27 June – Eurogroup in Brussels

The idea that a government should consult its people on a problematic proposal put to it by the institutions met with incomprehension and was treated with a disdain that bordered on contempt.

Jeroen Dijsselbloem (00:00:01):

… uh, among whom of course, uh, Yanis, prepare the meeting. Um, I think given the situation where we are in now, in our last meeting we had on the table a set of papers, a common position of the three institutions. After having put those on the table, they were last proposals from the Greek side, and we asked the institutions to look at those. Uh, we’ve now reconvened to hear basically the position of the Greek, uh, government to see where we are.

Jeroen Dijsselbloem (00:00:41):

And Eurogroup in our last meeting, of course, did not take a formal position, there was no agreement between the institutions and Greek authorities at the time, so if we can spare to give the floor to Yanis first, to tell us about the position the Greek government, apparently, already has taken. To be informed about that, and then we’ll take it from there to see what our position should be. Yanis, can I give the floor to your first.

Yanis Varoufakis (00:01:11):

Thank you, Jeroen. Thank you, colleagues. In our last meeting we were presented with quite a comprehensive set of documents from the institutions containing proposed Prior Actions. Uh, debt sustainability analysis that was endorsed by the Commission, but not by the… not fully, at least, by the International Monetary Fund, as well as, uh, a proposal regarding funding for the proposed period of the five month extension.

Yanis Varoufakis (00:01:40):

Now, the Prior Actions that were presented, um, contain many parts that we consider very difficult to convince our parliament about. And therefore, they make it extremely onerous for us to pass through Parliament this particular set of Prior Actions. Now, even setting, however, that aside, uh, what makes in our estimation impossible to pass through Parliament this comprehensive proposal by the institutions, is the lack of an answer to an important question. Will these painful measures at least give us a period of tranquility, during which to carry out the reforms that we need to carry out? Will a shock of optimism, c- counter the recessionary effect of the extra fiscal consolidation that is being expected of a country that has been in a recession for 21 consecutive, consecutive quarters?

Yanis Varoufakis (00:02:41):

And the answer to us, the honest answer is no. The institutions’ proposal is offering us no such prospect. As for the funding that is being put to us for the next five months, we consider it to be problematic in a variety of ways. Firstly, it makes no provision for the states arrears caused by five months of making payments without disbursements. And of the falling tax revenues that are, uh, res- a re- a result of this prolonged negotiation, and the constant threat of Grexit, which is wafting in the air.

Yanis Varoufakis (00:03:17):

Secondly, the idea of dipping into the funds of the HFSF, I called it cannibalizing the HFSF, in order to repay the ECB’s SMP bonds, bonds in July and August constitutes a clear and present danger. Greece’s fragile banks, possibly through, um, an operation that deals with a m- mountainous NPL’s that eant- eat into, uh, their capitalization, uh, could be stabilized.

Yanis Varoufakis (00:03:53):

However, by using up this fund for the purposes of repaying the SMP bonds held by the ECB, we’re doing away with a very important resource that the second program, the current program has designated to this task of dealing with the problem of the banks.

Yanis Varoufakis (00:04:12):

When I asked, uh, an official of the ECB, so what we do once we use up an important part of this capital of the HFSF, how do we deal with bank and capitalizations, which is what the HFSF was there for? The answer I received was “Well, it will be replenished.” “How?” I asked. The answer was, “Through the ESM.” But this is, a leap into the unknown because it is not part of the proposed deal that there is some kind of automated or quasi-automated replenishment of the HFS- HFSF, from the ESM, and as I’m sure Wolfgang will tell us all, that would require a new program.

Yanis Varoufakis (00:04:56):

So, a new program is embedded into this few month-long extension, even though it is not articulated as such. And that is, um, a very serious problem. I think that many of you would have problems pushing this through your parliaments, and I cannot take a proposal, a funding proposal to my parliament which includes a provision that you couldn’t put through your parliaments.

Yanis Varoufakis (00:05:21):

Um, thirdly, the proposed disbursements schedule as presented to us by the institutions is a minefield of reviews. There is, I understand the problem of trust, but if you look at it technically, it means that we will have one review per month. Our government, instead of concentrating on passing the important reforms that we need to reform… to- to- to- to pass, we are going to be constantly engaged, week in, week out from tomorrow in this reviewing process, which will lead to what?

Yanis Varoufakis (00:05:52):

It will lead to another negotiation like the one we had over the last five months, with the institutions, with the Eurogroup, consecutive Eurogroup meetings sometime in October, November, in order to determine the parameters of a new program, and I don’t think that none of us can actually take this process, um, as it is implied by this proposi- proposal of the institutions that was tabled here two days ago.

Yanis Varoufakis (00:06:23):

Fourthly, given the that it is abundantly clear that our debt will remain unsustainable by the end of this year, and that market access will remain as distant as it has been of recent, it is our assessment that the International Monetary Fund cannot be counted upon to disperse each share 3.5 billion, the share that the institutions are counting as part of the funding package on the table. And that is another problem.

Yanis Varoufakis (00:06:50):

If I’m asked in parliament, my parliament what are the chances that this part of the funding package is going to be dispersed, in all honesty, I’ll have to say to them, minuscule. These are solid reasons why our government does not consider it has a mandate to accept the institutions’ proposal. And moreover, let’s be honest here, even if we were just for the benefit of ending this process and signing and sealing an agreement, we could not pass it through our parliament. And the result of that would be much worse than what we are doing now, the situation we found ourselves in now. It would mean that our government would fall, we would lose our, uh, support in parliament, and we would go into a process, an electoral process that would last a minimum of 23 days.

Yanis Varoufakis (00:07:41):

Now, at the very same time, colleagues, our government does not have a mandate, and I want to insist on that, I want to, to, to ask for your, uh, attention here, we do not have a mandate to turn down the institutions’, uh, pro- proposals, out of hand. Our party received 36% of, in the 25th of January election, together the two governing parties have just over 40% of the vote. Fully cognizant of how weighty the present moment in history is, we feel obliged to put the institutions’ proposal to the people of Greece.

Yanis Varoufakis (00:08:17):

We shall endeavor to spell out to them fully, what a yes to the institutions’ proposal means, to do the same regarding a no vote. We have our own recommendation but it is not binding on the Greek people, it is they who are sovereign, uh, decision makers. And we are going to accept their verdict fully and we, we’ll do whatever it takes to implement it, one way or another.

