Closed Live – Greek crisis negotiations

Greek Prime Minister Alexis Tsipras flew to Brussels on Wednesday morning to try to salvage a bailout deal amid increasing signs of unease among his nation’s creditors over the compromise offer he presented on Monday. Eurozone finance ministers held a meeting on Wednesday evening but without an agreement in place after a day of tense negotiations, it was expected that talks would have to continue on Thursday, the first day of a planned EU summit of national leaders.

By John Aglionby, Ferdinando Giugliano and Mark Odell

Good morning. The post-eurozone enthusiasm of Monday evening appears to be running aground on the reality of actually securing a deal that satisfies all parties – from the IMF to the Independent Greeks, the ruling Syriza party’s coalition partner.

Greek PM Alexis Tsipras is due in Brussels in a couple of hours for what are likely to be very tough talks with ECB president Mario Draghi, IMF chief Christine Lagarde and European Commission president Jean-Claude Juncker. Can a deal be salvaged?

The FT’s Kerin Hope and Claire Jones report that while the mood music might not be sounding great in Brussels, there’s more cheery news in Athens, where the Greek central bank did not ask the ECB to extend the emergency liquidity assistance to the country’s banking sector. That’s because about €100m flowed back into Greek banks yesterday.

In contrast to Greek bank depositors, the country’s markets are feeling less upbeat, according to the FT’s Kadhim Shubber.

Kadhim writes: Greek banks led the main Athens index down 2.33 per cent to 776.43 in early trading on Wednesday, as eurozone leaders gave the country four days to implement reforms and unlock sorely-needed bailout funds.

Attica Bank fell 8.7 per cent, while Bank of Piraeus dropped 7.29 per
and National Bank of Greece and Alpha Bank lost 6.69 per cent and
6.56 per cent

The decline follows strong gains on Monday and Tuesday, with Greek
equities still up more than 10 per cent this week.

More on the ELA, courtesy of the FT’s Valentina Romei, who has charted how the upper limit has risen (and risen) in recent months.

Officials in Brussels say the sticking points in the negotiations include VAT rises, pensions and corporate taxation. FT Brussels bureau chief Peter Spiegel has dived deep into the 11-page Greek proposal to show where there’s agreement and where there isn’t …

Here, in three images, is a summary:

Wires are reporting Tsipras as saying that the creditors did not accept his reform proposals.
Markets are starting to weaken.
More details coming up …

Jamie Chisholm, the FT’s global markets commentator, writes:

Reports on the Twittersphere that Greek prime minister Tsipras said the Greek proposals had not been accepted by creditors sparked a sharp and negative reaction in markets. The FTSE Eurofirst 300, the pan-European equity index, turned a 0.1 per cent gain into a 0.5 per cent loss and investors moved into the supposed safety of German bonds, pushing the 10-year Bund yield down 6 basis points to 0.81 per cent.

Fair to say Alexis Tsipras is not happy with Greece’s international creditors, Kerin Hope, the FT’s Athens correspondent reports.

Before boarding his plane to Brussels, the Greek prime minister said:

“The rejection of equivalent measures has never happened before. Not in Ireland, not in Portugal. Nowhere! This curious stance may conceal one of two possibilities: either they (the EU and IMF) don’t want an agreement or they are serving specific interest groups in Greece.”

It will come as no surprise that Greek equities are not reacting well to the Tsipras statement. The FT’s Kadhim Shubber writes:

Greek bank stocks have soured on reports Greece’s creditors have not accepted Alex Tspiras’s reform proposals.
Attica Bank and Bank of Piraeus have fallen further, now down 10.14 per cent and 9.65 per cent respectively, while National Bank of Greece and Alpha Bank have slid 5.83 per cent and 5.57 per cent.
The main Athens index is now down 3.27 per cent to 769, having dipped 4.26 per cent.

The FT’s Peter Spiegel and Kerin Hope have clarified what Tsipras said. He did not say the proposals had been rejected, rather that objections had been raised.

