EU Frustration Mounts as Greeks Try to Bypass Aid Process

by Ian WishartRainer Buergin

10:37 AM EEST

April 24, 2015

Euro-area finance ministers voiced their frustration with Greece after Prime Minister Alexis Tsipras tried to bypass their veto on financial aid with an appeal to Angela Merkel.

With Greece running out of money and stalling over commitments to reform, euro-zone finance chiefs meeting in Riga, Latvia, Friday said the country’s authorities still haven’t shown sufficient progress on plans to revamp the economy to justify a loan payout.

“I demand very urgently that we get results on the table,” Austrian Finance Minister Hans Joerg Schelling said before sitting down for talks. “If you follow the media of the past days you hear time and again that ‘Tsipras says’ and ‘Tsipras thinks’, so apparently this has been moved to leaders’ level.”

Tsipras sought to circumvent the finance ministers’ authority less than 24 hours earlier, pleading his case with German Chancellor and French President Francois Hollande on the sidelines of a summit on immigration in Brussels. Under euro-area procedures, it’s the finance ministers who have to sign off on any aid disbursement and Merkel said last month she’s not prepared to override those controls.

Euro Exit

Greece’s anti-austerity government, elected in January on a promise to renegotiate the terms of a 240 billion-euro ($261 billion) bailout, has to present detailed proposals to European creditors for disbursement of the next bailout loan portion or risk running out of cash.

Even a default by Greece probably wouldn’t mean the country has to leave the euro area, economists say. The chances of Greece missing some of its debt payments in the coming weeks are 40 percent, while the probability of an exit from the bloc stands at 30 percent, according to median estimates in a Bloomberg survey of 29 economists. Almost four in five respondents said a default won’t trigger an exit.

In February euro-area finance ministers gave the government until the end of June to complete the deal, and said they expected a list of reforms by the end of April.

“We talk, talk and the substance is missing; we are waiting for real proposals and real figures, and time is running,” Slovak Finance Minister Peter Kazimir said. “I have almost no expectation for today.”

Stocks Climb

Concern the country would imminently run out of cash has subsided after Tspiras raided local government’s coffers to help cover the central administration’s obligations on Tuesday.

The benchmark ASE Index was up 4.4 percent at 12:30 p.m. in Athens on Friday, climbing for a third day.

It would be unwise to rule out the possibility of positive developments from the negotiations in the weeks to come, said Bloomberg Economics analyst Maxime Sbaihi.

“While some stumbling blocks remain -- notably on collective lay-offs -- the rapid deterioration of the financial situation in Greece should provide a big enough incentive for the authorities to start adopting a more conciliatory approach,” he said. “The negotiators don’t even have that many differences to bridge”

Tsipras used Thursday’s meeting with Merkel and Hollande to urge an acceleration of talks in order to reach a deal by the end of this month, according to a Greek government official who spoke on condition of anonymity.

Greece and its creditors have found common ground on the target for the country’s primary budget surplus being set at 1.5 percent of economic output for 2015 and also converge on the 2016 target, the official said, without specifying the 2016 figure. The two sides also have converged on privatizations, the official said without providing details.

‘Great Urgency’

Tsipras’s office has also established a hotline for direct contact with leaders of creditor institutions, according to two people familiar with the matter.

Dutch Finance Minister Jeroen Dijsselbloem, who leads the euro-area group, said he didn’t expect a decision on Friday.

“I think there’s a great sense of urgency for all of us to get a deal, but work has to be done” before the group of finance ministers can take a decision, he said.

“I’ve spoken to my colleagues in Athens and they’re determined to get a deal and they know that time is running out,” he said.

(An earlier version of this story corrected the spelling of the German Chancellor’s name in the first paragraph.)