EU Economy
Athens leak suggests Juncker has plan for Greece
By Michael Hennigan, Finfacts founder and editor
May 19, 2015 - 7:35 AM

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Alex Tsipras, Greek prime minister, and Jean-Claude Juncker, European Commission president, Brussels, March 2015

On Monday a Greek newspaper claimed that it had a leaked copy of a new proposal from Jean-Claude Juncker, the president of the European Commission, on how to break the standoff between Athens and its creditors. Meanwhile Yanis Varoufakis, Greek finance minister, said he expects an agreement with bailout creditors to take place over the next week or so. However, he said the leftist government would reject any "non-viable" compromise.

Peter Spiegel, the head of the FT's Brussels bureau, says in a blog post that the To Vima newspaper says the Juncker plan envisions a deal with Greece which completely cuts out the International Monetary Fund and releases about €5bn in aid to Athens from three different sources: the €1.8bn remaining in the EU’s portion of the current bailout; €1.9bn in profits from Greek bonds purchased by the European Central Bank back in 2010; and another €1.3bn or so in additional Greek bond profits the ECB will get in July.

In exchange, Greece would agree to adopt a relatively short list of economic reforms that are significantly narrower from those being sought by the IMF and the Eurozone.

A Commission spokesperson said in a tweet that she didn't know if such a proposal exists — a convenient formulation to avoid confirming or denying.

Meanwhile, in a late night interview with Star TV, the Greek private television channel, Yanis Varoufakis said he thought creditors were eager to reach a deal.

"I think we are very close," Varoufakis said. "Let's say [it's a matter] of about a week."

Since the end of January, Greece's radical left-led government has been in on-off talks with the Eurozone, ECB and IMF on reforms that are required to get a release of €7.2bn installment of the current expiring bailout agreement.

Last week Greece met a €750m due payment with the IMF by transferring money from an emergency fund at the Fund and the media reported that in a letter Alex Tsipras, Greek prime minister, told Christine Lagarde, IMF managing director, that the country's financial situation was perilous.

The FT also reports that last week Poul Thomsen, head of the IMF’s European department, warned the IMF board that negotiations on the Greek economic reform package remained so unproductive that the fund could be forced to withhold its €3.6bn portion of the €7.2bn aid tranche.
Mr Thomsen insisted that the fund remained flexible on which reforms Athens needed to implement but told the board the programme must “add up” and begin lowering Greek debt to sustainable levels, officials said.

Varoufakis in his TV interview, said he would reject any compromise that the Greek government considered to be "non-viable."

The Greek government has "red lines" which include further pension cuts and increased market liberalisation.

"I assure you that if we face a dilemma between paying a creditor who refuses to sign an agreement with us and a pensioner, we will pay the pensioner," Varoufakis told the television channel. "I hope we will be able to pay both."

Eurostat data last week showed that the Greek economy contracted in Q4 2014 and Q1 2015 — two straight quarterly declines, which meets the European definition of a recession.

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