Yanis Varoufakis (00:08:43):

We believe that calling a referendum is optimal given the constraints that we face because as I said, firstly, it’s the only alternative we have to, to a, uh, a collapse of the government, a failure to push through parliament the proposal of the institutions. But let me add another wrinkle to this, even if we managed somehow to pass it through our parliament, we would be facing a major problem of ownership of the program and implementation. Put simply, just as in the past, Greek governments pushed through policies dictated by the institutions, but could not carry the people with them, we too would fail in doing so.

Yanis Varoufakis (00:09:28):

So, let me now concentrate on the question we are going to be putting to the, to the Greek people. Much has been discussed as to what it will be. We are very clear on this, there is a proposal by the institutions, maybe it will change today, maybe it won’t. This is what we’re putting to the Greek people, we’re asking them to instruct us, to accept it fully without further negotiations, which we shall do if the Greek people tell us to do this, or to negotiate further, if there is room for further negotiations.

Yanis Varoufakis (00:10:02):

Many journalists… I’ll wait and see if there is such a view here, comment and there is a logic to it, that this could be a referendum on the Euro, well, on Greece’s participation in the Euro. Let me be very clear on this, colleagues, our participation in Euro, in the Euro is not, and cannot be part of any referendum. Let me remind you that the European Union treaties have no… make no provisions for an exit from the Euro, and it would be a violation of the EU treaties, for us to go anywhere near that question.

Yanis Varoufakis (00:10:37):

The question is very simple, there is a proposal by the institutions. The institutions worked very hard to come up with it. We could not bring ourselves to signing it for reasons I have explained, it is up to the Greek people to decide. The suggestion that we’re coming to you with is that a one-month extension is offered of the existing arrangement so as to allow a smooth transition from today to the 6th of July so as to allow the Greek people, in calmness to deliberate, to consider the proposal which is in front of them, and to make a considered judgment on that basis.

Yanis Varoufakis (00:11:29):

I would like to ask the secretariat to distribute a letter to the president of the Eurogroup, um, maybe it has already been dis- distributed, by which we are making this, um, suggestion/request formal. Our task today is to circumnavigate a number of uh, troubles, and to find the safest route towards an outcome that allows the Greek people to come to pass judgment on what is a comprehensive proposal by the institutions. These are critical moments and the decisions we make are momentous. In years to come, I think that this meeting is going to feature prominently in the way that we answer to history’s demands over us. Thank you.

Jeroen Dijsselbloem (00:12:32):

Thank you, Yanis. Um, can I say that, um, I am sorry that we, we have come to, to this negative conclusion. [inaudible 00:12:49] prepared to come to an agreement with the institutions on the basis of the proposals that the institutions have jointly put on the table.

Yanis Varoufakis (00:12:57):


Jeroen Dijsselbloem (00:12:58):

But I think that’s a political fact that we have to accept at this point before us now, what consequences we think that it should have. There’s also a separate request from your side, uh, of the table. The reality of the situation given that negative decision, will be [inaudible 00:13:27] before the expiration of the program Tuesday at midnight as that is the situation where we are, responsibility of that aligns with the Greek government and the fact that they have taken this decision to enter the talks with this conclusion.

Jeroen Dijsselbloem (00:13:51):

I will give the floor to ministers because I think this is very much a political, uh, decision. Uh, the institutions have done their work and put joint papers on the table in our last meeting. So, I will, uh, give the floor to ministers to start with.

Michael Noonan (00:14:10):

Thanks very much, Jeroen. It’s, uh, it’s disappointing to come and be in the position we’re in now. Uh, this is the fifth time in 10 days we have come together and when we finished on Thursday evening, we had an institutional paper on the table, and we had a counter paper from the Greek authorities. And while there was, uh, quite a divergence between the two positions there was always also a lot of similarities.

Michael Noonan (00:14:44):

And I thought that if we met today, uh, that’s why the gap wouldn’t be closed completely, that the gap would be narrowed somewhat, and that there would be a single paper, that, uh, the Greek authorities could put to their parliament. But, uh, the prospective last round of negotiations that I anticipated is not now available because last night, the Greek authorities decided to end the negotiations, uh, by announcing a referendum, and by saying that they would, uh, recommend to, to the Greek people to turn down, uh, the paper of the institutions, uh, even though it’s full format was not yet decided, and was pending the result of today’s meeting.

Michael Noonan (00:15:37):

So, that leaves us in, in a very bad position because effectively one side has, has gone from the negotiations. And, uh, it’s a matter for, for the Greek authorities, but, uh, there was no indication of that when the heads of state and government meeting ended on Friday evening. My prime minister said he went, he went back to Dublin on the understanding that there would be a further round of talks today, which would have meant to a further bridging of the gap.

Michael Noonan (00:16:09):

So, it leaves us all in, in a very difficult situation, and it also- also has brought about, uh, a situation in my view where, uh, the Greek authorities, uh, and to a certain degree, all of us in politics across the EU, uh, are losing control of the situation. I think it’s moving now to a position where the markets and public opinion, particularly in Greece, uh, is going to be the deciding factor. And, uh, we’re looking here, at, at the iPad and, uh, there are queues at ATM machines in Greece, uh, at the minute in Athens.

Michael Noonan (00:16:48):

Uh, there are queues for petrol and diesel in Athens. And, uh, that seems to me that we now are in a situation where the crisis has commenced whereas the conversation this morning was, what will we do on Monday if there were a crisis? I don’t think it’s Monday anymore, it’s now. And on the data coming in, 250 million went out of the Greek ATM machines last night against a normal weekend withdrawal purview. So the signs are very clear, and, uh, it’s very hard to stop trends like that once they commence because they are not subject to any reaction or inaction.

Michael Noonan (00:17:38):

Uh, public opinion and the market perception takes over. And I think we’re in a, in a very dangerous situation, and, uh, I’m very sorry it has come to this. Uh, I think, Yanis, the, the decision of your cabinet last night was technically mistaken. Uh, I think if you could reverse it, you might retrieve some of the situation uh, but we’re, we’re, we’re in a very bad situation now where no matter what the political decisions are, I think it’s going to be, uh, a very, a very bad and a very unpredictable outcome. Thank you very much, Jeroen.

Jeroen Dijsselbloem (00:18:18):

Thank you, Michael. Wolfgang?

Wolfgang Schäuble (00:18:24):

Thank you, Jeroen. I would like here to echo on what, uh, Tony said. Of course, it is certain of a wider Greek authorities to arrange them to, uh, uh, uh a referendum. It’s hard to Greek authorities whether it’s government, whether it’s parliament, there’s the matter of the Greek constitution [inaudible 00:18:51] Greece.

