Merkel sets strict terms for Greek aid, Juncker flags EU cash

German Chancellor Angela Merkel, the euro zone’s main paymaster, said on Friday Greece would only receive fresh funds to ease a cash crunch once its creditors approve a comprehensive list of reforms it has promised to present soon.

However, she signaled some flexibility on what reforms Athens would have to make, and European Commission President Jean-Claude Juncker offered leftist Greek Prime Minister Alexis Tsipras a sweetener by saying 2 billion euros from the European Union budget were available to ease the humanitarian impact of five years of austerity measures.

Both leaders were speaking after Tsipras promised euro zoneleaders in overnight talks on the sidelines of an EU summit that his government would move swiftly to present a full economic reform package in a drive to avert bankruptcy.

After two months of growing frustration on both sides since Tsipras was elected with a mandate to end austerity, he held three hours of talks with the leaders of Germany, France and the main EU institutions to try to break an impasse that risks sending Athens stumbling out of the euro zone.

A joint statement by the EU institutions spoke of a “spirit of mutual trust” and Tsipras said he now felt more optimistic, but it remained uncertain whether he and Merkel were talking about the same reforms, and how far Greece would have to start implementing them before it receives any new cash.

The risk of a continued standoff, exactly a month after Greecesecured a last-gasp four-month extension of an EU/IMF bailout, was highlighted by comments from Merkel and Tsipras.

“The agreement of Feb. 20 is still valid in its entirety. Every paragraph of the agreement counts,” Merkel told German journalists who questioned whether she was now offering cash for promises.

Tsipras appeared to differ. “It is clear that Greece is not obliged to implement recessionary measures,” he told reporters. “Greece will submit its own structural reforms, which it will implement.”

Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam