Greek talks ‘progressing’…so where’s the deal?

Cash-for-reform talks between debt-ridden Greece and its creditors have dragged on for months now, and fatigue is starting to set in – but officials insist that progress is being made behind the scenes.

The European Commission’s Economic Affairs Commissioner, Pierre Moscovici, told CNBC that there had been advancements, despite the lack of a concrete deal on reforms that Greece has to implement in return for more financial aid

“We have been progressing more in the last three weeks than in the previous three months,” Moscovici told CNBC Thursday.

Talks between the Greek government and those overseeing its bailout — the International Monetary Fund (IMF), European Central Bank (ECB) and the Commission — have been sporadic but ongoing since the so-called troika extended Greece’s bailout program by four months in February.

Greece has been slow to reform in that time, however, arguing with lenders over certain measures, including changes to the labor market and pension cuts. Yet the country is running out of money and Greece is due to make a large repayment to the IMF on June 5.

Talks were now focused on “serious matters,” such as tax reforms, Moscovici said, but more needed to be done.

“We are starting to discuss pensions (and) administrative reforms…But it’s true that we are not yet there, that a lot needs to be done and that the conditions for a full agreement, a comprehensive agreement, are not yet met,” he said. “This is why we need to work day and night because we want Greece to stay in the euro zone.”

Greece’s government intends to reach an agreement with its lenders on a deal by Sunday, Reuters reported Thursday, citing a spokesman, who brushed off comments from euro zone officials suggesting a deal was some way off.

Angel Gurria, secretary general of the Organisation for Economic Co-operation and Development (OECD), told CNBC that if there was a will to strike a deal, a solution could be found.

“My experience suggests that when everyone involved in the negotiation wants to strike a deal, eventually a deal is struck. I think this will be the case,” he said Thursday.

“Political leaders, the ministers, all understand the importance of arriving at a happy conclusion. I think the question is a lot in the details… The experts have to chip in, but my expectation is that there will be an agreement and that we will move forward.”

The prolonged talks are worrying international finance leaders, however, and were top of the agenda at this week’s Group of Seven (G-7) meeting in Dresden, Germany.

Christine Lagarde, the head of the International Monetary Fund (IMF), was quoted by the Frankfurter Allgemeine Zeitung newspaper as saying that talks with Greece could fail and may force the country into a debt default – and a possible exit from the euro zone.

“A Greek exit is a possibility,” she said in the interview, due to be published Friday. Such an eventuality would “not be a walk in the park,” she added, but would “probably not” mean the end of the euro.

A so-called “Grexit” was not a scenario that Moscovici thought likely, however, and he said the Commission was “dedicated” to keep Greece in the euro zone. But time was running out, he said, and a sense of urgency was needed to conclude talks.

“We are looking for the conditions of a real credible package now, and I say: ‘Well, it’s doable. It’s possible. It’s feasible. But in order to do that we must have the feeling of urgency because time is running short’,” he said, adding that there was no “plan B” for Greece.

“When you start talking about a plan B (it) means you don’t believe in your plan A. My plan, my only plan is Greece in the euro zone.”


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.