Wolfgang Schäuble (00:19:01):

But, uh, the, the, um, the program for Greece, the so-called MOU, is, uh, something different. The institutions had been [inaudible 00:19:14] of our rules, the institutions had been asked to make reviews on the progress of the program and to give common recommendations with Greek government, with [inaudible 00:19:33] because the creditors are the member states of [inaudible 00:19:33] I hate to repeat myself, but, uh, sometimes people have forgotten [inaudible 00:19:33] discussion. It’s always very, very clear, there are always [inaudible 00:19:33] the three creditors. [inaudible 00:19:33] as member states of certain eurozone. There is the EFSF and now we would be, uh, we are taking liability for this but [inaudible 00:20:13] in its absence we’re [inaudible 00:20:13].

Wolfgang Schäuble (00:20:13):

Therefore, the, thought, thought is that what we have [inaudible 00:20:13] from it, uh, Michael just mentioned it, we wanted on, on … We wanted to get, uh, take a decision on the [inaudible 00:20:17] to Greek government. Now, the Greek government has declared [inaudible 00:20:21], uh, this year that we will not [inaudible 00:20:21], but you can deliberate with the Greek people the position of Greek government whatever it is and the position of institutions [inaudible 00:20:23].

Wolfgang Schäuble (00:20:23):

But, uh, we can’t have negotiations between the people of the Euro member states [inaudible 00:20:37] referendum in Germany as well. But if I want to make a, a quick decision on a- on a- on a position which is binding, we need an arrangement, an agreement, what is the substance of the decision? And that is not going, we do not have it.

Wolfgang Schäuble (00:21:05):

Therefore, uh, your referendum is important for Greece, but has not binding, uh, uh, has no [inaudible 00:21:14] from, uh, from the other member states. The given program r- uh, runs out at the end of June. And without any common proposal, we can’t, uh, think any, uh, uh, we can’t even think of, of any extensions, it’s impossible [inaudible 00:21:33] sorry to say, this is no way to, to, to get the resolutions. Therefore, uh, we have to take, uh, steps to, uh, [inaudible 00:21:44] situation as it is. And, uh, [inaudible 00:21:50] mentioned just by Michael.

Jeroen Dijsselbloem (00:21:41):

Thank you. Edward?

Edward Scicluna (00:22:03):

I wouldn’t, um, keep, uh, back from, from making any comments. However, I just ask a question to Yanis. He said this referendum will not be about, uh, a Greek exit. What is he proposing, um, that the government stand would be on this referendum? Is he not telling the people to vote for the package, [inaudible 00:22:13] and or it means that [inaudible 00:22:31] is going to against it, what does that imply? Um, what is he going to explain to the Greek people that if they were to vote, as he is suggesting to them to vote against, what would that lead to? That’s the whole question.

Jeroen Dijsselbloem (00:22:53):

Yanis might be useful here to answer that question before I [inaudible 00:22:59].

Yanis Varoufakis (00:22:58):

Happy to do so, Jeroen, thank you. I am going to tell the Greek people, we are going to tell the Greek people what we told you here. That the proposal which is on the table, or was on the table, last in, in the last Eurogroup meeting, in our, considered opinion and after having studied it very carefully, is financially not sustainable. And that we consider it to be a proposal which we could not accept even though we were fully determined to go well beyond our electoral platform, we already have… Michael is correct, uh, Michael Noonan, um, mentioned that the, um, Prior Actions that we have proposed are very, very close to the ones that the institutions have proposed.

Yanis Varoufakis (00:23:47):

That shows to what extent we were prepared to travel across a very large landscape to meet the institutions’ view. But the whole package, if you look at the funding, if you look at the debt situation, debt sustainability, is simply not one that I can recommend to the Greek people as a package that is tough medicine. I do not mind tough medicine, but this is toxic. It is not a package that would actually work and prevent you from having to come back to this Eurogroup meeting in two months time to have another such tedious round, discussing the lack of sustainability of the Greek situation.

Jeroen Dijsselbloem (00:24:25):

Yanis, I fully understand that you reject what was on the table, but the question was rather whether what is the alternative for the Greek electorate? I’m just asking from a point of political int- interest.

Yanis Varoufakis (00:24:40):

Jeroen, it’s very simple, we’re saying to the Greek people, instruct us to sign along the dotted line of the institution’s proposal and if you instruct us to do that, we will do it tomorrow. So, this is my answer to Wolfgang, you’re quite right, Wolfgang, we’re not deliberating with the Eurogroup, we’re deliberating with the Greek people. We’re seeking from them a clear instruction to sign the MOU, as it was presented to us, as amended by the institutions. If the Greek people say no to this then we’re going to have to deliberate amongst ourselves and with you, in order to find out what the optimal arrangement is for every one in Europe.

Jeroen Dijsselbloem (00:25:26):

I will return to Edward.

Edward Scicluna (00:25:31):

It is the question of clarification because on the second version, when you say, “Instruct us to, to v- to sign the agreement,” means that you’re proposing that you’re in favor of and in the sense of telling them-

Yanis Varoufakis (00:25:39):


Edward Scicluna (00:25:39):

… to vote in favor?

Yanis Varoufakis (00:25:42):


Edward Scicluna (00:25:44):


Yanis Varoufakis (00:25:46):


Edward Scicluna (00:25:46):

But previously you said-

Yanis Varoufakis (00:25:48):

I’m sorry for the interrupting, but that’s not so, you can have a CEO of a company taking a proposal for a merger to the board, to the, uh, shareholders, and say- saying, “I don’t agree with that, but if you agree with that, I’ll push it through.” This happens every day.

Edward Scicluna (00:26:02):

Uh, not every day.

Yanis Varoufakis (00:26:05):

[laughs] Well, almost every day, every other day. It happens, doesn’t it?

Wolfgang Schäuble (00:26:59):

[laughs] Every other day.

Yanis Varoufakis (00:26:59):

It happens, doesn’t it?

Wolfgang Schäuble (00:26:59):

Every, every, every other day.

Yanis Varoufakis (00:26:59):

[crosstalk 00:26:59] (laughing).

Michel Sapin (00:26:59):

[French 00:26:59].

Jeroen Dijsselbloem (00:27:01):

Yanis, I think [inaudible 00:33:05] basically a question you were reacting in your direction.

