Varoufakis | Eurogroup |
[Paragraph 1] Over the last five years, the people of Greece have exerted remarkable efforts in economic adjustment. The new government is committed to a broader and deeper reform process aimed at durably improving growth and employment prospects, achieving debt sustainability and financial stability, enhancing social fairness and mitigating the significant social cost of the ongoing crisis. | The Eurogroup reiterates its appreciation for the remarkable adjustment efforts undertaken by Greece and the Greek people over the last years. During the last few weeks, we have, together with the institutions, engaged in an intensive and constructive dialogue with the new Greek authorities and reached common ground today. |
| This is a perfunctory recognition of the disaster visited on the "program countries" by European austerity policies. The language from the Greek letter about the broad policy goals of the new Greek government, in particular improving social fairness, appears later on in the Eurogroup draft. |
[Paragraph 3] In this context, the Greek authorities are now applying for the extension of the Master Financial Assistance Facility Agreement for a period of six months from its termination during which period we shall proceed jointly, and making best use of given flexibility in the current arrangement, toward its successful conclusion and review on the basis of the proposals of, on the one hand, the Greek government and, on the other, the institutions. | The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions. This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece. |
| Here the language is essentially the same in both version except that the Eurogroup version includes the 'bridging' language which Varoufakis had been insisting on during the negotiations, but was missing from his letter on Thursday. |
[Paragraph 4] The purpose of the requested six-month extension of the Agreement's duration is: | The Greek authorities will present a first list of reform measures, based on the current arrangement, by the end of Monday February 23. The institutions will provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. This list will be further specified and then agreed with the institutions by the end of April. |
| This adds procedural precision to the Greece commitment to embark on reforms. |
| Only approval of the conclusion of the review of the extended arrangement by the institutions in turn will allow for any disbursement of the outstanding tranche of the current EFSF programme and the transfer of the 2014 SMP profits. Both are again subject to approval by the Eurogroup. |
| The Eurogroup paragraph has no counterpart in the greek letter. What the Eurogroup offers is the disbursement of the €7bn of the remaining tranche of the current program, which Varoufakis had pointedly said were "on the table" for him to collect by "Just signing on the dotted line" but that he could not sleep at night if he signed on to extending the old program. Presumably the fact that he signed means that he does not consider this to be the same as the old program. Also, the Eurogroup offers the €2bn in SMP profits which were part of the previous agreement but had been withheld. |
(d) To extend the availability of the EFSF bonds held by the HFSF for the duration of the Agreement. | In view of the assessment of the institutions the Eurogroup agrees that the funds, so far available in the HFSF buffer, should be held by the EFSF, free of third party rights for the duration of the MFFA extension. The funds continue to be available for the duration of the MFFA extension and can only be used for bank recapitalisation and resolution costs. They will only be released on request by the ECB/SSM. |
| On substance the Greek side got what they wanted but the additional language is significant. "The assessment of the institutions" points to the ECB voicing concerns about the ongoing capital outflows from the Greek banks. This is important as the German negotiators were arguing that the Greek banks had passed last year's stress test and so didn't need to be recapitalised. The real concern of the Germans was the possibility that Greece could use these funds to finance the government. As the Greeks insisted all along this was not their intention, they can agree to have the bonds held in custody by the EFSF but available in case a recapitalisation is necessary. The release of these funds falls to the ECB/SSM as it should be, not to the Eurogroup. |
(e) To commence work between the technical teams on a possible new Contract for Recovery and Growth that the Greek authorities envisage between Greece, Europe and the International Monetary Fund which could follow the current Agreement. | In this light, we welcome the commitment by the Greek authorities to work in close agreement with European and international institutions and partners. Against this background we recall the independence of the European Central Bank. We also agreed that the IMF would continue to play its role. |
(c) To allow the European Central Bank to re-introduce the waiver in accordance with its procedures and regulations. |
The Greece government observes that an agreement on a program would allow the ECB to reassess Greece as solventnot at risk of imminent default which would allow it to reinstate Greek government bonds as eligible for ECB refinancing operations. This would also mean that Greek banks' recourse to ELA would no longer be necessary. The Eurogroup replaces this with a reaffirmation of central bank independence. |
