Europe dampens Greek hopes of swift deal

Greece’s European lenders on Tuesday played down Athens’s hopes of a swift end to negotiations on an aid agreement and said talks must speed up before the country runs out of cash.

The sober outlook from Brussels and Berlin contrasted sharply with vigorous optimism displayed in Athens, where top officials from the new leftist government made a series of public appearances to promise that a deal was just days away.

Finance Minister Yanis Varoufakis said in a talk show overnight that a deal could arrive in a week, while Prime Minister Alexis Tsipras said talks were in their “final stretch”.
The comments helped push Greek stocks up 2.6 percent on Tuesday.

But euro zone policymakers said talks were not moving nearly as fast as needed to clinch a deal in a short time.
“More time and effort is needed to bridge the gaps on the remaining open issues. We consider that progress is being made, albeit at a slow pace,” European Commission spokesman Margaritis Schinas told a daily news briefing.
The Commission also denied a Greek newspaper report that its chief, Jean-Claude Juncker, had offered a compromise proposal to break the impasse in talks, which set a lower primary surplus target for Athens in return for tax reforms and tax hikes.

After a meeting in Berlin, the leaders of Germany and France said talks must be accelerated to free up fresh aid to Athens.
“I would say the talks need to speed up, rather than that they are going too fast,” German Chancellor Angela Merkel said at a news conference. French President Francois Hollande agreed the talks with Greece needed to be “accelerated”, adding: “We all have the same stance which is that Greece must stay in the euro zone.”

Both leaders will meet Tsipras at an EU summit in Riga this week, where Greece is pushing for a series of bilateral meetings on the sidelines to help broker a deal before it runs out of cash.

But Jeroen Dijsselbloem, Head of the Eurogroup of euro zone finance ministers that decides on aid disbursements, said it was unlikely a deal on Greece would be struck in the Latvian capital.

After staging a small economic recovery last year, Greece has returned to a full-blown crisis since Tsipras’s leftist government took power in January promising to end austerity and unpopular bailout programs.

Without access to debt markets or aid, the government has found itself locked in tough negotiations as cash coffers run dry. Athens is expected to scrape through payments to government workers and pensioners this month, but payments of 1.5 billion euros to the IMF next month will pose a much bigger challenge.