Scepticism over Greek proposals signals tough bailout talks

Greek Prime Minister Alexis Tsipras delivers his speech as he attends a parliamentary session in Athens, Greece, on July 10, 2015.
Greek Prime Minister Alexis Tsipras delivers his speech as he attends a parliamentary session in Athens, Greece, on July 10, 2015. PHOTO: REUTERS

European ministers want Greek Parliament to enact reform measures to show it is serious

ATHENS • European hardliners led by Germany yesterday dampened expectations that a deal with Greece was at hand, questioning whether the government in Athens can be trusted to keep its word in exchange for a €74 billion (S$111 billion) bailout.

Greece's proposal "is not good enough yet", Dutch Finance Minister Jeroen Dijsselbloem said as he arrived for emergency talks with his euro area colleagues in Brussels.

Also, the failure to implement earlier agreements "is still a big concern", he said. The wall of scepticism came hours after Greek Prime Minister Alexis Tsipras won overwhelming support in Parliament for a package of spending cuts, pension savings and tax increases that would clinch the country's third bailout since 2010.

The finance ministers' talks will be followed by a summit today, the deadline for a new agreement.

Officials from the creditor institutions gave the proposals a cautious welcome, with International Monetary Fund chief Christine Lagarde foreseeing "a lot more progress".

A positive assessment of the Greek proposals delivered by the European Commission, European Central Bank (ECB) and International Monetary Fund late on Friday, along with bullish comments from Athens' key euro zone ally France, had raised expectations that the Eurogroup would green light new loan negotiations.

But several ministers said on arrival for the talks that more spending cuts and reform measures were needed, with swift enactment by Parliament to show that Greece was serious this time. German scepticism may yet overshadow that prospect, with Finance Minister Wolfgang Schaeuble saying: "We're going to have extraordinarily difficult negotiations."

With Greek banks shut and dependent on a credit lifeline from the ECB, the measures were seen as a last chance to avert the collapse of the financial system and prevent Greece's exit from the euro.

Mr Tsipras said he would now focus on securing a deal.

"Can the Greek government be trusted to act do what they are promising, to actually implement in the coming months and years?" Mr Dijsselbloem said. "I think those are the key issues." BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Sunday Times on July 12, 2015, with the headline 'Scepticism over Greek proposals signals tough bailout talks'. Print Edition | Subscribe