Yanis Varoufakis (00:29:29):

Thank you, Jeroen. Well, the answer to, let me be, go straight to the answer that I’m, I want to give to Michel Sapin. The answer is, of course, yes. There’s always room for negotiation. There’s always room for deliberation. Colleagues, the process is simple. The institutions and the members of state negotiate. The institutions have the final word on the draft agreement that is put to the Eurogroup. If the members states and the ministers agree, okay. The great unanswered question is what happens if there is no agreement either because the government of the members states says no or because it differs to the electorate through a referendum as we have done?

Yanis Varoufakis (00:34:04):

Then we enter uncharted territory, which we must chart together. But again, Michel, we are here, we are open to having discussions and rest assured that if that global package is in equilibrium, to use an expression that you used earlier, uh, we will reconsider. But the question we have to answer to our own parliament and to our own people is, is this package that we agreed to? Does it contain a significant probability that we will be able to recover in the next few months and set off on the road to recovery? If the answer is that we are agreeing to, um, a hurdle or a series of hurdles that come together, come attached with very stringent measures that enhance the recessionary elements without offering any chance of achieving escape velocity towards the end of this extension, then our recommendation will have to remain to the Greek people that this is not a sustainable offer.

Jeroen Dijsselbloem (00:35:32):

That seem like a positive response to what Michel was saying. Uh, I will continue with other speakers. [crosstalk 00:35:40]?

Speaker 7 (00:35:44):

Thank you, Jeroen. So-

Jeroen Dijsselbloem (00:35:45):

Why was this not a positive response?

Speaker 7 (00:35:48):

… [crosstalk 00:35:48] because I, the next step after this referendum.

Speaker 8 (00:35:54):

Thank you, [inaudible 00:35:57]. We will use the time to make an intensive check of the, of the Greek proposal, but I cannot find, uh, out that there’s the word sustainability there in the paper of the institutions and, uh, I think if you [inaudible 00:36:01] paper of the institutions, um, and [inaudible 00:36:01] is no better [inaudible 00:36:01].

Speaker 8 (00:36:00):

Second point, there is, what is the result of the assessment of the institutions about the Greek paper? As I mentioned in the last meeting, the [inaudible 00:36:35] about the Greek proposal, and, um, the second, the third thing is, at least you vote with this referendum about something which is not co-existing because if we enter the program on June [inaudible 00:37:06], there is nothing existing [inaudible 00:37:09] um, and at least, um, at least if the Greek people are saying yes against the recommendation of the government, will you then sign the paper of the institution?

Yanis Varoufakis (00:37:27):

Yes. Yes. [crosstalk 00:37:30]. I was clear on this.

Speaker 8 (00:37:32):

And, for me, it’s very important to ask why you made this referendum yet because we have lost time, we have [crosstalk 00:37:41] referendum, which is in principle based on the [inaudible 00:37:47]. Uh, and only you have to ask the people about an agreement and not about the paper and the, that’s the problem I have with this, uh, process, with this referendum and with the situation that you have, uh, left instead of negotiations. Uh, time’s running out and as we told the last, talk, talk about in our last meeting, uh, uh, we have to see the realistic return of this, uh, for the next two, few hours, not for the next two days, for the next two hours.

Jeroen Dijsselbloem (00:38:37):

Thank you. [inaudible 00:38:37].

Pier Carlo Padoan (00:38:42):

Thank you Jeroen. I guess, you all feel how difficult this moment is, and in moments like this one who likes to see most of clarity so that one can work out the implications and decisions, which I fully respect on any side. However, as I continue to listen to this discussion, to this ongoing debate between, uh, Yanis and, and colleagues, uh, I get more and more confused. Um, I’m more and more confused about what is the strategy of the Greek authorities. Uh, we are presented with the fact that this of course is absolutely in the right of the Greek people and government that there is a referendum to vote yes or no to a proposal, which proposal? Uh, may I ask, uh, politely whether you’re going to describe measure by measure, uh, alternatives by alternatives to the Greek people what, uh, views are and what if, for instance, in the mind of the electorate there is agreement in one measure and disagreement on the other measure?

Pier Carlo Padoan (00:39:48):

Uh, I’m even more puzzled by the fact that as so stated the government is going to support a no rather than a yes. Then as [inaudible 00:40:00] was asking, what if the result is yes? Is that a no confidence vote in the government? You also said, Yanis, that you might want to ask Greek people to have a mandate on a long-term program. Is this a different referendum or is it going to be in the set of questions? And then if you, uh, ask for a mandate for a long-term program, are you going to also explain that in order to get the long-term program, which since the beginning I personally supported, there are some steps which are necessary given that there is a current program.

Pier Carlo Padoan (00:40:36):

And finally, uh, are you going to discuss the consequences of whatever outcome the referendum is to Greece or the Greek people? And in general, uh, are, are you going to go beyond this specific point or are you going just to say that with the referendum, that’s the end of it? Thank you, and sorry for adding questions, but-

Yanis Varoufakis (00:41:01):

That’s okay.

Pier Carlo Padoan (00:41:01):

… as I said, I’m getting terribly confused and I apologize for that. Also, I think I will turn again to Yanis to get more clarity on these issues. Yanis.

Yanis Varoufakis (00:41:12):

Pier Carlo, your questions are, are spot on and I welcome them because clarity is necessary. Let me be very clear, if the answer on Sunday, the 6th, by the Greek people is that we should sign, we will sign, and we will sign immediately. You’ve asked, Pier Carlo, very pertinent political question. Does this mean that it will not, uh, will this not be a vote of lack of confidence, uh, withdrawal of confidence from the government? Maybe it will be, maybe we’ll need to have a different governmental configuration that will pass the agreement as offered by the institutions through parliament. We will do whatever it takes… to quote Mario, politically in order to remain faithful to the verdict of the Greek people if the Greek people say yes or no.

Yanis Varoufakis (00:42:01):

You asked a question, which I think is very important these days. You said, “Will you describe to the Greek people the SLAs, the Prior Actions that were proposed by the institutions and compare them and contrast them with the ones that you propose as a Greek government measure by measure by measure?” Yes we will, we have, we are very strong believers in the capacity of people, or voters to be active citizens and to make, uh, considered analysis and take, uh, decisions responsibly concerning the future of their country, this is what democracy is all about.

