Bailout deal near?: Alexis Tsipras Bailout Deal

Published: July 1, 2015

Bailout deal near?: Alexis Tsipras Bailout Deal, Greek prime minister Alexis Tsipras has made a fresh reform proposal to eurozone ministers, after his country became the first advanced economy to default on an International Monetary Fund (IMF) payment.

Eurozone ministers were to consider the latest gambit by the leftist prime minister in a conference call later on Wednesday (local time), even as debt-stricken Greece’s creditors poured cold water on the latest plan.

In a letter, seen by Reuters, Mr Tsipras said Greece could accept a bailout offer published on June 28 if several conditions were changed.

It appears the new conditions are almost identical to the bailout offer that was placed on the table last week, so it doesn’t appear that a lot has changed.

There are some sticking points which Greek prime minister Alexis Tsipras is hoping to have amended within this bailout.

Those are to do with with a 30 per cent VAT discount on the Greek islands. The islands are popular with tourists, so they want to ensure that the tourism industry continues to thrive.

Another condition is to do with pensions. The Greek government had offered to raise the pension age from 65 to 67. As part of the last bailout package, that was supposed to happen as soon as it was accepted by the Greek authorities. But Mr Tsipras is trying to have that pushed back to later this year.

Of course, these are conditions that Mr Tsipras is placing on the table. Germany in particular would have to agree to these given that it is owed so much money. German chancellor Angela Merkel has said that no decision will be made until after the referendum on the weekend.

There is a school of thought here in Greece that perhaps this latest move by the Greek authorities to accept a bailout, or accept most of the conditions attached to it, is politically motivated domestically.

That’s because Mr Tsipras has almost staked his prime ministership on the referendum, urging citizens to vote “No” this weekend. Perhaps he’s trying to get himself out of that position, so whichever way the vote goes he can hold onto power.

“The Hellenic Republic is prepared to accept this… agreement subject to the following amendments, additions or clarifications,” the letter said, referring to the reforms-for-cash contract binding Greece with its creditors.

The Greek government said any deal would have to allow Greece to maintain a 30 per cent VAT discount on islands, and postpone a 2012 pension reform until October 2015.

Although dated June 30, eurozone officials said the letter arrived after the 19 Eurogroup ministers had ended a conference call on Tuesday evening.

German finance minister Wolfgang Schaeuble effectively ruled out all negotiations, saying that no Greece deal was possible before Sunday’s referendum on bailout terms.

“First of all, Greece must clarify its position on what it wants, and then we will have to talk about it, under conditions that are now far more difficult,” Mr Schaeuble told a Berlin press conference.

The crisis is hitting hard in Greece, where banks will be closed all week, although about 1,000 branches opened on Wednesday to allow the elderly to receive pension payments.

The only option for everyone else was to queue – sometimes for hours – at cash machines to withdraw a maximum of 60 euros a day.

The Greek proposal was sent by Mr Tsipras to heads of the institutions that have overseen Greece’s two bailouts worth 240 billion euros since 2010, just as the European part of the EU-IMF bailout expired.


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