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 Greek Prime Minister Alexis Tsipras is trying to force the pace of
the talks, keen to wrap up agreement on sensitive economic reforms
by mid-August, while many Greeks are on holiday, and receive an
initial aid disbursement by Aug. 20 in time to make a bond payment
to the European Central Bank.
Athens is negotiating with European Union institutions and the
International Monetary Fund for up to 86 billion euros ($94 billion)
in fresh loans to stave off economic collapse and stay in the euro
zone.
At a meeting in Egypt on Thursday on the sidelines of ceremonies for
the inauguration of a Suez Canal extension, Tsipras and French
President Francois Hollande agreed that a new deal should be
concluded soon after Aug. 15.
"The objective is for the negotiations on the program ... to be
concluded at the end of August. We know it’s difficult but we must
make sure that the conditions are met, in a good spirit," Hollande
told reporters.
Talks were going "in the best of directions", he added.
The European Commission too says talks are moving "in a satisfactory
way" and is keen to wrap them up soon, not least because of the
political sensitivity of arranging another bridge loan for Athens if
a deal is not ready in time.
Commission spokeswoman Mina Andreeva said she did not expect "any
particular decisions" from Friday night's meeting although
negotiations had begun on drafting a memorandum of understanding on
a loan agreement.
Germany, keen on fiscal discipline and far-reaching economic
reforms, is sceptical of any early deal and doubts a multi-billion
euro bailout can be agreed by mid-August.
"It remains completely open," said one politician from the ruling
coalition government, adding that Finance Minister Wolfgang
Schaeuble was taking a cautious view of comments by Commission chief
Jean-Claude Juncker on the chances of a deal.
Greece would not get a free ticket to new aid, the coalition
politician added.
The Sueddeutsche Zeitung said the German Finance Ministry favored
another bridge loan to give Greece and its creditors time to
negotiate a comprehensive reform program.
A ministry spokeswoman told a news briefing on Wednesday: "According
to our information, a range of issues remain to be settled,
especially around future conditionality."
Open questions included macroeconomic and budget targets which
required calm and thorough discussion, she said.
That appeared to reflect Finance Minister Wolfgang Schaeuble's
scepticism about whether Greece is fit to remain a member of the
19-nation European monetary union.
Schaeuble last month proposed that Athens take a "time out" of up to
five years from the euro if it could not meet the conditions, an
idea seen as a veiled expulsion from the common currency.
He was overruled by Chancellor Angela Merkel, who negotiated a July
13 euro summit deal under which Tsipras accepted tougher terms than
those he had previously rejected in return for talks on a three-year
loan to keep it in the euro zone.
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SMOOTH NEGOTIATIONS
All sides agree the negotiations that began at expert level on July
20 have gone smoothly in terms of procedure, with none of the
obstruction and squabbles over protocol and access to data and
ministries that marked previous rounds under Tsipras' leftist Syriza
party.
There have been few leaks on the substance - partly because many
officials are on holiday but also perhaps a sign of serious intent
on both sides.
Greece reported progress this week on pension reform, a sticking
point in the past, but other sensitive issues include taxation of
farmers, labor law, liberalizing product markets and cutting defense
spending. On the creditors' side, the most sensitive issue is debt
restructuring to ease Athens' burden.
EU sources said Friday evening's conference call of the Economic and
Financial Committee of deputy finance ministers of all 28 EU member
states would be briefed on the state of play and, if talks were
really far advanced, might prepare the way for a teleconference of
euro zone finance ministers next week.
If more issues remain open, they could discuss conditions for a
second bridging loan of up to 5 billion euros to enable Athens to
meet the ECB bond redemption deadline, they said.
Greece has said it doesn't want more bridge finance, and non-euro EU
countries such as Britain and the Czech Republic are not keen to add
to last month's loan from the European Financial Stability
Mechanism.
However, new rules were formally enacted this week to ensure the
contributions of non-euro states would be guaranteed by euro zone
funds in case such a loan were required.
One senior euro zone official who will be on Friday's call said
advances so far in the negotiations suggest an agreement should be
ready just before Aug. 20, but an EFSM loan might be available as a
backup if it takes a little longer.
(Additional reporting by Jan Strupczewski, Robert-Jan Bartunek in
Brussels, Jeremy Gaunt in Athens, Gernot Heller in Berlin, Tatiana
Jancanikova in Bratislava; Writing by Paul Taylor; Editing by Giles
Elgood)
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