Yanis Varoufakis (00:42:43):

Uh, you asked the question about the long-term. Our objective, as you know, we have discussed with the two of us, was always to come to an agreement that might be tough, that might be, uh, bitter medicine, but which would come part and parcel of a broader package that would take Grexit of the table. The greatest problem that the Greek economy now has is the fear of Grexit. This negative expectation which impedes investment, it impedes consumption, it impedes growth. This package as presented by institutions does not contain any hope of this in the near future. Instead, what it promises is an ext- extension of the current uncertainty through one review after the other, leading to another negotiation like this. I think that it, I, I’m, I’m puzzled for once by the lack of comprehension of how important that is and our collective failure to come up with a package that doesn’t extend the crisis, pretending that it has solved it for a few months.

Yanis Varoufakis (00:43:54):

Um, you asked me whether we are going to discuss the consequences of a no vote. Yes we will, to the extent that it is possible to discuss consequences concerning an uncharted territory. But let me finish by asking, posing my own question. Yes, this uncharted territory is very frightening for us. It’s devastating. It scares us. I’m sure it scares everyone. However, does this mean that because a no vote or a n- negative decision by a government like ours is scary? Does this mean that a government li- our, like ours should accept any package proposed to it? I submit to you that if we’ve reached that point in Europe, then we should reconsider what we have done.

Jeroen Dijsselbloem (00:44:55):


Luis de Guindos (00:44:55):

Uh, Yanis. Uh, I, I am a f- uh, in full agreement with what Michel has said about the legitimacy of the requirement to, to call a referendum. You are fully entitled to, to do that, but at least let me say you something. I think that, uh, you know, this referendum is a little bit, uh, taking consideration of the specifics a little bit particular.

Luis de Guindos (00:45:25):

First because being called with the, you know, uh, eight days in advance is the first time that I have that, uh, I seen my life, uh, you know, referendum with the such a short notice. I don’t know, perhaps we can look at the track records of previous referendums, but, uh, well it’s going to take place, uh, the referendum on July the 5th, um, and today is, uh-

Yanis Varoufakis (00:45:55):


Luis de Guindos (00:45:55):

…July 27th.

Jeroen Dijsselbloem (00:45:55):


Luis de Guindos (00:45:59):

June. [inaudible 00:46:00] the question that has been also pointed out by, by Michel, you know, perfectly and everybody knows and we are politicians, that in referenda uh, the question is vital, I don’t know what kind of questions you’re ready to put. You know, regardless of, uh, you know, uh, if this is a proposal that is not the proposal of the Eurogroup, is the proposal of the institutions, but we are having a referendum about a proposal. This is something that has been, you know, put forward by other colleagues, and I am not going to elaborate any- anymore.

Luis de Guindos (00:46:32):

Thirdly, and this is also important. You are, you know, s- uh, supporting, the no, so you, you, you call a referendum with eight days in advance about a proposal that, uh, you say, “No, no, no, we are not going…” you are against that proposal that I don’t know really, you know, uh, uh, whose proposal has been, uh, you know, uh, look who, who’s are the authors of this, this proposal?

Luis de Guindos (00:47:02):

And let me say something that I think that is also relevant, is this referendum has been called before our negotiation? Yes. Uh, you know, today and, you know, uh, we, we, we, we, you know, you, you knew it perfectly that, uh, we had to, you know, you’re gonna look today that, uh, us, Michael has said, you know, the gap, uh, between your proposal and ours was, or the proposal of the institutions, was not the, you know, as big, that, you know, could, we can, we could bridge, you know, this gap, you know, during this meeting and we got presented us, a sort of fait accompli, and this fait accompli, you know, makes our life extremely, extremely, extremely difficult, you know, this is a breaker in a sense of the negotiations, you know, that’s the impression that I have.

Luis de Guindos (00:47:57):

Uh, simultaneously, you’re requesting an extension. You know, I have read the letter that you have, that you have forwarded to, to Jeroen and you’re requesting, you know, an extension of the program. But, uh, Yanis, I think that the, we have, we have commented and we have elaborated a lot about trust during our lesen- recent meetings. Do you think really that, you know, with the, you know, calling this referendum with these characteristics, you know, is a trust-building event? Because I have a lot of doubts.

Jeroen Dijsselbloem (00:48:40):

Thank you. Alex?

Alexander Stubb (00:48:41):

Thanks, uh, Jeroen. I, I, I’d like to make two comments, and then perhaps a few questions to, to Yanis. I, I think, I think I agree with all colleagues that either last night or this morning [inaudible 00:48:51] the news was a very unpleasant surprise and I also agree with Michael, with [inaudible 00:48:58], with Wolfgang on that in effect, I think this basically, uh, ends the process, uh, a mixed process of negotiation was ended. Let there be no un-clarity about this, uh, by the Greek government, that I see it as a very sad day in many ways, um, especially I think, uh, for Greece and, and, and to be quite honest, I think this basically means that what we used to call a plan B actually becomes, uh, the plan A, um, in [inaudible 00:49:32], but, uh, you know, in Finnish there’s a saying, it’s time to put the [inaudible 00:49:37] on the table. And I, uh, I think that’s a situation in which we are now, we’ve basically come to a dead end. There’s no p- in this game of cat and mouse, but, but, you know, we’ve come to basically a dead end.

Alexander Stubb (00:49:51):

And, and this brings me to my, my second point. I, I agree, we should spend our time here talking about the next steps, uh, of, uh, plan B. There’s absolutely no possibility we’ll get any kind of an outcome from here. I, I agree with Pier Carlo, we need clarity and that clarity is, is the next steps. Uh, to be quite honest, the way in which I see things unravelling is that number one, the program will not be extended. Number two, Greece will be unable to pay the IMF. Number three, uh, there will be a run on the banks, which has obviously already started. Number four, if there is no EL- uh, extension of the program, they will be no ELA. Number five, they will be both political and economic chaos. Number six, you will not be able to pay salaries and you will not be able to pay pensions. Number seven, you will probably be pretty much, uh, on your own. Um, number eight, there’ll be capital restrictions. Number nine, the IMF will not pay and number of 10, the EU will not pay.

Alexander Stubb (00:51:02):

Against this background, which I find a horrifying perspective, especially from a Greek perspective, I think we should focus our time on how to protect the eurozone and how to stay unified. And my simple question will be rather blunt, Yanis, is that have you seriously been able to explain the consequences of the actions that you’re currently taking and then the risks that you are taking to the Greek people? Now, my question is also of trust. I left this meeting on the first day, can’t say I was happy about it, but I left in good faith thinking that negotiations between the institutions in Greece will take place, but obviously they haven’t. And then we’re surprised with announcement of a referendum.

