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 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.
Senior EU officials assessed the progress in talks between Athens
and its international creditors, with Germany warning against haste.
Greek Prime Minister Alexis Tsipras has tried 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.
The view of EU officials was that talks are proceeding smoothly and
may be completed over the weekend, one source said.
If a draft memorandum of understanding and an updated debt
sustainability analysis are ready as planned on Tuesday, the Greek
government and parliament would be expected to approve them by
Thursday.
This would open the way for euro zone finance ministers to meet or
hold a teleconference on Friday to endorse the up to 86 billion euro
three-year loan programme for Athens.
Greece would be expected to enact another package of reform
legislation before Aug. 20, in parallel with national ratification
procedures to receive a first aid payment in time to meet the ECB
payment.
"Everyone is working on Plan A - a deal with disbursement by Aug.
20," the source said.
Negotiations began on July 20, a week after euro zone leaders agreed
at an acrimonious all-night summit on stringent conditions for
opening talks with Greece on a third bailout to save it from
bankruptcy and keep it in the euro zone.
The source said no major differences had emerged among creditor
nations on the one-hour call of the Economic and Financial Committee
of deputy finance ministers, partly because there was nothing
immediate to decide.
Some countries, led by Germany, were keen to nail down more specific
long-term reform commitments in addition to the immediate actions to
be implemented, the source added.
Tsipras and French President Francois Hollande agreed at a meeting
on Thursday that a new deal should be concluded soon after Aug. 15.
"The objective is for the negotiations on the programme ... 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 also has said 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.
Earlier on Friday, commission spokeswoman Mina Andreeva said
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.
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The Sueddeutsche Zeitung said the German Finance Ministry favoured
another bridge loan to give Greece and its creditors time to
negotiate a comprehensive reform programme.
The ministry says a range of issues remain to be settled,
"especially around future conditionality," including macroeconomic
and budget targets.
That appeared to reflect Schaeuble's scepticism about whether Greece
is fit to remain in the 19-nation monetary union. He proposed last
month 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.
Schaeuble was overruled by Chancellor Angela Merkel, who negotiated
a July 13 euro summit deal in 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.
SMOOTH NEGOTIATIONS
All sides agree the negotiations that began at expert level on July
20 have gone smoothly, with none of the obstruction and squabbles
over protocol and access to data and ministries that marked previous
rounds under Tsipras' leftist Syriza party.
A senior EU official said cooperation from the Greek side has been
"outstanding" with the institutions having had full access to
ministers, ministries, files and figures.
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. Other sensitive issues include taxation of
farmers, labour law, liberalising product markets and cutting
defence spending. On the creditors' side, the most sensitive issue
is debt restructuring to ease Athens' burden.
A senior Greek official said the two sides' assessments of the
macroeconomic outlook and primary budget balance targets were very
close and unlikely to be an obstacle to a deal.
However, the official said Athens sought to defer removing tax
breaks for farmers, particularly sensitive for the pro-European
opposition New Democracy party, until after aid is disbursed and the
first bailout review completed, three months into the programme.
Greece might hold early elections before then.
(Additional reporting by Jan Strupczewski, Julia Fioretti in
Brussels, Jeremy Gaunt in Athens, Gernot Heller in Berlin, Tatiana
Jancanikova in Bratislava; Writing by Paul Taylor; Editing by Leslie
Adler)
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