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Tuesday, June 23, 2015

Greek Summit: EU welcomes with caution reforms proposed by Greece

EU and Greek flags
(Image: Consillium Europe)
Emergency summit of EU countries regarding the Greek crisis was held in Brussels on Monday, 22 June, as the Eurozone leaders and Greece’s creditors arrived to this meeting with cautious optimism and hopes of an agreement with the Greek government.

Greek government presented during the Summit the new plan of economic and financial reforms to be implemented in the country in order to prolong financial help of EU creditors. The reforms’ plans include higher taxes, abolition of the preferential VAT treatment for Greek Islands, increase in taxes on corporate profits that are above 500 Million Euros and rising of retirement age up to 67 years and curbing early retirement in the country.

Jeroen Dijsselbloem, Chairman of Eurogroup of 19 EU finance ministers, supported the initiative of Greek Parliament and described the document as a comprehensive one, although it needed further talks and corrections. But this document demonstrates readiness of Athens for negotiations and resolving the problem.

Greek government, led by the left-wing Syriza party, has chosen the hard line in its relations with EU and IMF as well, threatening EU with exit from Eurozone and refusing to pay the debts and participate in the further financial support program of IMF. Greek government blamed EU leadership, particularly Germany, for refusing to keep funding Greece without being sure of sustainability of the Greek public finances and Greece’s ability to pay the debts. This position of the Greek government was heavily criticized by the EU authorities, as European Council President Donald Tusk called on Athens to end the “blame game” with the Greek creditors.
Alexis Tsipras, Greek Prime Minister
(Image: Time)

Greece’s current crisis is deepening, as Greece has to repay the IMF (International Monetary Fund) 1.6 billion Euro debts by the 30th June, or the country will be declared in default, what could trigger harsh capital control and bank run as well. In addition to that the talks about Greece leaving the Eurozone became more and more frequent, with the governments of other EU countries estimating the possible impact of it on their economies.
A meeting between Greek and EU finance ministers, held earlier on Monday, 22 June, has failed; thus, there are no big hopes for the outcomes of the further talks.

German Chancellor Angela Merkel arrived in Brussels later on Monday and stated that although Greek reforms’ proposals were met with optimism and welcomed by the EU leaders, there is still no serious basis for a decision, so this summit will be rather consultative one.

French President Francois Hollande is more optimistic, stating that the recent talks with the Greek government representatives and Greek reforms’ plan can be the foundation for an agreement that has to be reached as soon as possible.

It’s worth mentioning that Greek Prime Minister Alekxis Tsipras had earlier a phone call with the US Treasury Secretary Jack Lew, who urged Greek Prime Minister to make a “serious move” towards the new deal with the EU creditors in order to save Greek economy.

Greek emergency Summit
(Image: The Guardian)
Thus, Greek proposals of the reforms announced during the Monday Summit in Brussels demonstrated readiness of the country to continue talks with the EU creditors and financial organizations and to accept the prolonged financial support program as well. Financial markets in their turn reacted well on the news about the Greek reform package and ongoing talks with EU leaders.

Meanwhile thousands of people demonstrated on Monday in Athens, in front of the Parliament’s building, showing their support of Greece remaining within the Eurozone.

The talks with the Greek government are ongoing, as there is also a two days European Summit scheduled for Thursday to take the negotiations forward and to reach a deal with the Greek government.