Alexander Stubb (00:52:00):

And how can we trust your actions if your prime minister comes out, and these are quotes, quotes on the [inaudible 00:52:09] memoir, “Contravenes the founding principles and values of Europe.” In which way? “Accumulates unbearable new burdens”. Yeah. To all of us.”Amplifies social imbalances”. “Violates fundamental rights to work, equality and to dignity.” “Blackmail ultimatum.” And, “Strict and humiliating austerity.” Now, if I was a Greek voter, no matter how pro-European I was, and if I was listening to my prime minister saying that I would personally be voting against that package. So what is there really at the end of the day anymore to negotiate? I really think that this is a sad day for all of us and I think it’s time to start talking the next steps. Sorry for being so blunt, but that’s just how I see things right now.

Jeroen Dijsselbloem (00:53:13):

[inaudible 00:53:13].

Speaker 12 (00:53:17):

Now, I have a problem because this is exactly what I prepared for myself (laughing).

Jeroen Dijsselbloem (00:53:35):

Hey, cat, cat on the table, cat on the table.

Speaker 12 (00:53:36):

[inaudible 00:53:36] (laughing). Okay, first thing my prime minister was completely shocked after he found out about the referendum and I must admit that I was not, because even on the basis of our first meeting [inaudible 00:53:51] January or beginning of February, it was clear to me that because [inaudible 00:53:57] I was expecting something like, and I wrote, maybe I’m too direct, but this is the way I see the situation. One, Greece decided not to accept the proposal, there would not be any extension and then I propose we leave it to historians to find out what was going on. Bygones is bygones, next steps are necessary to [inaudible 00:54:23] excessive spillover to limit the extreme and the, for, for the rest of us, and to limit the extreme damage for the Greek people.

Speaker 12 (00:54:34):

And just for a note, in all this, of this time-losing process, I constantly has to remind myself that I’m a member of helping countries, not the country that got the help. I, I, I have sometimes a feeling that I’m the one who is the debtor [inaudible 00:54:56] and I would like to remind you that we wrote off already 67% of our bilaterial debt to credit to you with changed conditions. And that’s all I have to say.

Jeroen Dijsselbloem (00:55:14):

Thank you. [inaudible 00:55:16].

Speaker 13 (00:55:18):

A lot has already been said about what we experienced in the last [inaudible 00:55:21], uh, quite regularly and I think that’s also what my prime minister experienced, uh, hearing the news about this referendum, so I’m not gonna repeat, uh, the things that has already, that have already been said by several of the colleagues, but there’s one thing that I find very striking or very, even offensive, that’s the fact that the Greek government is now saying, “We will put to our people the ref- the proposals of the institutions,” I think we more or less know what they are. “And if the people say yes to what these proposals are, we will accept it, and we will execute it.” While criticism of the Greek government, the present Greek government on those proposals or [inaudible 00:56:07] proposals has being very severe.

Speaker 13 (00:56:10):

This is just incredible, this is just not credible. And so this is one of the main reasons not the only one for, one, uh, why for us, uh, an extension of [inaudible 00:56:23] is absolutely out of the question, as things stand now.

Jeroen Dijsselbloem (00:56:34):

Thank you. Maria Luis.

Maria Luis Albuquerque (00:56:36):

Thank you, Jeroen. As much has, has been said, I’ll just like to add that, that I do know by experience how difficult it is to implement the program, how difficult it is to announce difficult measures, um, and I know that it’s, it’s hard because even if you believe, if you defend what needs to be done, and if you believes that it is the best for your country. And one of the reasons why I think that our program and others have succeeded is because of ownership, which you also mentioned that it is very important, because we did believe that would be, uh, the best way to implement these tough measures because the outcome would, would be worth it.

Maria Luis Albuquerque (00:57:24):

So, and, and this demands mutual trust between ourselves and the institutions and real belief that this is the right way. So I see absolutely no way, as Jeroen just mentioned, how can the government defend a no, use the terms you accused to clarif- to, to discuss or to classify the proposals under the [inaudible 00:57:49] and then implement them because they are to, to failure. It’s impossible that they would work and one would never know if they had a problem of design or a problem implementation. It wouldn’t be possible to tell them apart, but it is a certainty that they would fail. With this kind of attitude from the beginning, they could never provide the results which would be needed.

Maria Luis Albuquerque (00:58:14):

So, obviously, I, like, uh, everyone else, I’m sure, fully respe- respect your decision to make a referendum and ask your people whatever you think should be asked. But please bear in mind that whatever comes out of the decision of the one, of one country cannot presume decisions from all the other 18. And this has been made extremely clear since February 11th when we had our first meeting. And somehow I have the feeling that the message is not going through.

Jeroen Dijsselbloem (00:58:51):

Thank you. Rimantas.

Rimantas Šadžius (00:59:02):

Thank you, Jeroen. Uh, from the very beginning, uh, this negotiation with the new Greek authorities, uh, seemed very strange to me. Well, I understood from the very, uh, onset, from, from February that the new Greek government, uh, was trapped between economic realities that I think we do understand very well around this table and, uh, pre-election promises. Uh, and this is a difficult situation to any new government. Of course, uh, the political elite of the country should, uh, work upon overcoming this post-election syndromes.

Rimantas Šadžius (00:59:41):

And I think in many countries, uh, uh, pre-election, um, pre-election promises and the, the, uh, real action, um, uh, differ more or less, uh, in different countries. Uh, it depends on the, on the style of this election campaign, but, uh, nevertheless, uh, please recall that at the very first meeting, um, Pierre Moscovici told that there are three trajectories and we were discussing about, uh, the first two, and it was me who said, well, I think the most realistic was the third trajectory that we do nothing and everything goes on, uh, as it should go. Um, the, on, uh, based on economic grounds.

Rimantas Šadžius (01:00:27):

My thoughts, my, my hope was, uh, that, uh, sometime later, uh, the Greek gov- new Greek government will feel the economic reality that it encounters in the country and, uh, things will start normalize. But all these, uh, six months, that’s, uh, the, the previous, uh, program was extended, was spent mostly… please, uh, please, let’s be frank to us, ourselves, was spent by waiting proposals from the Greek side. And these proposals, the first proposals that came where, some of them were, were, were quite naive like, uh, video cameras on housewives, uh, and, and students, things like that.

