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Greek Debt Talks Enter Familiar Summer Tumult
The Greek debt talks are entering an all-too-familiar stage, as the country's creditors on Monday sought to overcome a standoff over whether to give new aid to Athens.
Eurozone finance ministers discussed the bailout terms and for the first time formally debated ways to possibly ease Greece's giant debt burden. But the talks here on Monday were inconclusive.
The ministers said they would meet again on May 24 in hopes of signing off on a long-delayed review of whether Athens is complying with the terms of the 86-billion-euro bailout agreed to last summer — its third financial lifeline since the crisis began seven years ago.
Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers, told a news conference Monday evening that there could be an agreement leading to more aid for Greece at that May 24 meeting.
The Greek government said on Monday that it hoped an agreement would make it possible to dispense €5.7 billion, or about $6.5 billion, from the bailout funds.
Once again, though, there are wide gulfs between European officials, Greece and the International Monetary Fund over a continuing austerity program and the prospects of debt relief for Athens.
Greece needs the money to make a debt payment in July. If the parties involved do not come to terms, the country could default, and the markets could be put through another summer of tumult. A year ago, the jockeying over the bailout prompted fears that Greece could crash out of the eurozone and destabilize the wider regional economy.
The situation does not seem to have changed much in a year.
The I.M.F., a major creditor, has been threatening not to contribute to the bailout program if eurozone member states fail to offer Greece some debt relief. And although the Greek Parliament has narrowly approved a bill overhauling the debt-ridden country's pension and tax systems, workers in Greece started a three-day general strike on Friday, protesting austerity that has cut household incomes by a third, with around 25 percent of Greeks still unemployed.
The Eurogroup ministers have struggled for weeks to find common ground between their national governments and the I.M.F., which has demanded far-reaching guarantees to make the prospect of Greece paying back its loans more realistic.
In a statement on Monday, the finance ministers said that Greece must still put in place a "mechanism'' to ensure that additional austerity measures are "automatically implemented,'' if necessary.
Greek debt is around 177 percent of gross domestic product, and its potential to climb was underlined by an analysis prepared by the European Stability Mechanism, the eurozone bailout fund. That analysis, seen by The New York Times on Monday, showed that Greek debt could fall as low as 63 percent of gross domestic product by 2060 — or rise as high as 258 percent by that same year. The wide range was a result of different scenarios using variables like the Greek growth rate and the external economic environment.
The I.M.F. has also long sought to persuade eurozone countries to offer Greece some debt relief, arguing that the country's level of debt has to be cut. In a letter to the Eurogroup last week, Christine Lagarde, the fund's managing director, threatened not to contribute to the bailout program that was agreed upon last year if debt relief was not offered.
Germany, the main national lender, and a number of smaller countries that have endured austerity, are skeptical about whether Greece needs such relief.
"My assumption will be that there will be a problem of debt sustainability that we need to address," Mr. Dijsselbloem acknowledged during the news conference. "How big it is, when we need to address it, how we can address it, we will discuss in detail next Eurogroup," he said.
Euclid Tsakalotos, the Greek finance minister, warned over the weekend that imposing more pain on Greece could lead to the breakdown of bailout negotiations and the creation of a "failed state" in the region that could shake the currency bloc.
But on Monday, at a separate news conference after the finance ministers' meeting, Mr. Tsakalotos suggested that the plans for an austerity "mechanism" were acceptable to Greece.
Asked whether the "mechanism" would also be acceptable to the I.M.F., Mr. Tsakalotos indicated there could be still be more wrangling ahead. "The I.M.F. made it quite clear it wasn't its favorite mechanism — that it didn't think it was what it would have chosen," he said. "But I think there is a general recognition by the I.M.F. that we can only do what is legally possible."
There has also been mounting discontent among ordinary Greeks over the new measures. Protests during the weekend's general strike briefly turned violent on Sunday when hooded youths pelted the police with firebombs and stones outside the Parliament building in central Athens.
The package of measures includes 5.4 billion euros, or about $6.2 billion, in budget savings, chiefly stemming from an overhaul of the social security system, including more cuts to pensions and higher social security contributions. The package also includes higher taxes for Greeks on medium and high incomes, and higher levies on alcohol and cigarettes.
[Source: By James Kanter, The New York Times, Brussels, 09May16]
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