroup meeting, where all sides cited "progress" in the previous period, but with still no resolution to differences.
The Greek delegation - which included the finance minister, the alternate FinMin, the labor minister and the economy minister, whose portfolio oversees energy -- returned to Athens on Friday, but without a fixed date for a return to Greece of creditors' top negotiators.
The latest venue for trying to reach an agreement apparently shifts to Rome over the weekend, where Greek Prime Minister Alexis Tsipras will attend a commemorative EU Summit, and where the increasingly embattled leftist Greek government will attempt to bypass creditors' demands via a "political solution" at the heads of government level.
Tsipras, in fact, has addressed a letter to European counterparts linking negotiations over painful reforms in Greece's labor sector with discussions on the future of Europe.
As per results of four days of extra negotiations in Brussels, a Community source on Thursday said the unscheduled talks resolved certain issues dealing with fiscal measures, such as reduced social security spending that will be achieved through a "harmonization" of monthly rates paid to beneficiaries. Lowering the annual tax-free income threshold has apparently been conceded by the Greek side, and as such, is no longer considered an impediment to the agreement.
While no details have been leaked by either side during the course of negotiations, sources in Brussels appear confident that the "fiscal" front will be concluded in a matter of days when creditors' representatives return to Athens.
Conversely, reforms in Greece's often inflexible labor sector await whatever deliberations Tsipras has in Rome with his EU counterparts. Nevertheless, as "N" has previously reported, it is the IMF that insists on labor sector liberalization, rather than European creditors. The latter apparently accept the Tsipras government's intent to restore obligatory collective bargaining talks between unions and employers' groups in the country for sector-wide work agreements -- something the IMF adamantly opposes.
On the contrary, European creditors insist that the leftists in Athens further open up and deregulate the energy sector in Greece, which is still overwhelmingly dominated by the state-run Public Power Corp. (PPC). For instance, European creditors want Athens to sell-off several of PPC's power-generating units to the private sector.
The further "break-up" of PPC now looms as one of the most difficult obstacles blocking the second review, given that the leftist-rightist coalition government in Athens is derived from political forces ideologically opposed to privatization, and also risks losing further support from its leftist grassroots supporters.
The last-minute addition of Energy Minister Giorgos Stathakis to the Greek negotiation team apparently failed to resolve differences.
The next "unofficial deadline" to achieve a staff-level agreement is the April 7 Eurogroup, something that hinges on a timely return of creditors' representatives next week, otherwise the next date on the calendar is the May 22 Eurogroup meeting.