For the first time in months, there’s some genuine confidence ahead of Wednesday’s Eurogroup meeting.
The eurozone’s finance ministers have now had two days to assess the proposals for a bailout deal made by the Greek government, and there have been no major tantrums, so it seems like we may have the basis for a deal.
On the sidelines of the meeting, Prime Minister Alexis Tsipras will meet Jean-Claude Juncker, Christine Lagarde and Mario Draghi, the heads of the European Commission, IMF and ECB, the organisations formerly known as the “Troika”.
Greece needs to unlock its €7.2 billion ($US8.2 billion, £5.16 billion) bailout tranche to make debt repayments due this month and next, or it will default, which could bring down the country’s banks shortly afterwards.
Not everyone is happy with the deal — according to Reuters, one Syriza politician called it a “tombstone.” Another said the measures in the proposals would cause “social carnage” and are “not in line with the principles of the left.”
BNP Paribas analysts list the 5 major risks they think are still in the way of a deal (emphasis ours):
1. The plan is still subject to intense scrutiny and negotiation; 2. The Greek proposals include a debt write-off, which, while unavoidable, is still politically controversial; 3. A deal will have to be approved by the Greek parliament first and then by a number of national parliaments in creditor countries, including Germany’s Bundestag; 4. Capital controls may still be needed even if a deal is struck; and 5. last but not least, a deal by the end of the week would only involve the review of the current programme. Greece and its creditors would still have to agree on a new programme
The Syriza coalition, which was cobbled together over years out of political necessity, is now under intense pressure. Tsipras can’t be certain that his deal will get support from his own movement.
Barclays’ George Saravelos noted earlier this week that the deal will have to be approved by the central committee, which represents the fractious and varied political movements that make up Syriza. It could then stumble with Tsipras’ own parliamentarians.
It’s not clear how much opposition there is to Tsipras’ deal among Syriza, but many activists are far more comfortable with the prospect of leaving the eurozone than the country is generally.
What’s more, the Greek camp seems to have gained very little in negotiations over recent weeks, and it’s not long since Tsipras was calling the position of the Troika of lenders “absurd” himself. Pensioners rallied in Athens yesterday too, protesting against the reported retreat on Greek pension system reforms.
Though a deal seems much closer now than it did a week ago, the same basic problem stands in the way: There is nothing which could be agreed capable of satisfying both the International Monetary Fund, Greece’s European creditors and a large part of the coalition governing Greece.
Whether Tsipras can hammer together a deal that satisfies just enough people to squeak through the gaps still isn’t clear.
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