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Breakdown in talks, as Greece walks out in Brussels. Now what?

The Greek delegation walked out the negotiations with creditors representatives in Brussels on Sunday afternoon. During the meeting that lasted 46 minutes, the Greek side submitted revised proposals but they were considered as “insufficient” by the creditors.

A difference gap of 2.6 billion euro remain between the two sides. According to a statement issued by the European Commission, the creditors do not want tax hikes but permanent expenditure cuts and thus of €2 billion per year.

Greek negotiator Yannis Dragasakis who is also Deputy Prime Minister told media that the institutions did not respond in way or with authorization that would allow unresolved issues to be settled. He added that the lenders representatives had said that they were not authorized to switch fiscal measures into structural reforms. He said that Greece had submitted proposals  on Sunday and that these proposals were covering the fiscal gap as demanded.

Dragasakis added that the IMF and the EU still wanted Greece to cut pensions of 1% of GDP and Value Added Tax hikes. Athens has vehemently rejected further cuts in pensions.

Citing Greek government sources, Channel 4 reporter Paul Mason, tweeted on the reaons the Greek negotiators left:

“Greek negotiators left because they were told that negotiations were over.”

” Greeks were told officials (Juncker chef de cabinet and Thomson’s deputy) didn’t have mandate to make any concessions on fiscal gap.”

“My snap take on Brussels talks breakdown. Greeks did offer to do 2% of fiscal austerity, which they had not done before. EU wants 0.6% more.”

“Holland/Merkel told us to go to institutions and do deal, institutions told us no more negotiations.”

It is not the first time the talks break down. Last Thursday, it was the IMF that left negotiations, today it was Greece.

So now what?

A European Commission spokesman said: “President [Jean-Claude] Juncker remains convinced that with stronger reform efforts on the Greek side and political will on all sides, a solution can still be found before the end of the month.”

The Eurogroup scheduled to convene on June 19th is reportedly to take up the Greek issue.

According to Greek media citing the EC statement, “Juncker had given Greece a deadline to give a respond about the creditors’ demands by next Thursday, the Eurogroup meeting day.”

I assume it is a question the IMF and the EU do not care to answer.
 juncker tsipras kiss

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17 comments

  1. As always, it is Greece that is expected to make massive concessions, effectively taking instructions from Germany and France. There have been no negotiations at all, in reality: it is German-French diktat. Greece is left with no option but to default and it should do its best to fuck up the eurozone: that is what former friends do when they become enemies.

    • Giaourti Giaourtaki

      Print some thousand billion Euro and let dynamite fishers take care of it

    • Don’t you see there is not a single country supporting the Greek negotiation position? It’s not just Germany and France. It’s not just CDU/CSU, but also SPD and Greens. If it was a diktat – why did we bother to discuss for five months? If that was the case Merkel and Hollande could have just said In January “These are our demands. If you don’t comply completely, you will not get any more money out of the bailout package”.
      If you want to blame Germany for all the Greek faults, you will fail miserably. We will still see Greeks as our friends.

      • If that was the case Merkel and Hollande could have just said In January “These are our demands. If you don’t comply completely, you will not get any more money out of the bailout package”.

        which is precisely what they have been doing. While turning the screws on the country in order to bleed it dry and demolish the little that was left of its economy after the German/French/
        IMF/Troika remedy of austerity was imposed om the country. You might call this “negotiations”, everybody else calls it “a gun to the head”…

      • That is more or less what they did say, with lies and public face being made separately. Don’t you see that this is a political fight not about Greece but about how to run the EU? The fact that the German Greens and SPD are completely useless — and more interesting in collecting German support than in dealing with reality — is yet another indication that Germany is not a country fit to lead the EU. Please stop trying to do so, because you have no idea how to collaborate — and seem to think that issuing orders is the way forward.

    • You keep muttering that drivel to yourself while the Dutch, Slovaks, Fins et al laugh behind your back about your “Greek Reality”…

  2. So little attention

    The people primarily responsible for Greece’s deep and prolonged depression and high unemployment are pushing policies that would extend the crisis and worsen its impact on those who have suffered the most.

