Forget any conciliation: what is going on behind the scenes a day ahead of the Eurogroup meeting is nothing short of disaster.
“The Greeks are digging their own graves,” warns one EU official, according to MNI, with another exclaiming the Greek plan as “hopeless” and added “how can you have a plan when you make no payment obligation till the autumn and then you probably scrap that.” Simply put, speaking on condition of anonymity, an EU official described the situation as “berserk” adding “there is no plan.”
The carefully orchestrated dance between the new Greek government and its European creditors appeared to crack Tuesday, with top Brussels officials infuriated by what they see as wildly misleading claims coming from Athens.
A senior European official, who spoke on condition of anonymity, described the situation as “berserk” and said, “there is no plan.”
“The Greeks are digging their own graves,” the EU official said.
At the start of the Tuesday, Greece floated its latest funding plan via press leaks, including to the Kathimerini newspaper, proposing a bridge financing programme that would lead to a “new deal” with creditors from September onwards.
There were reportedly four parts to the new deal: 30% of the existing memorandum with the Troika will be cancelled and replaced with 10 new reforms agreed with the OECD; Greece’s primary surplus target would be cut from 3% of GDP this year to 1.49%; Greek debt would be reduced via an already announced swap plan; and the “humanitarian crisis” would be alleviated via policies announced by Prime Minister Alexis Tsipras Sunday.
The first official described the plan as “hopeless” and added “how can you have a plan when you make no payment obligation till the autumn and then you probably scrap that.”
An exchange between the new Greek finance minister Yanis Varoufakis and Europe’s representatives, Thomas Wieser and Declan Costello, on Sunday was not successful, according to a source with knowledge of the encounter. The source said the Greek side gave the impression that if the Eurogroup did not agree with its stance, then the creditors could “go to hell.”
“For the Eurogroup to just agree new liquidity puts an awful lot of faith in a new government, without knowing what’s planned,” he said. “The ECB has stopped support, the EFSF and ESM need programmes and bilateral loans would be hard to pass domestically.”
Meanwhile, the only advisor to the new Greek government, the investment bank Lazard, is not seen as playing a positive role by the EU side to date.
One EU official described the Lazard bankers as “incompetent” and “counterproductive.”
Meanwhile, we may have just hit peak trial balloons. Too bad the ECB can’t monetize those when it runs out of Bunds to buy.