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13/07 – Greece’s future in the Eurozone is still uncertain

All European media report that Greece’s future in the Eurozone remains uncertain. Once again, marathon talks in Brussels this weekend broke up without any agreement between countries advocating a hard line toward Greece, including Germany and the Netherlands, and those such as France and Italy, calling for an agreement to keep Greece in the euro area. But late last night reports stated that the discussions were moving away from a Grexit and that there were hopes that the ECB would increase the ELA to Greek banks today.

Euro area leaders weighed plans that would require Athens to adopt some economic policy changes – including VAT hikes, pension cuts and a scaled-up privatisation programme – within two days to assure creditors of the country’s ability to manage its finances and qualify for a third bailout in five years or face effective expulsion from the single currency. European media report that the main novelty would be the creation of a €50 billion fund supervised by creditors to which Greece would have to transfer saleable states assets and whose benefits would be used to reduce the country’s mountain of debt. The Parliament and government in Athens will have to vote on the reforms on Wednesday.

The Guardian writes that according to a draft Eurogroup statement, policymakers insisted on the fact that it was up to Athens to win back creditors’ trust. Luxembourg PM Xavier Bettel, who is heading the EU for the next six months, highlighted the need to rebuild trust, adding that the target is for Greece to be kept in the euro area under conditions, SKAI TV reports. In an interview with Tagesthemen Extra, European Parliament President Martin Schulz claimed that a third aid package can only be decided on if trust is restored.

An assessment of Greece’s situation prepared over the weekend by the finance ministers put Greece’s financing needs at €82 billion to €86 billion over three years, all media report. SKAI TV also refers to EC President Jean-Claude Juncker in saying that he “will fight until the last millisecond for an agreement.” Some media, such as The Wall Street Journal Europe write that following this weekend’s talks on the Greek bailout, investors are braced for another volatile Monday.

Several media comment on the outcome on this weekend’s talks. British media comment that having to decide between stringent austerity measures or leaving the euro area is a terrible choice for Tsipras, with London Mayor Boris Johnson writing in the Daily Telegraph that Germany demands for the seizure of Greek assets are tantamount to tyranny and have to be resisted. Corriere della Sera refers to those measures as “humiliating and disastrous.” In Libération’s editorial, David Carzon writes that the turn taken by this weekend’s negotiations, with the most intransigent countries arguing that trust in Greece is broken, looks like a victory of selfishness and a bad sign for the very idea of Europe.

L’Opinion‘s editorial warns that the EU could “become a land of irresponsibility where suspicion outweighs cooperation.” Il Messagero refers to Minister Matteo Renzi as saying that if some countries have decided to “get rid of Greece” they must take the responsibility to say so. According to Les Echos, the European Stability Mechanism, which has a capital of €80 billion and a loan capacity of €500 billion, has enough funds to rescue Greece.

La Croix states that both the Greeks and their creditors should water down their wine in the very short term as Greece has been making undeniable sacrifices and Germany’s intransigence is “dangerous” and “politically absurd.” In an interview with Corriere della Sera, Migration Commissioner Dimitris Avramopoulos claims that all proposals must be in the interest of European partners, but must be sustainable for Greece. Nevertheless, in Les Echos, Nicolas Barré argues that EU member states are right to wonder if they can trust Greece with the savings measures requested in return for an additional €80 million loan. In an article in Profil, Franz Schellhorn writes that as Greece’s debts were already cut and its citizens consume more than they earn, the EU now has the chance to signal to the countries of the euro that their fiscal conduct has consequences.

French and German media also widely comment on the Franco-German confrontation to keep Greece in the Eurozone. Berthold Kohler writes in FAZ that the crisis can do the most damage with regard to the relationship between Germany and France, as the room for compromise between Paris and Berlin’s opposing views in policy has gradually become smaller. Le Quotidien quotes the harsh words of Jean Asselborn in a German media: “If Germany aspires at a Grexit, this will cause a deep conflict with France. It would be a disaster for Europe,” recalling that Germany needs to “avoid conjuring up the ghosts of the past.”

According to Le Soir, Yanis Varoufakis said he is convinced Mr Schäuble “wants to eject Greece to frighten France and make it accept his model of a disciplinary euro area.” Writing in El País, professor of political philosophy Daniel Innerarity suggests that Greece’s debt crisis is strengthening the case for transforming Germany’s economic hegemony into leadership. Kathimerini highlights that for the first time a significant number of countries sided in favour of Greece, putting an end to Alexis Tsipras’ isolation.


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