As Peter tweets:

Meanwhile, uncertainty over Greece has hit the German economy, according to a note by Unicredit, the Italian bank.

The Ifo business climate index declined from 108.5 to 107.4, marking the second consecutive decrease. While the current assessment component dropped for the first time after three increases, the business expectations fell for the third consecutive month. In our view, the latest decline has primarily been driven by uncertainties surrounding Greece.

The FT’s Paris bureau chief Anne-Sylvaine Chassany, hears that on debt relief the Greeks want a deadline for the debt relief talks to happen – not just a vague commitment tied up to conditions as in 2012.

She adds that officials are hoping that German finance minister Wolfgang Schäuble will adopt a softer stance this time – perhaps in the realisation that he may have pushed the envelope on Monday.

Anyone wanting to dive a bit deeper into market-related angles to the Greek crisis should read over today’s FT Alphaville Markets Live . Bryce Elder and Paul Murphy read various tea leaves, to mix metaphors.

Alexis Tsipras has just tweeted his unhappiness with international creditors.

And the European Commission’s reaction to the Tsipras tweets?

Another photo from the eurozone-IMF pre-Tsipras meeting:

European Commission president Jean-Claude Juncker (L), economic affairs commissioner Pierre Moscovici (2L) and IMF managing director Christine Lagarde (R)

Economists are very sceptical of the plan the Greek government has presented to international creditors. This FT piece explains why.

Many Greece-watchers fear the focus on fiscal consolidation and tax increases may trigger a repeat of what has happened over the past six years: a Greece that stumbles from one rescue programme to the next, rather than being able to stand on its own feet.

Tsipras has arrived at the European Commission for what are likely to be several hours of very tough talks. He made no statement on his arrival.

Henry Foy reports from Athens on how charities are struggling to plug the gaps in the Greek welfare system:

It was when young children began arriving at his hospital without rudimentary vaccinations that Anastasios Yfantis realised the dangerous extent to which Greece’s welfare state has been gutted.

Further gloom alert:

Stefan Wagstyl, the FT’s Berlin bureau chief, reports that Wolfgang Schäuble, Germany’s tough finance minister, has further damped hopes of an early agreement in the Greece crisis.

Not appearing to have changed his view since yesterday, Schäuble’s spokesman has said that the minister described the Greek proposals as a “starting point” for negotiation, that there was still “a long road ahead of us” and, after generous actions from the creditors, it was now “only for the Greek side to move”.

More from Stefan Wagstyl in Berlin:

Berlin expects Greece’s three bailout monitors to iron out any differences they may have and come to a joint position. A senior German official said: “I assume that the three institutions will come to a common judgement.”

Markets update from the FT’s Michael Hunter:

Banks remain mired in losses at the bottom of a retreating Athens General stock index. Bank of Piraeus is now down 11.5 per cent, while National Bank of Greece is 9.2 per cent lower. Eurbank Ergasias is down 8.8 per cent and Alpha Bank is down 9.2 per cent.

Overall, the Athens General is down 4.4 per cent to 760.46.

Meanwhile, Greek sovereign debt yields are climbing.

The yield on government paper due in 2017 is up 88 basis points at 22.032 per cent, with the yield on 10-year notes up 25bp at 10.837 per cent.

To highlight just how confusing it is to ascertain just where the negotiations are, Kerin Hope reports from Athens that a government source says the Greek side has rejected “counter proposals” the creditors reportedly put forward earlier today.

This does then beg the question what is being discussed if both sides are not accepting the other side’s proposals …

Kerin has handily answered my question from the previous entry.

The government leaked a Greek translation, not the original document, of what they said were the IMF’s counter-proposals.

They then said the Greek side had rejected the self-same counter-proposals.

Kerin believes this was done to reassure Greeks the govt is fighting their corner and to put the ball back in the court of Lagarde, Juncker and Draghi.

Kerin Hope has got hold of the creditors’ counter proposal to Tsipras’s reform proposals and Peter Spiegel has dissected it in this Brussels Blog post.

The major point of contention is over pension reform.

