The writing was already on the wall after several EU officials expressed reservations about the feasibility of striking any sort of compromise with Greece’s negotiating team in Brussels on Sunday, and now it’s official. Talks have once again ended with no deal as the Greeks are standing their ground on pension cuts and VAT hikes.
#BREAKING Greece bailout talks end with no deal, 'significant gaps' remain : EU— Agence France-Presse (@AFP) June 14, 2015
More color from Bloomberg:
Greek govt delegation in Brussels bearing proposals that can bridge gap between country, its creditors on fiscal, financing matters, Greek govt official says in e-mailed statement, asking not to be named in line with policy.
Greek govt will not accept cuts to pensions, VAT increases on basic needs goods like electricity.
IMF insisting on annual pension cuts of EU1.8b, or 1% of GDP; another EU1.8b of increased VAT revenue: govt official.
What this means is that Greece came to Brussels and presented the same "not serious" proposals Tsipras submitted last week. That is, Athens is willing to deal on fiscal targets and is more than willing to accept free money from the EFSF and ESM (which would be used to pay the ECB on July 20) but is not yet desperate enough to concede to pension cuts or VAT hikes. That means there will be no deal for now and all eyes will turn to a scheduled meeting of EU finance ministers on Thursday.
As we noted earlier today (and on countless occasions previously), 'deadlines' and 'ultimatums' are largely meaningless because even if Greece misses its June 30 bundled payment to the IMF, Christine Lagarde would need to send a formal failure to pay letter to the Executive Board. Only then would Greece actually be in default. It’s up to Lagarde to decide when to send that letter and she would have at least 30 days. The set up for EFSF loans is similar, and besides, it seems exceptionally unlikely that either EU creditors or the IMF would put Greece into formal default while a deal is working its way through the Greek parliament, meaning all Tsipras really needs to do is get something on paper that has a chance of flying with Syriza hardliners and get it to the floor before July 20, when a payment to the ECB comes due.
In other words: expect more contradictory headlines and more 'ultimatums' next week as this charade continues into its sixth month.
A sampling of headlines:
- EU: `THERE REMAINS A SIGNIFICANT GAP' BETWEEN PARTIES
- EU: GAP BETWEEN PARTIES `IN THE ORDER' OF 0.5%-1% OF GDP
- EU: GAP BETWEEN PARTIES IS ABOUT 2B EUROS ON ANNUAL BASIS
- EU: GREECE PROPOSALS REMAIN `INCOMPLETE'
- JUNCKER'S `LAST ATTEMPT' TO SEEK ACCORD MADE `SOME PROGRESS'
- EU: FURTHER GREECE DISCUSSION WILL NOW MOVE TO EUROGROUP
- EUROPEAN COMMISSION GIVES DETAILS IN TEXT MESSAGE