New York Times: Eurozone agrees to Greece talks in exchange for bailout payments


Eurozone finance ministers agreed on Monday to begin negotiations in Athens as soon as next week over much-needed overhauls in exchange for bailout payments, with Greece appearing to win a reprieve from the crippling austerity that it has faced for years.

The agreement fell short of an all-encompassing deal, with key questions unresolved over the shape of the changes to Greece’s pensions, as well as its tax and labor rules. But it is a positive sign ahead of a meeting this week between Chancellor Angela Merkel of Germany and Christine Lagarde, the head of the International Monetary Fund, who have taken contrasting positions on debt relief toward Athens.

Greece does not have to make another major debt repayment to its creditors until the summer. But with elections due in France, Germany and the Netherlands this year, the country’s bailout is threatening to become a major political issue across the region. European officials are particularly eager to head off another full-blown crisis if only to avoid giving succor to far-right parties in those polls.

Representatives of Greece’s main creditors will “go back to Athens in the very short term,” Jeroen Dijsselbloem, the president of the Eurogroup, which brings together the finance ministers of the 19-nation eurozone, said on Monday.

“I’m very happy with that outcome,” he told a news conference in Brussels.

The negotiations are the latest step in Greece’s yearslong debt crisis.

The country’s finances first came up for question as the global financial crisis unfolded, and the country has been reliant on bailouts since. But as a condition of that help, creditors have demanded painful austerity in a bid to reduce Greece’s debt, which stands at 180 percent of gross domestic product. That has meant heavy cuts to pensions and benefits, as well as an increase in the number of Greeks who pay tax.

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Those cuts have hit ordinary Greeks hard and sent the country’s economy into a tailspin. Unemployment is above 25 percent, and the economy has shrunk by a fifth since the financial crisis. Effie Achtsioglou, Greece’s labor minister, wrote in the Financial Times last week that Greek pensioners “already have barely enough to live on.”

That issue of austerity has also formed a crucial divider between two of Greece’s main creditors — Germany and the International Monetary Fund. The I.M.F., which has not yet said whether it would join a third bailout for the country, has argued for some measure of debt relief for Athens. Berlin and many other eurozone members have chafed at cutting Greece any slack, reluctant to seek taxpayer support for more aid.

Monday’s meeting appeared, however, to raise the specter of easing off on those tough conditions, with Mr. Dijsselbloem suggesting there could be a “shift from austerity to structural reforms” as part of efforts to draw the I.M.F. into the bailout.

Greece’s government welcomed what it called a “political agreement” and said that it had accepted creditors’ demands that structural changes to the country’s economy be enshrined in legislation. If agreed, those changes would come into force after the country’s third international bailout expires at the end of next year.

The I.M.F. also gave an upbeat assessment of the meeting. It said in a statement that it welcomed Greece’s progress in meeting the fund’s requirements and said that, on that basis, it had agreed to send officials to negotiate for reforms.

Source: NY Times