Rimantas Šadžius (01:01:14):

Uh, but, uh, unfortunately during all these six months, uh, nothing has changed in the real economic policy of, of, of the, the Greek government and Greek state. Now, the situation, economic situation is very difficult, very difficult. So, uh, this third trajectory didn’t work for, for some reason. I don’t know… I can’t suppose why. And the argument, for me, to, to make, um, um, the, uh, this position is, uh, the proposal for referendum.

Rimantas Šadžius (01:01:52):

Look, uh, the government proposes to have a referendum where they propose for the people to answer no. That means that government has no constructive position, that the government by itself is destructive. It’s no way, uh, to, to, to carry on the issues there, uh, this way. And of course, if the government is by itself, the present government is by itself so destructive, automatically it follows that whatever kind of the negotiations we have here, there is no agreement possible. If there is no constructive position that could be, well, uh, posed to, to Greek people to answer yes, it’s nothing to talk about.

Rimantas Šadžius (01:02:41):

Now, uh, the third and the very important issue in all this process is, uh, not money but moral, political and moral hazard. Um, yes, during the negotiations with institutions, with Eurogroup, with leaders and now with Greek people that you are going to discuss, uh, these, uh, all these, uh, matters about [inaudible 01:03:07] the tax perhaps, uh, you became, uh, the front-page story, that, no doubt about that. Uh, the worst thing is that many countries and in Lithuania for, for sure, you became also the last page story, a kind of bande designé, a cartoon.

Rimantas Šadžius (01:03:32):

And this means that it will be extremely difficult to talk about helping this country afterwards when we talk about subsequent programs. Uh, [inaudible 01:03:49] because nobody talked about that after Wolfgang, that what’s, uh, what we should care about is also our economic and monetary union, which is not decided by referenda, whatever legal they are. This is a set of principles that we must speak to. Lithuania has come through a very difficult period of preparation of joining the eurozone. And we brought, uh, letters signed by prime minister, the minister of finance and the head of the central bank rather than, well, a computer-printed letter that we got today, uh, asking for, uh, almost [inaudible 01:04:32] reason to extend, uh, the, the present program again for one month.

Rimantas Šadžius (01:04:36):

The previous that was signed only by minister of finance, which doesn’t mean the decision of the government, uh, at least enumerated reasons for what reason the, uh, program should be extended. Now, we haven’t given that, so I think we should stick to the principles. I agree very much with those, uh, who said that, uh, uh, no extension, um, uh, of the present program is possible because there is no substance of such kind of extension. And I agree very much with [inaudible 01:05:13] who, so, who just enumerated a list of items that we should discuss today. [bang]

Jeroen Dijsselbloem (01:05:22):

Thank you. Uh, [crosstalk 01:05:25].

Michel Sapin (01:05:29):

Thank you. Nobody around this table is very happy with a, with the Greek government’s approach. While, this is it, this is not the first time that [inaudible 01:05:43] more drama again and again by submitting new proposal very late in the process. With respect to the referendum as, uh, depression [inaudible 01:05:58], Yanis, your government was elected to make decisions, so it should make them. The Greece is free to, uh, have a referendum but if, uh, the Greek government will reject, rejects, uh, the, the package which is on the table, then the program is over because, uh, the referendum on, on 5th July is out of, of legal framework that we can move and we will be against the the anti extension.

Michel Sapin (01:06:37):

And I’m sorry about, about the referendum with , uh, with government’s negative advice as anti-extension [inaudible 01:06:46]. I didn’t like, uh, [inaudible 01:06:50], uh, the [inaudible 01:06:50]. It’s, uh, excellent [inaudible 01:06:50]. Uh, I’m afraid [inaudible 01:06:56].

Jeroen Dijsselbloem (01:07:06):

Uh, [inaudible 01:07:06].

Speaker 17 (01:07:05):

Yeah, I can be very, uh, brief. Um, holding a referendum obviously is entirely up to the Greek government. And as Michel has just explained, it may not be completely clear what the Greek government intends to ask and in what manner. But what is completely clear is that there will likely be no in principle deal today between the creditors and, and Greece. And frankly such a deal doesn’t seem realistically in sight. So I’m afraid, uh, time’s up and the deadline is clear and always been clear. And, uh, I see no reason for an extension in this situation.

Jeroen Dijsselbloem (01:07:52):

Uh. Pierre, Pierre [inaudible 01:07:53].

Pierre Moscovici (01:07:52):

Thank you, Jeroen. I think, uh, uh speaking on behalf of the country, that is a firm believer in the Euro and the virtue, uh, of what we have built together, uh, around that common currency, today’s very sad day. Um, it’s a very sad day because we had all tried, uh, from the beginning of the year to find solutions and today it seems that there’s very little hope left. I must concur with those who have mentioned their prime minister who was really shocked to hear the news that the referendum would be held, as there was the summit a couple of hours ago. But this was not mentioned, at least to our knowledge, it was not mentioned. And I speaking with many colleagues, it seems that no one was informed. Obviously, this is the contrary of building confidence.

Pierre Moscovici (01:09:03):

Now, nobody’s disputing or questioning the right of Greece hold a referendum on such an important subject. But what is really troublesome is the timing of this announcement because if that is, um, what’s the intention of the Greek government, this decision could have been taken months ago or at least weeks ago. So today, this late referendum interferes with the whole timetable that we have agreed together.

Pierre Moscovici (01:09:41):

Now, we’re asked to postpone the deadlines, but may I remember with you all together, we have already postponed by four months on the 20th of February the deadlines. [inaudible 01:09:57] ample time to work and share different proposals which were not used efficiently. I’d also like to say that what is at stake is, uh, the credibility, uh, of the eurozone itself. We’ve been negotiating here four months and, uh, if it is the right of the Greek government to ask its population, what it thinks, uh, of an eventual deal, which is not on the table by the way. So we’re really wondering what is going to be asked and, to the Greek population. I completely agree with the questions mentioned by Michel Sapin. We also have public opinions and we have to explain to them what’s going on.

Pierre Moscovici (01:10:47):

So in this context, I really don’t see a perspective of how we can continue to negotiate. Where is there still space to find a common solution? Where is the space to still stay in the same common framework? That’s why I’m saying that today is very sad.

Jeroen Dijsselbloem (01:11:10):

Thank you. Harris?

