Differing accounts after late-night Greek talks

March 20, 2015

Hollande, Merkel, Dijsselbloem, Juncker, Tsipras, Tusk and officials during an EU leaders summit in Brussel

After late-night talks in Brussels with key EU leaders and institutional chiefs, Greek Prime Minister Alexis Tsipras assured his creditors that he would soon present a full set of economic reforms in order to unlock cash to stave off bankruptcy.

Since striking a deal last month to extend Greece’s bailout for four months, both sides have talked past each other and little has been done in Athens to meet its side of the bargain.

The three-hour meeting on the sidelines of an EU summit was called for by Tsipras to reach a “political deal” rather than dealing with awkward detail and numbers at a finance ministerial level.

Both sides spoke of a “spirit of mutual trust” but the message was clear – no reforms, no money – and the risk of a further standoff which could push Greece close to the euro zone exit was plain to see in the differing accounts given by Tsipras and Angela Merkel about what measures Athens needed to enact.

Tsipras said it was agreed that Greece did not have to pursue “recessionary measures” while Merkel said the Feb. 20 agreement must be met in full. The Greek premier hoped the European Central Bank would drop its refusal to allow issuance of more short-term debt but there is no sign of that happening.

Officials say Greece has enough money to get through April but no more. Deposit outflows from banks are spiking again, reaching 300 million euros on Wednesday, the highest level in a single day since the February deal with the euro zone staved off a banking collapse.

The EU leaders also agreed sanctions imposed on Russia will stay in place until a Ukraine peace deal is fully implemented, effectively extending them to the end of the year if need be.  The compromise papers over growing divergence in the bloc over whether to roll over the sanctions which expire in July. Now, the sanctions will be linked to the full implementation of the Minsk ceasefire agreement which the summit said is only foreseen by the end of 2015.

The European Union will also launch a first operation in a new propaganda war with Russia. Officials told Reuters a dozen public relations and communications experts would start work by the end of March in Brussels with a brief to counter what the EU says is deliberate misinformation from the Kremlin over Moscow’s role and aims in Ukraine and elsewhere in Europe.

Talks between Russian and Ukrainian energy ministers and the European Commission will take place in Brussels today to begin seeking a deal by around June on ensuring future gas supplies. Last year the Commission brokered three-way talks that led to an accord in October to keep gas flowing over the peak demand winter months. That deal expires on March 31, after which Ukraine is set to lose the discount negotiated last year unless a new deal is reached.

Day two of the summit will focus on economic governance, with the further leeway – until 2017 – given to France to get its budget deficit down to EU limits likely to be a focus. That has caused some disquiet about the bloc’s big beasts getting different treatment from their smaller peers. Turmoil in Libya is also on the agenda and it would be a surprise if the leaders didn’t say something about the massacre of 17 foreign tourists by militants in Tunisia yesterday and offer some support.

Six world powers are unlikely to reach a framework agreement with Iran on its nuclear work in the coming days as the sides are still far apart on key issues, a senior European negotiator said on Thursday, blaming Tehran for failing to compromise.

Tehran and the powers led by the United States are seeking a comprehensive agreement to curb Iran’s most sensitive nuclear activities for at least 10 years in exchange for a gradual end to sanctions. The powers aim to complete the framework of a deal by the end of March and fill in the detail by June 30. The U.N. nuclear watchdog is expected to give a monthly update on Iran’s compliance with terms of an interim accord struck with big global powers curbing its nuclear programme.

A clutch of credit ratings reviews are due, most notably S&P on Portugal and Nigeria, Fitch on Turkey and Moody’s on Cyprus.

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