Word of warning – there’s lots of red pen!

Greek markets update from Kadhim Shubber:

Greek bank stocks have pulled back some of their earlier losses, with
the Athens General stock index down 2.2 per cent to 777.53, having
dipped 4.4 per cent earlier in the day

Bank of Piraeus is down 8.47 per cent, a slight recovery from its
earlier 11.5 per cent fall, while Eurbank Ergasias and Alpha Bank are
also doing a little better, down 8.16 per cent and 7.21 per cent
respectively. National Bank of Greece is 5.83 per cent lower and
Attica Bank is down 5.8 per cent.

Further gloom alert:

Kerin Hope in Athens has the following reaction to the creditors’ edits to the Greek government’s proposals:

A senior Greek official says,

“The IMF stayed with their original harsh line. We didn’t expect that and we can’t accept it.”

It must be that time of day for me to take over the blog on Greece and the seemingly perpetual negotiations. And don’t take that from me, these are the thoughts of Carl Bildt, who knows a thing or two about mediating in a crisis.

One of the Greek opposition parties, not surprisingly, is on the same page as the creditors when it comes to cutting spending v raising taxes.

The well-respected blog MacroPolis has just posted this article as a reminder of why Tsipras is so reluctant to sanction a cut in defence spending. It follows revelations by the FT’s Peter Spiegel last week that two of Greece’s three bailout monitors – the European Commission and the ECB – were pushing Athens to cut defence spending.

Here’s an excerpt from today’s MacroPolis blog post:

However, Greece also has its own domestic security reasons for maintaining its military at a certain level. While relations with Turkey are much improved compared to the tension-filled days of 1996, when the two countries almost went to war over Greece’s Imia islets, a threat still remains. Dozens of Turkish air force jets conduct unauthorised overflights in Greek air space each year. More recently, Turkish warships have also entered Greek waters without permission.

Ankara still maintains the casus belli principle it adopted in 1995, by which it would deem a unilateral move by Greece to exercise its legal right to extend its territorial waters to 12 miles as a cause for war.

We should point out that this is very much a perceived threat from Turkey and business relations between the two countries are fine, as is tourism, but as Kerin Hope, the FT’s Greece correspondent, puts it: the “old fears still stalk the Greek defence ministry under Syriza”.

For all you French speakers out there the magazine Challenges has just published this interview with Christine Lagarde, head of the IMF.

She remains critical of the over-reliance of the latest Greek reform proposal on raising tax revenues. She tells Challenges:

You can’t build a programme just on the promise of improved tax collection, as we have heard for the past five years with very little result

Eurozone finance ministers are starting to arrive for what was being billed as the make-or-break meeting in Brussels this evening, although the way things have been going today it may well not be the last “make-or-break” meeting in this saga.

If you want to do some eurozone finance minister-spotting, click on this link where there is live video feed of the VIP entrance of the European Council’s Lex building where the meeting is being held.

The best I can say about the live video feed is that it looks like a beautifully sunny evening in Brussels and the road outside the Lex building is quite busy, so perhaps some of the finance ministers are stuck in traffic . . . .

Hold on, no wonder the feed is showing an empty drive. It appears there may be a delay to the start of the meeting because talks between Tsipras and the monitors are still ongoing. Although the FT’s Peter Spiegel says nothing has been decided as yet (in terms of starting time, at least).

And the signs from Athens aren’t great either – this from Derek Gatopoulos, a reporter with AP in Athens:

Ferdinando Giugliano, the FT’s economic correspondent, was feeling pretty pessimistic about an hour back:

The FT’s Peter Spiegel, who is preparing for what could well be yet another all-nighter, is quite rightly wondering where he will be getting the food and strong coffee from that he’s going to need to see him through into the early hours. It seems the Eurocrats are planning to starve the press pack from midnight, which is never a good idea.

Unless of course the press officers at the European Council know something others don’t . . .

