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11/06 – Optimism returns after Merkel and Hollande meet Tsipras

In the coverage of the Greek crisis, optimism returns as media (Naftemporiki, Daily Telegraph, Corriere della Sera) report on the meeting between Angela Merkel, François Hollande and Alexis Tsipras on the sidelines of the EU-Latin America summit. Their meeting lasted about two hours and was characterised by all sides as friendly and constructive, according to Naftemporiki.

Angela Merkel is reportedly ready to accept an agreement with the Greek government if it promises to implement at least one of the main reforms requested by the international creditors. Commissioner Moscovici is quoted in The Daily Telegraph saying he thinks “more than ever” that a Greek debt deal is possible. And Vice-President Valdis Dombrovskis eased some pressure on Greece in an El Economista interview, claiming that it is possible “to trade off some of the measures, including pension cuts.” Vice-President Dombrovskis calls on Greece to present “clear, credible” proposals.

According to Het Financieele Dagblad, the fact that the EC Vice President is optimistic about the latest Greek proposals indicates that the EC does not want to give the impression that it has shut the door on further discussion with Greece. Dijsselbloem is however concerned that the Greek prime minister underestimates the complexity of what is being asked of him. In the WSJE, Greg Ip says that while it’s likely that Greece and its international creditors will strike some sort of deal to avoid default, the question is whether it will emerge any better off from a new bailout, with more capacity to grow and thus able to support its debts, than it did from prior deals.

Mr Tsipras will have have new meetings in Brussels with his counterparts, as well as with President Juncker. In a concerned tone, Skai TV reports that Mr Tsipras was “welcomed” with two “no” upon his arrival in Belgium. EC President Jean-Claude Juncker appeared unwilling to meet him, and while Mr Tsipras was welcomed with kisses and hugs by Mr Juncker on camera, Mr Juncker sent the message that the Commission’s trust towards Mr Tsipras has been lost behind the cameras.

Le Monde says the atmosphere is very tense in Brussels, as an agreement between Greece and its creditors once again seems very difficult to reach. An EU source says “we spend our time to-and-fro: two steps back, one forward” and quotes Mr Juncker saying that “Tsipras is losing one of his last friends. The European Commission has always been flexible so far and acted with respect towards Athens.” Other media quote EC spokesperson Margaritis Schinas saying that ball is in Greece’s court.

The Times reports that Brussels yesterday warned that the ECB would impose tighter rules on the security required for aid to Greek banks unless the Syriza government signed up to austerity measures. Several media report that the EC is not satisfied with the Greek proposals. Diário Económico’s editorial emphasises that the European leaders and Commission are losing their patience with Alexis Tsipras. Europe is wasting too much time on a country whose economy is worth 1.8% of eurozone GDP and whose debt represents 1.7% of its own GDP.

Some media also report that the ECB gave a liquidity boost to the Greek banks, increasing the extraordinary liquidity assistance (ELA) by EUR 2.3 billion, marking the biggest weekly increase of ELA since 18 February. In other news, Kathimerini reports that Standard & Poor’s downgraded yesterday Greece’s credit rating one notch further from CCC+ to CCC, mainly due to the uncertainty regarding the negotiations with the creditors and the postponement of the IMF payment. S&P is rather pessimistic about the developments, doubts the credibility of the Greek proposals and leaves open the possibility of a further downgrade.


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