Tense Talks

Sweetening the Deal

Tsipras-Getty
Alexis Tsipras has to decide whether to accept - or decline.
  • Why it matters

    Why it matters

    The new plan could prevent Greece from falling into bankruptcy and leaving the 19-nation euro zone – at least for now.

  • Facts

    Facts

    • Creditors want to help Greece make it through the summer by re-designating €10.9 billion earmarked for Greek banks and making the funds available to Athens instead.
    • Reform demands include increasing value-added taxes on some products, and pension cuts. A concession has been to reduce the primary surplus demanded of Greece in the current bailout program from 3.5 percent of GDP to 1 percent.
    • The International Monetary Fund has bought time by allowing Greece to delay a €300 million payment due Friday. IMF debts totaling €1.6 billion will be bundled instead and paid at the end of this month.
  • Audio

    Audio

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The Europeans have extended one more olive branch to Greece, holding out the prospect of additional financial aid that will get the cash-strapped Mediterranean country through the coming summer months, Handelsblatt has learned.

But the new money funds, totaling nearly €11 billion, are conditional on Greece agreeing to a slimmed-down reform package, something that remains highly in doubt as Greek Prime Minister Alexis Tsipras continues to resist committing to the kinds of structural reforms demanded by the country’s international creditors.

The new offer marks the climax of a grueling week of negotiations between Greece, the European Union and the International Monetary Fund. If the last-gasp talks fail, it could force Athens to declare bankruptcy and even exit the 19-nation euro currency.

The IMF has also done its part to buy the negotiators a little more time – the end of this month at the latest – before Greece runs out of money.

According to the Washington-based fund, Greece is taking advantage of a rarely-used provision to bundle its debt repayments to the organization. That means it doesn’t have to pay the IMF €300 million on Friday – instead it has to pay a full €1.6 billion due by the end of June.

The negotiators need all the time they can get. Sources said that nightly negotiations between European Commission President Jean-Claude Juncker and Mr. Tsipras have produced some positive results but no conclusive outcome.

Greece’s donors are hoping a new offer of extra money might finally break open the impasse.

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