Hold on, it looks like members of the eurogroup knew about the lack of sustenance according to Anne-Sylvaine Chassany, the FT’s Paris bureau chief, who has once again decamped to Brussels:

And now it appears that at least some of the eurogroup finance ministers are staying stumm, or maybe the French finance minister is lost in thought trying to figure out how he can get his hands on Bezard’s basket of cherries:

Belgian finance minister Johan Van Overtveldt does offer some thoughts and he doesn’t appear optimistic of a breakthrough:

But I’m afraid we’re back to the silent treatment on the doorstep. As Italy’s finance minister, Pier Carlo Padoan, walks straight in:

I also spotted Dusan Mramor, the Slovenian finance minister, dash in without uttering a word.

And Mario Draghi, head of the ECB, ducked the press pack too:

The FT’s Anne-Sylvaine Chassany, the FT’s Paris bureau chief, has more on the thoughts of Belgian finance minister Johan Van Overtveldt:

And now to Slovakia’s Peter Kazimir, who spends quite a bit of time talking to reporters, largely no doubt as he realises it is the last time he’ll see the sun today:

The Slovak finance minister adds in a rather jovial tone (I caught him on the web cam):

And here’s our latest global markets overview from the FT’s Dave Shellock:

US and European stocks drifted lower and the euro edged ahead as a lack of progress in “cash-for-reforms” talks between Greece and its creditors made for an extremely cautious session.

Wait, Rik Winkel, the EU correspondent with the Dutch business paper Het Financieele Dagblad, is calling it differently. He reckons this won’t be an all-nighter at all, which could explain the cafeteria closing early:

And this may be a first: Jeroen Dijsselbloem, the Dutch finance minister and the head of the eurogroup, has just walked straight in:

And so did Greek finance minister Yanis Varoufakis.

It looks like Christine Lagarde, head of the IMF, just beat Mr Varoufakis to the meeting but said nothing either:

Valdis Dombrovskis, the European Commission’s vice-president for the euro, just summed it up when he told reporters “we are not there yet” and there were “still some issues” to work on and that he would now update ministers on where the talks had got to. He did not, however, suggest the meeting would be over quickly and agreed it could be a long night.

That did not cheer up the FT’s Peter Spiegel:

Hold on, now Peter Spiegel is saying that the meeting could be all over pretty quickly:

And there is some chatter around Brussels that there could be a eurozone summit on Friday specifically on Greece

Alexander Stubb, the Finnish finance minister, has just told reporters there won’t be a deal tonight or has he put it: “I would be positively surprised were we to get a deal tonight. There has been a lot of back and forth between the technical and political level.” He tells reporters there is nothing on the table “other than the leaks we have seen in the Wall Street Journal and Financial Times”.

Or you could sum up Mr Stubb’s comments this way:

Here is the view of the FT’s Anne-Sylvaine Chassany on Mr Stubbs response as reported in the Tweet by Open Europe (which rather annoyingly is only appearing as a link):

And this from Wolfgang Schäuble, the hawkish German finance minister, via Stefan Leifert, Brussels correspondent for German broadcaster ZDF:

And here is the last word from Stefan Wagstyl, FT’s Chief Germany correspondent, who sayd Wolfgang Schäuble was gloomy about the prospects of a deal. He said: “We are not much further along than we were on Monday.”

So that’s it from the Live blog team tonight after a day of intense negotiations and plenty of pessimism, in stark contrast to the optimism we saw earlier in the week.
Greece and its international creditors were struggling to narrow their differences for a deal to unlock desperately needed aid, after bailout monitors demanded more savings on the contentious issues of public pensions.
It seems there had not been enough progress during the day to present a deal to the eurogroup finance ministers who started their meeting at 8pm CET.
There were conflicting suggestions from ministers and officials as to how long the meeting might run but it seemed almost certain that negotiations would continue on Thursday. These will clash with a scheduled two-day summit of EU leaders, which is due to discuss the thorny issue of migration.
Expectations were growing that the agenda for second day of that meeting on Friday could include an emergency summit of the eurozone leaders to discuss Greece. The Live blog will return on Thursday, in the meantime, please check for updates on