News that new radical Greek government now has a negotiating platform for Finance Minister Yanis Varoufakis to take to his counterparts in the eurozone boosted Greek stocks on Tuesday.
But there is plenty of scepticism to go around after hearing the details.
The government wants the country’s bailout agreement to be overturned, reversing years of budget-balancing austerity policies. However, that austerity deal is required to keep the country’s public finances flowing.
Tensions are sky-high and, according to news agency MNI, one senior EU official says the situation is “berserk” and that “the Greeks are digging their own graves.”
Also Tuesday, Varoufakis told Parliament that Athens is not seeking a clash with its EU partners but isn’t avoiding one either.
“If you’re not willing to even consider a clash, you’re not negotiating,” he said to applause ahead of a confidence vote later on Tuesday. “We’re not seeking a clash. We will do everything to avoid it. But you’re not negotiating if you’ve ruled it out.”
Varoufakis added that the government would not accept any part of the bailout that increased the country’s debt, saying that 30% of the aid program was “toxic.”
According to German Finance Minister Wolfgang Schaeuble, it’s “over” for Greece unless they accept current deal.
Last week the European Central Bank stopped accepting Greek bonds as collateral in response to Athens abandoning its aid-for-reform program. On Tuesday, ECB Governing Council member Bostjan Jazbec defended the move.
“Sometimes we are unfairly made a scapegoat,” Jazbec said in an early release of an interview to run in Wednesday’s edition of German business daily Handelsblatt. “The ECB cannot solve all problems.”
Greece’s proposal, first reported by the prominent news agency ANA-MPA, will be presented at a meeting of the Eurogroup on Wednesday.
These are the main points:
- A “bridge” agreement on funding (a loan to tide Greece over through the spring and summer) until a wider deal can be negotiated in September.
- 70% of the current structural reform programme will be completed.
- 10 further reforms will be agreed with the OECD.
- Greece will run a 1.5% government primary surplus (raising more in tax than it spends on everything except debt interest), rather than the 3% currently planned.
- Debt relief — probably in the form of debt swaps Varoufakis has previously proposed.
- A bundle of measures to ease Greece’s social crisis, like subsidized meals for low-income and unemployed families, costing less than €2 billion.
Many of the points look quite reasonable. After Tsipras’ showdown speech on Sunday, implementing 70% of the planned structural reforms sounds like quite a lot. Pledging to continue running a primary surplus (even one smaller than currently planned) is also a major compromise.
It already sounds like the government is making good on its new stance. According to the Wall Street Journal, Greece has backtracked on their privatization policy, with the Journal reporting that the state-owned Port of Piraeus, which was due to be sold off under the last government — a decision Syriza promised to reverse — will now move forward. This would be a massive concession to the rest of Europe.
On Tuesday, stocks in Athens gained about 8% as the flood of headlines hit markets:
It remains to be seen how open European governments are to these changes. Some, like Finland and Germany, have signaled very little intention of changing course, and even debt swaps (less of a giveaway than the write-offs Greece’s Syriza party wanted) may be too much to bear.
Either way, Varoufakis is clearly trying to make his programme seem reasonable and considered, leaving any finance ministers who disagree looking like heartless Scrooges.
This post was updated at 13:00 EST