On Monday evening, it appeared as though things had finally, after five arduous months of negotiations, come to a head in Greece’s standoff with the IMF and EU creditors. Prime Minister Alexis Tsipras’ penned a lengthy op-ed over the weekend which seemed to indicate that the Greeks were at the end of their rope.
On the heels of Tsipras’ tirade, French President Francois Hollande, German Chancellor Angela Merkel, ECB chief Mario Draghi, and European Commission President Jean-Claude Juncker convened an emergency meeting in Berlin on Monday and Die Welt said Tsipras was apparently ready to discuss pension reform, a sticking point in talks thus far.
Tsipras apparently submitted what he called a “realistic” final proposal ahead of the meeting.
We have submitted a realistic plan for an agreement. It is now up to the political leadership of Europe to decide. pic.twitter.com/eOypUsIbXT— Alexis Tsipras (@tsipras_eu) June 2, 2015
Here's more color from Bloomberg...
The brinkmanship over Greece’s future intensified after Prime Minister Alexis Tsipras said his government submitted a new proposal aimed at breaking the stalemate just as creditors set about finalizing theirs.
Tsipras is waiting for European leaders to show their hand after they held top-level talks in Berlin on
Monday night aimed at hatching a plan to unlock funds and avoid the country defaulting. The goal of the meeting was to hammer out an offer from creditor institutions that Greece could consider in coming days, according to two people familiar with the plan. The Greek government said it hadn’t received any draft agreement.
“After submitting a complete proposal for a deal last night to institutions, we are not waiting for them to submit their own plan back to us,” Tsipras told reporters on Tuesday. “Greece is the one that submits the plan"...
Representatives from the creditor institutions were said to be wrapping up their proposal, two people familiar with the matter said. It was still unclear whether it would allow for modifications, one of the people said.
...and two rather ominous soundbites from Tsipras:
- TSIPRAS SAYS GREEKS KNOW NEXT DAY WILL BE HARD FOR GREECE
- TSIPRAS SAYS GREECE WILLING TO MAKE TOUGH COMPROMISES
The PM probably meant “next day” metaphorically, but earlier this morning, Bloomberg, citing two people familiar with the matter, reported that “representatives from creditor institutions [are] said to be wrapping up a proposal to end [the] impasse on Greek bailout talks.”
Sure enough, rumors are now hitting the wires that Die Welt — the same Die Welt who last night reported that Greece may be ready to cross its “red lines” — is out saying that an EU official has indicated the troika has now reached an agreement on a deal.
WSJ is running something similar and the bottom line seems to be that, fed up Syriza's unwillingness to concede its election mandate, the troika will now write the agreement for Greece and Tsipras can either sign it or not. Apparently, the IMF has scaled back its demands for EU creditor writedowns (another loss for Athens) but remains skeptical of the entire undertaking.
Greece’s creditors have reached a consensus on the terms of a proposed deal to put to the Greek government, according to two people familiar with the talks.
Officials representing European institutions and the International Monetary Fund on Tuesday morning completed the draft of an agreement to unlock bailout aid for Greece, after key European and IMF leaders met in Berlin late Monday to overcome differences between Greece’s creditors, they said.
Eurozone governments and the IMF have agreed to press Greece for far-reaching economic overhauls, while the IMF has softened its insistence that Europe offer explicit commitments to relieve some of Greece’s debt burden, the people said.
Greece’s high debt remains a contentious issue in the background between the IMF and European lenders, led by Germany, but is not holding up the creditors’ proposal to Greece. IMF head Christine Lagarde warned at the Berlin meeting that debt restructuring will become necessary if Greece doesn’t enact thorough economic overhauls that improve its budget balance and lift its growth trajectory, these people said.
The creditors’ proposal for an agreement is expected to be put to Greece’s government soon. Greek Prime Minister Alexis Tsipras is expected to face politically explosive demands for tough reforms of Greece’s pension system, labor laws and other areas, as well as creditors’ insistence on painful budget measures to ensure that Greece runs a fiscal surplus before interest.
Greece’s creditors have opted to write a draft agreement for Mr. Tsipras to accept after months of negotiations with Greek officials made only slow progress.
Creditors admit that Mr. Tsipras could face huge political difficulties if and when he asks his ruling left-wing Syriza party to accept a tough deal.