Greece faces ‘difficult’ eurozone judgment day

BRUSSELS ,Belgium – Greece’s eurozone partners were doubtful of a last-ditch bailout deal on Saturday, July 11, saying talks to stop it crashing out of the euro would be tough because trust in Athens had collapsed.

Hardline German Finance Minister Wolfgang Schaeuble led a chorus of scepticism about Greek Prime Minister Alexis Tsipras’s new reform plan aimed at a third debt rescue package worth more than 80 billion euros ($89 billion).

Parliament approved the leftist leader’s package of pension cuts and tax hikes in the early hours of Saturday, but there are doubts that finance ministers meeting in Brussels will back them ahead of a make-or-break EU summit on Sunday.

“We will have extremely difficult negotiations,” Schaeuble told reporters in Brussels.

“In the last months hope has been destroyed in an incredible way, even up to just a few hours ago. Definitely we cannot trust promises,” he added.

Minister after minister insisted on the need to rebuild trust with Athens after six months of torturous debt deal negotiations and a sudden referendum in which Greeks overwhelmingly rejected creditors’ bailout terms.

“We are not there yet. There is a major issue of trust – can the Greek government be trusted to do what they are promising in coming weeks, months and years?” asked Eurogroup chief Jeroen Dijsselbloem.

Irish finance minister Michael Noonan said it “would build trust” if the Greeks legislate as soon as next week on some of the reform plans, especially after Tsipras’s majority was “eroded” by the parliament vote.

’Armageddon’

Tsipras won the backing of 251 out of 300 deputies for his reform plans, even though they are similar to the ones that Greeks rejected in the referendum after he branded them “humiliating”.

Greece’s creditors fear it will not keep its promises after two previous bailouts worth 240 billion euros merely heaped fresh debt on a mountain worth nearly 180 percent of the country’s GDP.

Despite roundly voting ‘No’ last Sunday to accepting tough austerity terms for a bailout that expired June 30, Greeks are alarmed at capital controls that have closed banks and rationed cash at ATMs for nearly two weeks.

Queueing Saturday at a cash machine in Athens, Vassilis Papoutsoglou, 52, said: “We still don’t know what will happen tomorrow. Can we expect something better, or is it Armageddon?”

“When I go to the supermarket they don’t have many foods, even milk for the baby, the pharmacies don’t have any more (medicine),” added Marilena Mouzaki, 35, who was walking with her 11-month-old son.

The Greek government hoped the vote would give it an emphatic mandate to continue the talks with the creditors.

But it also revealed the depth of opposition to fresh austerity.

Three senior government figures were among 10 deputies who abstained or voted against and several others from the ruling leftist Syriza party stayed away, prompting commentators to predict a government shake-up.

Tsipras told parliament it was a “national duty to keep our people alive… we will succeed not only in staying in Europe but in living as equal peers with dignity and pride.”

The deal was “marginally better” than proposals put forward by the creditors last month that did not ease Greece’s 320 billion euro mountain of debt, Tsipras said.

50-50 chance

In Brussels there were some more hopeful voices.

IMF chief Christine Lagarde – who has echoed calls by Athens and the United States for part of Greece’s debt to be eliminated – was more positive, saying she hoped for “a lot of progress”.

Greece became the first developed economy to default on a huge payment to the International Monetary Fund on June 30.

EU economic affairs commissioner Pierre Moscovici said that “rapidly” putting reforms in action was “key to getting a programme, to be able to tackle the debt.”

EU sources who asked not to be named put the probability of a deal at no more than 50-50.

If eventually approved, Greece could receive between 74 billion and 82 billion euros from its EU-IMF creditors, including 16 billion euros from the IMF that is part of an old programme due to expire next March, sources close to the negotiations said.

EU President Donald Tusk has said the 28-nation European summit he will host in Brussels on Sunday is a “last chance” for Greece to seal a deal and avoid a disastrous “Grexit”.

And even if the leaders agree a deal, at least eight parliaments will have to weigh in, with Germany’s Bundestag having to vote twice. – Rappler.com