[Paragraph 1] Over the last five years, the people of Greece have exerted remarkable efforts in economic adjustment. The new government is committed to a broader and deeper reform process aimed at durably improving growth and employment prospects, achieving debt sustainability and financial stability, enhancing social fairness and mitigating the significant social cost of the ongoing crisis. | The Greek authorities have expressed their strong commitment to a broader and deeper structural reform process aimed at durably improving growth and employment prospects, ensuring stability and resilience of the financial sector and enhancing social fairness. The authorities commit to implementing long overdue reforms to tackle corruption and tax evasion, and improving the efficiency of the public sector. In this context, the Greek authorities undertake to make best use of the continued provision of technical assistance. |
| Gone is the reference "the significant social cost of the ongoing crisis". The added enumeration of commitments is something the Greek government can agree to, especially in terms as general as these. |
[Paragraph 2] The Greek authorities recognise that the procedures agreed by the previous governments were interrupted by the recent presidential and general elections and that, as a result, several of the technical arrangements have been invalidated. The Greek authorities honour Greece's financial obligations to all its creditors as well as state our intention to cooperate with our partners in order to avert technical impediments in the context of the Master Facility Agreement which we recognise as binding vis-a-vis its financial and procedural content. | The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely. |
| The Eurogroup does not induge Syriza's excusemakign or blameshifing, though it is true that the Samaras government put the Greek government in a bind by organizing elections within two months of the end of the previous agreement. Also, the bit about recognising the agreement "vis a vis its finanial and procedural content" was a turn of phrase which irritated the Germans and was too ambiguous. The rest of the eurogroup statement is rich in "procedural content". |
(a) To agree the mutually acceptable financial and administrative terms the implementation of which, in collaboration with the institutions, will stabilise Greece's fiscal position, attain appropriate primary fiscal surpluses, guarantee debt stability and assist in the attainment of fiscal targets for 2015 that take into account the present economic situation. | The Greek authorities have also committed to ensure the appropriate primary fiscal surpluses or financing proceeds required to guarantee debt sustainability in line with the November 2012 Eurogroup statement. The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account. |
(G) To discuss means of enacting the November 2012 Eurogroup decision regarding possible further debt measures and assistance for implementation after the completion of the extended Agreement and as part of the follow-up Contract. |
| The two texts are essentally in agreement regarding the 2015 fiscal balance, but they highlight different parts of the November 2012 Eurogroup agreement. The Greek text makes a reference to possible debt relief measures while the Eurogroup focuses only on the austerity. |
(b) To ensure, working closely with our European and international partners, that any new measures be fully funded while refraining from unilateral action that would undermine the fiscal targets, economic recovery and financial stability. | In light of these commitments, we welcome that in a number of areas the Greek policy priorities can contribute to a strengthening and better implementation of the current arrangement. The Greek authorities commit to refrain from any rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions. |
| Note the addition of two biting clauses in the Eurogroup statement. The first is that the Greek government commits to not rolling back previously adopted measures. Also that whether unilateral Greek actions undermine fiscal targets or not is determined by the institutions. |
[Final paragraph] With the above in mind, the Greek government expresses its determination to cooperate closely with the European Union's institutions and with the International Monetary Fund in order: (a) to attain fiscal and financial stability and (b) to enable the Greek government to introduce the substantive, far-reaching reforms that are needed to restore the living standards of millions of Greek citizens through sustainable economic growth, gainful employment and social cohesion. | On the basis of the request, the commitments by the Greek authorities, the advice of the institutions, and today's agreement, we will launch the national procedures with a view to reaching a final decision on the extension of the current EFSF Master Financial Assistance Facility Agreement for up to four months by the EFSF Board of Directors. We also invite the institutions and the Greek authorities to resume immediately the work that would allow the successful conclusion of the review. |
(f) To agree on supervision under the EU and ECB framework and, in the same spirit, with the International Monetary Fund for the duration of the extended Agreement. | We remain committed to provide adequate support to Greece until it has regained full market access as long as it honours its commitments within the agreed framework. |
