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Greece and Europe Ready for Compromise, Not Armageddon

dimoskopisi708Greek Finance Minister Yanis Varoufakis sounded optimistic over tomorrow’s Eurogroup in his interview to the Sunday edition of newspaper “Kathimerini.” A solution “will be found even at the last minute,” he said.
Speaking of Greece’s European loan partners and their willingness to come to an agreement, Varoufakis said he is “convinced that Europe knows how to produce honorable agreements through honorable disagreements.” Despite the impasse reached on Wednesday’s Eurozone Finance Ministers’ meeting in Brussels, the Varoufakis said that European officials have agreed on several issues and “developments in the last few days have produced a significant level of optimism.”
Regarding his famous quote that Greece has no Plan B but Armageddon, Varoufakis said, “There is no Plan B in a mutually beneficial agreement,” adding that “negotiations are being carried out sincerely and with no suggestion of bluffing.”
However, Greek Prime Minister Alexis Tsipras did not sound as optimistic speaking to “Real News.” Tsipras said that tomorrow’s meeting will be very difficult for the Greek side, despite the “important step” that has been taken so far. He said it is still early to speak of an agreement and that the Eurogroup negotiations will be tough.
The Greek team of negotiators in Brussels tomorrow will be composed of Varoufakis, Deputy Foreign Affairs Minister Euclides Tsakalotos, Financial Experts Council President Giorgos Chouliarakis and Lazard executives, the firm that offers financial advice to the Greek government.
Athens will not agree to the extension of the current bailout program and will insist on the proposed “bridge program.” Great importance will be given to the wording of any kind of agreement.
Greece will agree on 70% of commitments from the existing bailout program and present proposals to replace the 30% of reforms the Greek government considers to be “toxic.”
The Greek side will proceed with reforms in registering real estate property and personal wealth of Greek citizens, licensing of television channels and radio stations, exports, the construction industry and the tax system. Also, there will be efforts to tackle tax evasion, fight corruption, reduce bureaucracy, bring a single payroll for all public sector employees and raise low pensions.
Athens will ask repayment of 1.9 billion euros from European Central Bank (ECB) profits from Greek bonds. It will ask for an increase of T-bills issuing threshold that now stands at 8 billion euros. It will also ask for the 11 billion euros in the Hellenic Financial Stability Fund (HFSF) to consolidate the Greek banking system. Finally, Athens will ask for the reduction of the primary surplus target to 1.5%. The target is currently set at 3% of GDP for 2015 and 4.5% for 2016.
So far, Germany has shown the hardest stance in negotiations, refusing to accept any solution other than the continuation of the existing bailout program. Yet, German Finance Minister Wolfgang Schaeuble spoke of “new contractual arrangements,” a euphemism for another bailout program, or “Memorandum.”
Despite her austerity beliefs, German Chancellor Angela Merkel has backed down on previous Eurozone crises. So on Monday’s Eurogroup, analysts say, it would not be surprising if Germany offers Greece an easier deal. Full of euphemisms, again, in order for both sides not to lose face.

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