10/07 – Greece tabled proposals late yesterday evening

Media report that Greece tabled its proposals yesterday evening. They are already being examined by the institutions and will lead to a Eurogroup meeting on Saturday and a last-ditch summit on Sunday. British and Greek media consider the proposals to be a “capitulation” to the EU’s demands.

The Guardian reports that “the Greek government last night capitulated to demands for a raft of new austerity measures by reportedly submitting a package of reforms and public spending cuts worth €13 billion.” Kathimerini speaks of a package of painful measures, which has small differences compared to the proposal that was tabled by EC President Jean-Claude Juncker and was rejected by last week’s referendum.

However, the proposals lead some Italian media to say there are “promising signs” from Greece’s creditors of an accord (Il Sole-24 Ore), or that EU figures showed they are “amenable” to a deal with Greece (ilsole24ore.com), and that an accord with Greece is “within reach” (La Repubblica). La Repubblica reports that Commissioner Moscovici was “the most optimistic of all.” Indeed, he said that the “sensation” is that dialogue has started again, and that “there is a solution”.

Meanwhile, the issue of debt restructuring has come back on the table. The Telegraph reports that a chorus of countries and key institutions demand debt relief for Greece, in a shift that could break the five-month stalemate and avert a potentially disastrous rupture of monetary union at this Sunday’s last-ditch summit. Le Figaro reports that Angela Merkel is under increased pressure as the IMF, the US Treasury and European Council President Donald Tusk urged Germany not to reject Greek debt alleviation, each with their own motives.

Berliner Zeitung reports that IMF Managing Director Christine Lagarde offers the prospect of future loans for Greece on the condition of a debt cut of 30%, however, many partner states, including Germany, strictly oppose a debt cut. EC Vice-President Dombrovskis and Commissioner Moscovici talked to media, both saying they are waiting for concrete proposals and stressing that Greece’s place is in the eurozone.

EC Vice-President Dombrovskis told BBC’s Hardtalk that Greece needs to come with reform proposals this week and has serious problems with the sustainability of its public finances. Later on, we’ll have to assess the whole affair, and “realise that some reorientations and an improvement of the eurozone governance will be necessary,” Commissioner Moscovici told France Inter. Meanwhile, European Council President Donald Tusk told NRC that he fears a “Graccident”. He believes that Greece was given too much manoeuvring space to endlessly negotiate with Europe. “I think that from the start boundaries should have been tougher.”

Along this line, German media feature opinions of partisans of the hard stance on Greece. In an interview with Wirtschaftswoche, former US Deputy Secretary of the Treasury Robert Kimmit supports Angela Merkel´s insistence that Greece follow the rules of the euro area and states that Europe is devoting too much time and too many resources to the Greek crisis. In an interview with Bild, Estonian Prime Minister Taavi Roivas said that his people have an honest feeling of solidarity and are willing to help, however, they themselves have been through harsh reforms, and there is always a limit to the willingness to help. He adds that Greece needs to present a solid reform plan and stick to it.

In a guest article in Handelsblatt, the President of the German Centre for European Economic Research (ZEW) Clemens Fuest and the President of the German Institute for Economic Research (Ifo) Hans-Werner Sinn criticise the ECB for granting further ELA loans to Greece. ELA credits are meant to ease temporary liquidity shortages of solvent banks, not to grant insolvent banks the possibility to support ailing governments.