Bizarrely, there were leaks and news reports of progress all day on the meeting of Eurogroup ministers on a bailout memorandum. That would amount to a capitulation by Greece, since as we discussed earlier today, “bailout” in this context means an extension of the current deal with the Troika, with Greece continuing to adhere to the existing terms, including labor-squeezing structural reforms when Syriza has promised to raise minimum wages and hire 300,000 unemployed workers.
Here, for instance, was a 5:21 PM story from Bloomberg:
But just before 6:30 PM, the GreeK government announced that any discussion of a bailout memo was off. From the Guardian, quoting the Greek statement:
At this euro group there has been no agreement.
An extension of the memorandum cannot be accepted. Negotiations will continue with the goal [of achieving[ a mutually beneficial agreement.
The Guardian’s take on the press conference following the day of talks:
That’s the shortest, and most disappointing, press conference I can remember covering since this financial crisis began.
The failure to agree a statement, even a holding one, suggests that the two sides have made desperately little progress tonight.
From my vantage, as bad as the terse remarks were, this was the worst sign:
We didn’t agree the common ground that will allow officials to start work now, ready for Monday, Jeroen Dijsselbloem reiterates. We need a political agreement first.
But the two sides had no common ground before the day started. This was Bloomberg’s summary earlier in the day of the two sides’ positions:
Greek Finance Minister Yanis Varoufakis presented his European counterparts with four principles for a new financing deal, according to two euro-area officials, as Greece battles to stave off a cash crunch and stay in the currency bloc.
Greece wants a deal that provides for financial stability, financial sustainability and debt restructuring, while addressing Greece’s humanitarian crisis, Varoufakis said during talks Wednesday in Brussels without offering details…
“I don’t expect an outcome today,” Dijsselbloem told reporters in Brussels before the talks. Extra money “is not on the table right now” and Greece needs to stick to its reform path, he said.
The Dijsselbloem remarks sounded marginally more accommodating than what Eurogroup officials maintained before, but it is more polite code for their unchanged view: “Greece needs to stick to its current bailout, and we aren’t giving it any dough otherwise.” There was no reason for them to change their position, absent massive arm-twisting from the US, and our sense has never been that the US is working all that hard to shift the European position. Any words to Merkel would need to be accompanied by a full court press on other channels. However, given the visible, abject failure of a day of talks, and the fact that the next meeting isn’t until next Monday, the US does have time to swing into full gear if it does appreciate how much pressure it will need to apply to get the Eurogroup side to budge.
Varoufakis has also reiterated that Greece is not contemplating a Grexit:
Asked by a reporter before the meeting whether Greece’s exit from the euro area is on the table, Varoufakis said: “Of course not.”
As various readers have stressed, this isn’t as forceful a statement as it sounds, since there is no mechanism for either a voluntary withdrawal or an expulsion from the Eurozone.
So if Greece is unable to get a deal with the Eurozone on an extension, and the process is leaving them (whether justified or not) that Greece is being unreasonable, the result is no bailout money, and reduced odds of getting a deal to meet the principal payments coming due in June. Greece looks to be on the trajectory to a default.