Greece Gets Last-Minute Help From France on Bailout Proposal
ATHENS — As Greece
engaged in a last-minute scramble on Thursday to formulate a bailout
proposal that could determine whether it remains in the euro, France,
its most sympathetic ally among Europe’s big powers, stepped in to give a
helping hand.
While
the assistance appears to be mostly technical, it highlighted the
contrasting approaches being taken by the two leading powers in the
European Union. Germany has stood firm against concessions to Greece,
while France has thrown itself into the search for a deal.
The
French assistance appeared to be an effort to make sure the Greek
proposal, due by midnight, would be as thorough and salable as possible
to Greece’s creditors and would smooth the way for a compromise on a new
bailout package to keep Greece afloat financially and inside the euro.
“There
is a group of people who have been sent to help the Greeks, to try to
transform words into action,” said a French government official with
knowledge of the effort.
The
representatives of Greece’s main creditors — the European Commission,
the European Central Bank and the International Monetary Fund — are
scheduled to review the new proposal in Brussels on Friday. Any sign at
that meeting that Greece had assuaged its creditors by agreeing to
pension cuts, tax increases and other steps could make it easier to
reach a deal when all 28 leaders of European Union member states gather
on Sunday to decide once and for all whether Greece should receive
bailout funds or be pushed out of the eurozone.
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Reaching
the decision will also require an assessment by the 19 finance
ministers of eurozone countries. That meeting, of the so-called
Eurogroup, has been scheduled for Saturday afternoon in Brussels.
France has been the most steadfast major nation in Europe supporting Greece ever since Prime Minister Alexis Tsipras
was ushered in to power in January on a mandate to repudiate austerity.
Paris has been particularly outspoken in recent days about the need for
a compromise that would help Greece and hold the eurozone together.
France’s
posture has been a sharp contrast to that of Germany, whose chancellor,
Angela Merkel, has shown little inclination to compromise on demands
that Greece take actions to show that it can be fiscally responsible
before even considering new bailout aid.
Neither
French nor German officials would discuss France’s involvement in the
Greek proposal in any depth. But the development raised questions about
whether France and Germany have split heading into the final
negotiations or whether there is a back-room understanding between Paris
and Berlin that Greece needed further encouragement to make substantive
concessions if it was to retain the chance to stay in the euro.
Mr.
Tsipras and his team spent the day in meetings as they put together a
proposal and sought to ensure domestic political support for it.
In
one indication that European officials are trying to create a more
positive atmosphere for the end game of the negotiations, Donald Tusk,
the president of the European Council, the body that represents European
Union leaders, said on Twitter that both the eurozone and Athens needed
to make concessions.
Any
“realistic proposal from Athens needs to be matched by realistic
proposal from creditors on debt sustainability to create win-win
situation,” Mr. Tusk wrote after speaking with Mr. Tsipras.
Ms.
Merkel, speaking later in Sarajevo, reiterated her opposition to
actually writing off some of Greece’s debt, though she was less
definitive about steps like reducing interest rates or extending the
payment period as ways of helping Greece manage its indebtedness.
Germany
has taken an increasingly hard line toward Greece since the nation
voted no on Sunday to an earlier bailout program in a referendum that
sent political shivers across Europe. In the wake of the chaos sparked
by the vote, Ms. Merkel flew Monday to Paris to join President François
Hollande of France to discuss what to do next with Greece.
The
vote angered Mr. Hollande and another Greek ally, Finance Minister
Michel Sapin of France, both of whom issued stern warnings that the ball
was now in Mr. Tsipras’s court. On Thursday, Mr. Sapin took a harder
tone than he has in recent months, saying that while Europe should show
solidarity toward Greece, that would not be forthcoming if Greece did
not show responsibility.
The
eurozone’s credibility might suffer if Greece leaves the common
currency, Mr. Sapin added, but it might also suffer if Greece is allowed
to stay despite flouting the rules of membership.
But unlike a number of German officials, no politician in France has agitated to get Greece thrown out from the eurozone.
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Greece’s Debt Crisis Explained
The weak link in the 19-nation eurozone is struggling to
tame its debt. On Sunday, Greeks decisively rejected in a referendum
the terms of an international bailout.
When Greece in 2012 was the epicenter of the last flare-up in Europe’s long-running debt crisis,
many French officials steadfastly maintained that the euro currency
union was fundamentally a historic project, and that it should not risk
being broken up by the departure of Greece, nor of any other euro member
country.
That
sentiment was renewed by Prime Minister Manuel Valls of France on
Wednesday. “France refuses that Greece leaves the eurozone in the name
of our position and our commitments,” he told lawmakers in the National
Assembly on Wednesday in a speech that was broadcast live on Greek
television. To secure a deal, though, he said Greece needed to pledge to
modernize its economy and overhaul pensions.
He
also suggested that Mr. Tsipras’s most pivotal request — a program to
make Greece’s mountainous debt more sustainable — be taken seriously by
other European countries as part of any deal. Until recently, that has
been nearly a taboo idea in Europe’s halls of power, since European
taxpayers are currently on the hook if Greece defaults on its debts.
“There
can be no taboos. It is essential to establish a sustainable trajectory
for Greek debt in the coming years,” Mr. Valls said. “That is
obligatory to advance towards a long-lasting solution.”
The
United States has also urged a solution. In a flurry of recent phone
calls with the French, German and Greek leaders, President Obama and
Treasury Secretary Jack Lew have pressed all sides to come to a deal
that would avoid a breakup of the eurozone.
A
departure by Greece would hold not just financial and economic
implications for Europe and global financial markets, but geopolitical
significance at a time when the United States is grappling with
conflicts between Russia and Ukraine and a widening problem in the
Middle East.
The
situation has put Mrs. Merkel into the toughest position of her career.
She must balance between an angry German public, which sees no reason
to give Greece billions of additional bailout money or write down its
debt, when Athens for five years has made relatively scant progress in
reforming its economy.
Although
Greece has paid the price for austerity measures that have been pressed
upon the country to make up for politicians’ failure to make structural
changes that would get the economy growing again, Mrs. Merkel also does
not want her legacy to include a decision that weakened Europe, rather
than shoring it up as a great global power.
On
Thursday, as Mr. Sapin appeared alongside his German counterpart,
Wolfgang Schäuble, at a conference in Berlin, it was not clear that the
two sides were any closer to an agreement about the Greece problem.
Mr.
Schäuble said he would consider a proposal to restructure Greece’s
debt, but he expressed doubt that such a proposal would solve the
country’s underlying problems.
“In the days to come we will discuss whether there is an option, but I am skeptical,” he said.
He
called on the Greek government to demonstrate its good will by taking
concrete action in its Parliament to address calls by other eurozone
countries to improve the shattered Greek economy’s ability to grow.
“If
you really want to regain trust, why don’t you just do something,” Mr.
Schäuble asked rhetorically during the conference in Frankfurt organized
by the German central bank, the Bundesbank. “Go in front of Parliament
and just do it, implement a measure.”
Vice
Chancellor Sigmar Gabriel, leader of the Social Democrats, Ms. Merkel’s
coalition partners, expressed hope that a compromise would be found
now, but stressed that European interests are paramount. “It’s not a
case of bringing Alexis Tsipras to his knees,” Mr. Gabriel said. “But it
is certainly not that Europe should be brought to its knees.”
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