EU Impatient Over Stalled Greek Bailout Talks, Lagging Reforms

BRUSSELS – Top European officials are impatient about stalled negotiations between Greece and its bailout creditors, saying the government in Athens must step up its efforts to meet agreed-upon reform and privatization targets.

Greece must reach an agreement with its international bailout creditors to get the next installment of its 240 billion euro ($328-billion) emergency loan package in order to avoid default in May, when it has to pay back bonds worth about 10 billion euros.

The negotiations between Greece and the so-called Troika of creditors — the International Monetary Fund, the European Central Bank and the European Union — are months behind schedule amid disagreements over cost-cutting measures and reforms.

“We call on Greece and the Troika to do the utmost to conclude the negotiations,” said Dutch Finance Minister Jeroen Dijsselbloem, who is chief of the 18-member Eurozone. There is “far too little” progress, he insisted.

“I am sorry to say that the review is not yet concluded and further work is needed in Greece before the Troika can return to Athens,” he said. “We call on Greece and Troika partners to do their utmost to conclude negotiations as soon possible,” he added

The Eurogroup of finance ministers, which Dijsselbloem chairs, won’t approve paying out the next bailout loans unless there is a final agreement with the Troika, he warned, although that has often been the Troika’s tactic only to always relent in the end, fearing instability in Greece would jeopardize the entire financial bloc.

Dijsselbloem spoke after a meeting in Brussels where the creditors briefed the officials on the outstanding issues with Greece, including what he called a fiscal gap in this year’s budget and a lack of implementation of structural reforms.

The Troika puts the hole in the 2014 budget at up to 2.4 billion euros ($3.27 billion) although it could get wider after Greece’s highest court is reportedly set to rule that pay cuts to the military and emergency services personnel as part of austerity measures the lenders demanded were unconstitutional and must be repaid, at a cost of more than 500 million euros ($682.86 million) and the salary levels restored. Other public worker sectors now want the same relief.

“Progress is being made, but were not yet there,” said the EU’s top economic official, Commissioner Olli Rehn.

For the past four years, Greece has been relying on emergency loans after years of fiscal mismanagement left it with a mountain of debt and gaping budget deficit. In return, successive governments have had to slash salaries and pensions, raise taxes and sell off assets to reduce debt and make the economy competitive.

However, Greece is still struggling to emerge from a seven-year-old recession that saw its Gross Domestic Product fall by almost a quarter. Unemployment has risen steadily and stands at about 27 percent.

As they headed into the meeting in Brussels, ministers from other Eurozone nations suggested their patience is wearing thin as the latest negotiations with Greece keep dragging on.

“Greece must continue its successful trajectory, but further efforts are needed,” said German Finance Minister Wolfgang Schaeuble. “Greece must stay its reform course.”

Autria’s Michael Spindelegger also acknowledged that Greece had made significant progress, but added that Eurozone finance ministers are “indeed concerned regarding far-reaching reforms and the privatization program.”

Schaeuble noted that Greece’s fiscal data “looked good” but that “further efforts are needed,” while Spindelegger expressed concerns about structural reforms and a lagging privatization program.

Greek Finance Minister Yannis Stournaras said that further rescue funding is unlikely to be approved before March as European officials meeting in Brussels pressed Athens to intensify its reform efforts.

Stournaras was speaking at the conclusion of a summit of Eurozone officials in Brussels where Greece was not officially on the agenda but was discussed on the sidelines.

He said he hoped a deal could be reached with Troika officials next month, paving the way for the release of aid in March, and suggested that a primary surplus for 2013, estimated at 830 million euros, would help plug a fiscal gap for 2014. “The matter has been solved in a way that cannot be disputed,” he said.

He refused to discuss the problem of the military pay restoration which other analysts said would wipe out the primary surplus. Stournaras has been the country’s champion cheerleader for recovery and insists it’s on track this year and that there will even be a return to the markets. Greece has been locked out since relying on bailouts and after stiffing private investors, including Diaspora bondholders, with 74 percent losses in 2011.

Stournaras added that any fiscal gap for 2015 would be covered with structural reforms, not further austerity measures although the government has consistently failed to implement any of them nor gone after tax cheats fast enough to satisfy the Troika.

Apart from pushing Athens to move forward with stalled structural reforms and state sell-offs, Troika envoys have pressed government officials to adopt a raft of proposals aimed at removing barriers to competition.

The proposals are set out in a report by the Organization for Economic Cooperation and Development (OECD) and the government is prepared to adopt only 80 percent of them, it was reported after Prime Minister Antonis Samaras, the New Democracy Conservative leader, and his coalition partner PASOK chief Evangelos Venizelos discussed the matter

But the newspaper Kathimerini said it was told by unnamed sources close to Development Minister Costis Hatzidakis that there is resistance to many reforms, particularly among the ranks of PASOK. “Nothing has been resolved,” the source said. Venizelos has occasionally beefed about reforms but then relented.

Samaras said he wanted the talks wrapped up before Greece’s six-month term at the helm of the European Union Presidency expires on June 30 as critics said the government wasn’t prepared for the task.

(Material from the Associated Press was used in this report)