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April 28, 2016

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Greek talks are stuck

Donald Tusk rejected Greece’s request for a summit, as expected, but pressed the eurozone finance ministers to convene in the next few days, not weeks, to resolve disagreements with Athens. Wolfgang Schäuble says there is no need for a summit and that the problems are to be solved on a technical level, according to FAZ. They should not be linked with the refugee crisis, something Alexis Tsipras might have hoped for when asking for a summit. Tsipras and Tusk will have another call this morning to reassess the situation. 

The eurogroup officially cancelled its planned meeting for April 28, citing insufficient progress. But Jeroen Dijsselbloem said last night that Greece and the institutions are "getting close to a deal" on the contingency measures, and announced a eurogroup meeting next week or the week after.

The major disagreement is on contingency measures. Greece proposed a corrective system according to which each April, when Eurostat confirms the country’s fiscal data for the previous year, the Greek finance minister will be required to take corrective action if fiscal data deviates from target. Then, the finance minister would have to adopt spending cuts or revenue-raising measures to get public finances back on course. Greece’s Fiscal Policy Council could monitor this process and be involved in proposing measures, writes Macropolis. But there is resistance on the other side, from the IMF in particular. Instead of across-the-board cuts they prefer a list of specific measures to be agreed and legislated now. The Greek side, however, insists that legislating measures in advance is unconstitutional. Greek government spokeswoman Olga Gerovasili singled out the IMF as the main hurdle to conclude the review, saying the IMF is making demands which go beyond what was agreed last year. Inside Syriza, resistance to legislate more reform measures might well go beyond the Group of 53, of which Euclid Tsakalotos is a member.

We also get different messages from Brussels, Luxembourg and Berlin on what can be expected from Greece and when the next eurogroup meeting will be. Jean Claude Juncker told his commissioners that no democracy would accept such a demand for contingency measures. According to Greek Reporters, he also said that both sides are 95% close to an agreement and criticised the IMF on its hard stance. Klaus Regling says they are not even close to progress.

Roberto Gualtieri, chair of the economic and monetary affairs committee of the European parliament, said additional measures are difficult to justify also given that Greece outperformed its fiscal targets in 2015. He urged the eurogroup to discuss the Greek proposal and, if this is not possible, the EU political leadership to take over.

Our other stories

We also have stories on the meeting between the PMs of Spain and Catalonia; on Spain's budget overshoot in 2016; on securitisation legislation; on the chances for an Irish minority government; on why there will be a vote on Portugal's stability programme after all; an insightful comment on the French presidency; on the OECD Brexit report and why we distrust it; on what the Italians think about Weidmann in Rome; and on what the ECB is up against in Germany.

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