    Just 10 days after Syriza was elected, as I noted previously, the European Central Bank cut off its main line of credit to Greece and then capped the amount that Greek banks could lend to the government. All the hype and brinkmanship destabilize the economy, and some of this is an intentional effect of European authorities’ statements and threats. But the direct sabotage of the Greek economy is most important, and it is remarkable that it has gotten so little attention.

    Mark Weisbrot

    • “Just 10 days after Syriza was elected, as I noted previously, the European Central Bank cut off its main line of credit to Greece and then capped the amount that Greek banks could lend to the government.”

      And within those 10 days, there was a famous conversation:
      Dijsselbloem: “You just killed Troika”
      Varoufakis: “WOW!”

      So I would say that this cut off was a response move, not an initial step (purely against SYRIZA) like you would like to paint it.

      • By requiring the partners to stop playing the “technincal card” and start moving to the political stage, Syriza forced the negotiations to be held in the right level. For too long, Eurozone was feeling much too comfortable by sweeping the Greek bailout disasters under the carpet. This was a fault of previous Greek governments, not of Syriza’s. It is now fixed.

        Hard to understand is why such displacement can justify further difficulties in an already troubled national economy. Unless we accept that the so called negotiation was not indented to reach a better economic performance, easier and faster loan payback conditions.

      • “Dijsselbloem: “You just killed Troika”
        Varoufakis: “WOW!”
        So I would say that this cut off was a response move,”

        Except nobody killed Troika, not even the European parliament which declared Troika illegal.

        ECB’s illegal action against Greece [ECB mandate requires it to stay neutral] was not in response to any provocation but a purely political move. This will count against it later in the ISDA courts should default occur.

        • Well… accepting Greek junk rated bonds as collateral by ECB is also far away from their rules, but still they are doing it (most probably because of political pressure on ECB, what else) so without some political intervention there would not have been such amount of money appointed to Greek banks in the first place.
          Or in other words… if ECB stayed neutral, Greek banks would default long time ago.

          • Giaourti Giaourtaki

            And how comes that they bought cheap from gamblers Greek bonds in the so called haircut to get later if matured 100% “back”?
            Until today ECB earned 6 billion in interest from Greece.

  3. “Greece is left with no option but to default and it should do its best to fuck up the eurozone”

    Thats exactly what Greece, the Greek people and Government have to do! There is plenty of leverage and ammunition. Default, let immigrants pass, block sanctions on Russia, seize assets, etc… Its only a matter of intelligence, creativity and courage.

  4. Proofreaders mission

    Representatives of the creditors were not mandated to negotiate the Greek proposals.
    Info Grécia

    EU sent a negotiation team made of proofreaders to check if the Greek counter-proposal were an accurate copy of EU proposal. After pinpointing the first difference, they left. Mission complete.

    • Yes, there are no negotiations. They consist of threats from Germany and others, “Do as you’re told or we will fuck up your country”.

  5. The traditional IMF and World Bank formula of the past has been to loan Third World nations more and more fiat money with interest. When it became clear that these nations could not pay back these loans with interest; the IMF or World Bank would proceed to seize or lease said countries assets (mineral rights, land etc.) at bargain basement prices. It was a type of “eminent domain”.

    Now the same is being done to a once relatively prosperous nation in Europe. Loans at interest to pay back loans at interest doesn’t work. People are going hungry in Greece. Unemployment is higher than it was during WWII. The Greek government can’t cut anymore government subsidies or further tax an impoverished population. Enough is enough.

    Greece should default on these monopoly money loans, get out of the European Union and go back to the drachma. It will be difficult for a while but things will get better quicker than they would with continued austerity and the rest.

    • However IMF in all cases (except Greece) does one useful and necessary thing: the first move is to restructure debt.

      Along with the ECB, IMF has acted politically and against its mandate. Its days as a credible institution are numbered now. And especially with the creation of the rival AIB (Asia Investment Bank), a partial result of the Greek crisis.

      Worse, IMF has just authorized loans and guarantees to Ukraine for the second time in a year.

      Ukraine is a country at war, and IMF is absolutely forbidden to loan to a country at war. Ukraine does not have income for the year, another requirement. Therefore these are purely illegal and political moves, and have completely hollowed out the IMF as a neutral global institution.