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 The government of Prime Minister Alexis Tsipras has pushed two
packages of measures through parliament this month as conditions for
starting negotiations on a three-year loan program worth up to 86
billion euros ($95 billion) to keep Greece in the euro zone.
A spokeswoman for the European Commission said teams from the
creditor institutions were now in Athens. "Work has started, meaning
that the institutions are talking to the Greek authorities," she
said.
The talks had been due to start last Friday, but were delayed
because of organizational and security issues.
"Negotiations on a Memorandum of Understanding should now progress
as swiftly as possible," Commission spokeswoman Mina Andreeva told a
news briefing. Both sides say they want a deal concluded before Aug.
20.
Greece came close to the brink during a long stand off between the
government and its creditors, with Athens missing a debt repayment
to the International Monetary Fund and forced to close the country's
banks for three weeks.
Voters angered by years of austerity demanded by the creditors
rejected an earlier bailout offer in a referendum, but Tsipras later
agreed in Brussels to the lenders' terms as the crisis deepened.
The institutions involved in the talks are the European Commission,
the European Central Bank and the IMF, as well as the euro zone's
rescue fund, the European Stability Mechanism (ESM).
EU officials said the heads of mission of the Commission and the ECB
were already on the ground and the new IMF mission chief was due in
Athens by Friday to hold talks on a political level.
Andreeva said Greece had delivered "in a timely and overall
satisfactory manner" on promises made at a euro zone summit on July
13 of prior legislation to enable the negotiations.
"More reforms are expected from the Greek authorities to allow for a
swift disbursement under the ESM. This is also what is being
discussed right now," she said.
The banks have re-opened after the ECB increased emergency funding
but capital controls remain in place. Doubts also persist about
whether a severely weakened Greek economy can support another
program after a six year-long slump that has cut national output by
a quarter and sent unemployment over 25 percent.
Among politically sensitive measures held back from the initial
package were curbs on early retirement and changes in the taxation
of farmers to close loopholes that are highly costly for the Greek
state. A source close to the talks said these reforms were expected
to be enacted by mid-August.
However, touching pensions is sensitive with Tsipras's left-wing
Syriza party, which has already suffered a substantial revolt over
the Brussels agreement, and the main opposition New Democracy party
opposes ending tax breaks for farmers.
ACCESS PROMISED
EU officials played down the logistical and security issues that
have dogged talks between the creditors and Greece since Tsipras's
radical government took office in January, promising to free Greeks
from humiliation and imposed austerity.
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An EU official said access for the negotiators to ministries and all
relevant government bodies had been agreed. An ECB official said
part of the talks would take place at the Athens Hilton Hotel.
The talks will mostly cover a reform program that Greece must
implement to receive phased disbursements of loans, money it needs
to meet its debt service obligations and help recapitalize the
banks. However, an ECB policymaker said they would also cover debt
relief for Athens.
ECB Executive Board member Benoit Coeure said in a newspaper
interview published on Monday that the euro zone no longer questions
whether to restructure Greece's debt but rather how best to go about
it.
All euro zone countries wanted Greece to remain in the shared
currency bloc and were prepared to offer "unprecedented financial
solidarity" as long as Greece carried out reforms, Coeure told the
French daily Le Monde.
"In truth, the question is not whether to restructure Greece's debt
but rather how to do it so that it would be really useful for the
country's economy," he said.
"That's why it's important to make this restructuring, whatever form
it takes, conditional on the application of measures that reinforce
the economy and ensure the sustainability of Greek public finances,"
he added.
Coeure defended the ECB in the face of criticism about its handling
of Greece, notably the rationing of liquidity to Greek banks, saying
it had always stuck to its mandate during the crisis.
Five months of acrimonious negotiations had caused huge economic and
financial costs for Greece, and exposed how deeply flawed the euro
zone's decision-making was, he said, urging more integration in
order to take tough decisions effectively.
Germany's finance minister proposed at the height of the crisis that
Greece take a five-year "time out" from the currency bloc if it
could not meet the conditions.
"The genie of euro zone exit has escaped in the Greek crisis and
won't easily get back in the bottle," Coeure said.
(Additional reporting by Alexander Saeedy and Philip Blenkinsop in
Brussels and Leigh Thomas in Paris; Writing by Paul Taylor; editing
by David Stamp)
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