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Eurozone Nations Call On Greece To Restore Trust

  • Rikard Jozwiak

German Chancellor Angela Merkel says trust has been lost. (file photo)

German Chancellor Angela Merkel says trust has been lost. (file photo)

BRUSSELS -- Eurozone officials told Greece it must restore trust by putting reforms in place quickly to set the stage for talks on a new financial rescue package that would keep the nearly bankrupt country within the single-currency area.

At crisis talks in Brussels on July 12, EU leaders and ministers from the 19-member Eurogroup said they would do their best to keep Greece in the eurozone, with French President Francois Hollande saying the Mediterranean nation's exit would be a European "retreat" and should be avoided.

But with cracks appearing within the eurozone on how much to demand, German Chancellor Angela Merkel made clear Greece must restore trust after a rollercoaster week in which its people rejected a bailout in a referendum and Prime Minister Alexis Tsipras then changed course to seek new talks.

"I am here ready for another compromise," Tsipras said upon arrival in Brussels for a crisis summit with other Eurogroup leaders. "We owe that to the peoples of Europe who want Europe united and not divided. We can reach an agreement tonight if all parties want it."

Merkel said it would not be easy. Arriving in Brussels, she said that "the most important currency has been lost and that is trust. And reliability. That means that we will have tough discussions today and there will be no agreement at any price."

"I know that nerves are frayed, but it has to be ensured that the benefits outweigh the disadvantages," Merkel said.

European Council President Donald Tusk cancelled a summit of the European Union's 28 leaders that had been planned for the evening of July 12, but midday talks among the eurozone finance ministers were followed by the summit meeting.

Tusk said on Twitter that the talks would "last until we conclude talks on Greece."

European Commission President Jean-Claude Juncker said, "I will fight until the very last millisecond for a deal and I hope that we will have it."

But the European Union's commissioner for the euro currency, Valdis Dombrovskis, said it was "relatively unlikely" it would get the green light on July 12 to start talks for a new bailout for cash-strapped Greece.

Starting Monday, Tsipras will have to push reform legislation through parliament to convince partners in the eurozone to release immediate funds for Greece and begin negotiations on a new bailout program.

Finnish Finance Minister Alexander Stubb said eurozone finance ministers agreed to some "far-reaching conditions" for new talks to start, including a demand that Athens implement some of its promised reforms by July 15.

A document seen by Reuters said Greece must make changes in its value added tax (VAT) and pension systems, reform bankruptcy rules, and improve the independence of its statistics office before bailout talks can begin.

Six measures including the tax and pension reforms will have to be enacted by July 15 and the entire package endorsed by parliament before talks can start, a draft decision sent by Eurogroup finance ministers to the leaders showed.

The document included a German proposal to make Greece take a "time-out" from the eurozone if it failed to meet the conditions for a loan, but not all ministers endorsed that. Reuters cited a senior EU source as saying such a temporary exit was illegal and would not be in the summit statement.

"There is no temporary Grexit," Hollande said. "Greece is either in the eurozone or Greece is no longer in the euro zone, but in the latter case it's Europe that retreats and does not progress, and this is something I do not want."

Belgian Finance Minister Johan Van Overtveldt said the Eurogroup reached agreement on 90 percent of outstanding issues in their talks, leaving their leaders to resolve the rest.

The issue of trust -- or lack of it -- was prominent in the ministers' remarks.

"We need to have clear commitments, clear conditionality, and clear proof that those conditions will be implemented at the end of the day," Stubb said.

"Let's face it, the main obstacle to moving forward is lack of trust," said Italian Finance Minister Pier Carlo Padoan.

Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem said early July 12 that there is still “a major issue of trust” and “credibility” regarding Greece’s promises.

If there is no breakthrough, Greece could be left to go bankrupt and crash out of the eurozone.

Tsipras wants a 53.5 billion euro ($59.5 billion) bailout package to cover Greece’s massive debts until 2018.

Correspondents in Brussels quote diplomats who said there were sharp divisions about whether the latest Greek economic reform proposals go far enough to merit what would be a third bailout program for Athens.

The EU and the International Monetary Fund, along with the European Central Bank, have already provided more than 200 billion euros ($223 billion) in two earlier bailouts since a rescue plan began in 2010.

Germany has become increasingly frustrated with the current Greek government’s refusal to implement austerity measures that were promised by the previous Greek government as a condition for the earlier bailouts.

Berlin is now demanding that Athens accept harsh austerity measures in return for fresh funding.

With reporting by AP, Reuters, dpa, and AFP
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