Greek plan – a detailed programme or vague list of ideas?

March 30, 2015

German Chancellor Merkel and Greek Prime Minister Tsipras leave after addressing news conference in Berlin

The Greek government has sent a reform package to its EU and International Monetary Fund creditors, hoping it will unlock desperately needed funds to stave off bankruptcy.

The line from Brussels so far is that the list is more a collection of ideas than something that could be presented to the Eurogroup. It needs to be hardened up.

The European Commission, IMF and European Central Bank, informally called the Brussels Group, have spent the weekend discussing the proposals with Greek government officials talking about a good climate of cooperation.

If that leads to an agreement that the plan passes muster, a Eurogroup meeting of euro zone finance ministers could be called later this week to nail down a deal.

The list estimates a primary budget surplus of 1.5 percent for 2015 – below the 3 percent target included in the country’s existing EU/IMF bailout – and growth of 1.4 percent. It includes measures to boost state revenues by 3 billion euros this year but will not include any “recessionary measures” like wage or pension cuts.

Trust in the Greek government has run short. The euro zone has steadily cut off short-term funding options. Only if the Greek sums add up will money from Greece’s extended bailout programme be forthcoming. There is ongoing debate about whether some of the money could be released once the list has been submitted or whether action on top of words will be required.

A source familiar with Greece’s financial position told Reuters last week Athens would run out of money on April 20 without new cash. Tsipras said at the weekend that he expected liquidity problems would be resolved immediately after an agreement.
He will address the Greek parliament this evening.

Ex-president Nicolas Sarkozy’s conservative UMP party and its allies won the second and final round of French local elections on Sunday with the far-right National Front making only limited gains.

Sarkozy’s bloc will take over two thirds of the 102 local “departements” councils, up from 41 now. The anti-immigration FN got 62 of its candidates elected, a big jump from the 1 it had before the vote. But that still represents less than 2 percent of the total and the FN did not manage to win control of any of the departements.

Hollande’s Socialist party limped in third and was set to lose half of the 61 departements it held before the election.

It’s early days but there are fledgling indications that some of Europe’s fringe parties are topping out in Spain, the Netherlands and Britain. This could be no more than a blip but it bears watching.

Saturday’s Nigerian elections were extended into Sunday due to hitches with the voting system. The vote pits President Goodluck Jonathan against former junta leader Muhammadu Buhari. The race is expected to be the closest since the end of military rule in 1999 and could see Jonathan lose power despite a successful recent offensive against Boko Haram militants.

Opposition supporters are disputing results from a turbulent southern state even before they were announced. Sporadic violence has claimed a number of lives but by Nigerian standards the poll has not yet been hugely violent. The vote count will begin today.

Britain’s parliament will be prorogued today and the campaign for May 7 elections officially launched. An opinion poll on Sunday gave the opposition Labour Party a four point lead after its leader Ed Miliband exceeded expectations in a TV encounter last week when he and Prime Minister David Cameron were interviewed and quizzed by a studio audience separately.

Statistically, the poll’s margin for error means the two parties are still neck-and-neck but Labour will have a bounce in its step and it shows why Cameron moved to deny Miliband the opportunity of a head-to-head TV debate.

It’s early days, but if the poll gap persists, the Conservatives will face growing pressure to broaden their campaign message beyond one of “competence versus “chaos” and the mantra of a long-term economic plan.

Warplanes struck Yemen’s capital Sanaa overnight and after daybreak on Monday on the fifth day of a campaign by Saudi-led forces against Houthi forces opposed to President Abd-Rabbu Mansour Hadi.

Riyadh’s move is the latest front in a growing regional contest for power with Iran that is also playing out in Syria, where Tehran backs Bashar al-Assad’s government against mainly Sunni rebels, and Iraq, where Iranian-backed Shi’ite militias are playing a major role in fighting Islamic State. Sunni monarchies in the Gulf are backing Hadi and his fellow Sunnis in the country’s south against the Shi’ite advance.

World powers intensified nuclear talks with Iran on Sunday, two days before a deadline for reaching a framework deal, which Israel hoped would collapse. The foreign ministers of the United States, France and Germany cancelled their travel plans for the next few days so they can push for the accord that would lay the foundations for a final settlement with Tehran by the end of June.

Officials told Reuters that Tehran had indicated a willingness to cut the number of centrifuges it uses to fewer than 6,000, thereby slowing its programme, and to send most of its enriched uranium stockpiles for storage in Russia.

The talk is of hope but of big gaps still to be bridged. Foreign ministers from the United States, Britain, France, Germany, Russia and China will hold ‎the first full meeting with Iran’s foreign minister this morning.

Germany’s Angela Merkel is in Finland to meet Prime Minister Alexander Stubb and President Sauli Niinisto to discuss the Ukraine crisis, Russia and EU defence policy.

On the economic front, German and Spanish inflation data for March will cue up the euro zone figure due later in the week which is forecast to edge up to -0.2 percent, way below the ECB’s target of close to but below two percent and demonstrating why it has launched into quantitative easing.

Both countries appear to be beneficiaries of “good deflation” whereby cheap oil and food prices put more money in people’s pockets and boost domestic demand.

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