WATCH ABOVE: Its collection agency, the European Union, is growing more impatient by the day. But as Vassy Kapelos reports, Greece must now convince its creditors that it will follow through.
BRUSSELS — Bailout discussions between the Greek finance minister and his skeptical counterparts in the 19-country eurozone will resume Sunday after breaking up following more than eight hours of talks without any apparent breakthrough that will secure the country’s future in the euro.
During talks on Saturday, Greece clearly failed to give what its creditors in the eurozone have been demanding — iron-clad proof that it can deliver on its promises to implement tough austerity and reform measures in return for billions more in rescue money.
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“We had an in-depth discussion of the Greek proposals and the issue of credibility and trust was discussed,” Jeroen Dijsselbloem, the eurozone’s top official, said on leaving the meeting.
The talks will resume at 11 a.m. local time (0900 GMT), just a few hours before the European Union’s 28 leaders are meant to descend on Brussels for a summit that has been billed over the past week as Greece’s last chance to convince creditors that it deserves more financial help.
“It’s still very difficult but work is still in progress,” Dijsselbloem said.
The pressure was on Greece all Saturday even after the country’s parliament passed a harsh austerity package that it hopes will lead to a three-year bailout. Over and over in Brussels, finance ministers and top officials of the eurozone said the same thing — we don’t fully trust you to make good on your promises.
A European official present at the discussions, when asked what more needed to be discussed when ministers reconvene Sunday, said “everything.”
The official, who spoke on condition of anonymity because he’s not authorized to talk publicly, said ministers wanted “more specific and binding commitments” and that the Greek government’s proposals were “too little, too late.”
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Assuaging those concerns is the task facing Euclid Tsakalotos, who has been Greek finance minister for barely a week, following the resignation of his outspoken predecessor Yanis Varoufakis.
But he needs to do it as Greece desperately needs the money to avoid a financial collapse. Greece’s banks, according to some accounts, have barely enough cash in their vaults to see the country through the week.
Greece’s banks have been shuttered for the best part of two weeks and daily withdrawals from ATMs have been limited to a paltry 60 euros. The economy is in freefall and the country faces big debt repayments in coming weeks.
Early on Saturday, Greek Prime Minister Alexis Tsipras cleared one hurdle. Lawmakers in the Greek parliament overwhelmingly backed a package of economic reforms and further austerity measures, in the hope that it would convince European creditors to back a third bailout of the country. Greece has made a request to Europe’s bailout fund for a 53.5 billion-euro ($75 billion CAD) 3-year financial package but many officials in Brussels put that figure much higher.
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Still, the measures proposed, which include changes long-demanded by creditors, such as changes to pensions and sales taxes, weren’t enough to unlock an agreement in Brussels. Following months of deteriorating relations, creditors are demanding firm legislative action to back up the proposals at the very least.
German Finance Minister Wolfgang Schaeuble, who has taken a hard line on Greece over recent months, said the Greek government will have to do a lot more than just say it wants to reform if it’s going to get more money.
“We will definitely not be able to rely on promises,” he said. “We are determined to not make calculations that everyone knows one cannot believe in.”
Schaeuble was clear in who he blamed for the current crisis. He put that firmly on the shoulders of the radical left Syriza government that was elected in January on an anti-austerity prescription. The “hopeful” economic situation regarding Greece at the end of last year has been “destroyed by the last months.”
Finland is perhaps taking the hardest line of all. Reports out of the country said the coalition government was balking at further assistance for Greece.
The eurozone ministers have to give their blessing to Greece’s bailout request to the European Stability Mechanism. Traditionally, eurozone ministers agree by mutual consensus, though in exceptional circumstances a unanimous vote may not be needed.
READ MORE: Greece gets until Sunday for proposals to stave off collapse
Greece has received bailouts totaling 240 billion euros in return for deep spending cuts, tax increases and reforms from successive governments. Though the country’s annual budget deficit has come down dramatically, Greece’s debt burden has increased as the economy has shrunk by a quarter.
The Greek government has made some form of debt relief a key priority and will hope that a comprehensive solution will involve European creditors at least agreeing to delayed repayments or lower interest rates.
Tsipras has made much of the need for a restructuring of Greek debt, which stands at around 320 billion euros, or a staggering 180 percent or so of the country’s annual GDP. Few economists think that debt will ever fully repaid. Last week, the International Monetary Fund said a restructuring was necessary for Greece.
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