Harris Georgiades (01:11:20):

Thank you, Jeroen. Le- let me start by expressing my sympathy and my solidarity to the people of Greece. They have been through a lot and I fear that they will face even more difficulties in the times ahead. Uh, Greece is a country with an immense [inaudible 01:11:39] potential. But it is a potential which remains largely unutilized due to significant multi-dimensional structural deficiencies. This is why the direction of any effort should have been primarily towards structural reform and not towards taxes. Definitely not taxes that will simply maintain inefficient and wasteful public service. This is the worst kind of a austerity, the one which the state imposes upon its citizens [inaudible 01:12:20] through a heavy tax burden, so that [inaudible 01:12:30] can avoid the politically difficult and absolutely necessary fiscal consolidation.

Harris Georgiades (01:12:32):

Greece has found itself in such a protracted vicious circle of austerity because until now the [inaudible 01:12:39] of consolidation efforts always fell short of exce- expectations and remained incomplete. The support of Cyprus towards Greece has been expressed with not only with words, but with deeds. Through the PSI of 2012, Cypriot banks sustained a loss amounting to 25% of the GDP of the country, which led to the escalation of [inaudible 01:13:14] banking crisis and ultimately to the bailing of depositors.

Harris Georgiades (01:13:17):

Another, another 2% of the GDP represents the contribution of Cyprus to the Greek financing program before Cyps- Cyprus itself came under the program. Any further debt sustainability or [inaudible 01:13:27] arrangements would be acceptable on our part. Speaking of banks, however, and the noting that no arrangement has been reached leads me to find very important point. Almost 15% of local deposits inside which are been carried with subsidiaries of Greek banks. And we know that Greek banks have, are already under severe pressure. Let me clearly state that we should not be taking any chances, nor should we rely on the expectation that there will be no contagion or that depositors will behave calmly and rationally.

Harris Georgiades (01:14:22):

Mutually beneficial options are available as we speak, and there’s at the least one perspective private sector buyer for these subsidiaries. I’m not asking for favors, or for financial assistance, but I do expect and request that specific actions will now be initiated in order to ensure the financial stability of Cyprus and that we keep Cyprus on a path to recovery.

Jeroen Dijsselbloem (01:14:55):

[inaudible 01:14:55].

Speaker 20 (01:14:55):

Uh, if that’s [inaudible 01:15:11] I will return to the Commission first to get their assessment and advice [inaudible 01:15:18] ECB and IMF.

Speaker 21 (01:15:23):

Okay. Um, [inaudible 01:15:30] honorable colleagues, um, well, of course, we’re now in, um, in a very difficult situation, with very s- very unpredictable consequences. Uh, as you are aware, we have worked for weeks to conclude, uh, this, uh, review, and when we met two days ago, we, uh, presented a joint measures which we collectively, uh, [inaudible 01:16:04].

Speaker 21 (01:16:07):

So, uh, there was a [inaudible 01:16:07] of, um, input on, uh, table and Eurogroup asked the institutions to assess, th- th- these propo- , also the Greek counter-proposals, which were also tabled, to see if they, uh, contain suggestions, which [inaudible 01:16:46] to the Euro working, uh, uh, group.

Speaker 21 (01:16:47):

This we held on, uh, Euro working, uh, group [inaudible 01:16:48]uh, uh, these [inaudible 01:16:48], but there are two elements about which I wanted to emphasize, which I believe are somewhat mis- uh, leading from the presentation of Greek authorities. First, on the ultimatum. It was very clearly made from the point of view of the institutions that we’re ready to continue negotiations. And in fact, we were continuing with negotiations yesterday until the moment where legal [inaudible 01:17:15] stand up and left the negotiation room. Apparently, being instructed so after the decision of the referendum has been taken.

Speaker 21 (01:17:26):

So, the question here is that there is a proposal for the institutions which were filed on 25th of June. There’s a proposal of institutions [inaudible 01:17:39] in negotiations yesterday evening by the time [inaudible 01:17:45] negotiators [inaudible 01:17:46] and just so we are clear, I think [inaudible 01:17:57] it was very clear that Eurogroup did not take any stance on institution’s proposal. It neither endorsed nor rejected the proposal. It took note, uh, on the proposal [inaudible 01:18:09] are ongoing and, uh, uh, actually, uh, mandated, uh, institutions to assess Greek counter proposal [inaudible 01:18:18] because this can lead [inaudible 01:18:21], uh, more.

Speaker 21 (01:18:23):

So I think, uh, this is very misguiding, how Greek authorities are now preventing the, uh, uh, situation. Uh, so, but in any case, uh, now, uh, still from the institution point of view, we, uh, [inaudible 01:18:42], uh, because, uh, otherwise, we’re, uh, entering, uh, uh, a very, very, dangerous, uh, scenario with potentially very negative consequences for most of the euro [inaudible 01:19:05], to keep Greece in the eurozone is by far the best preferred option in the interest of Greece, it’s in the interest of Greek people, it’s in the interest of eurozone that we should accommodate the Greek [inaudible 01:20:18] that was my first remark.

Speaker 21 (01:20:17):

And my second remark, uh, is about the, uh, negotiation process. I have to say that my feeling is that really the institutions, and among them the Commission, we played our role, we played a role and we fulfilled our duty. A duty, uh, was under the mandate of the Eurogroup, to, uh, elaborate. first in the memoir then on the basis of your memoir [inaudible 01:20:40] proposals that could, uh, and should have [inaudible 01:20:49] with the Greek authorities. And [inaudible 01:20:53] on the fact that the, the package which was on the table from institutions [inaudible 01:21:00] and presented here Thursday and we went on this discussion until last night, uh, including with suggestions, which was, for example, to remove the VAT rates [inaudible 01:21:16] from the reduced rate of 13% to the standard rate of 23% and remove all, I say all other exemptions.

Speaker 21 (01:21:25):

We always try to find a package that was in my view clearly a balance as well, economically, financially and socially. And I feel that there is a mistake from the Greek authorities to, to refuse [inaudible 01:21:45] and to, uh, close the door to negotiations which is and was the mission of [inaudible 01:21:53]. Of course, now we are, these discussions have been interrupted by the, uh, decision of the prime minister [inaudible 01:22:02] takes place, uh, and we are waiting for the next [inaudible 01:22:13] of the group. Uh, of course, uh, I understand the point of view of the colleagues and [inaudible 01:22:21], but the institutions are and always be available, uh, to find solutions and to negotiate [inaudible 01:22:29] under your mandate.

Jeroen Dijsselbloem (01:22:31):

Thank you. Mario.

Mario Draghi (01:22:39):

Thank you, Jeroen. Let me just go through some possible implications of the new developments. I have to say it’s possible because, uh, the, it would be the Governing Council, of course, to take, uh, the decisions that, uh, [inaudible 01:22:49]. Uh, first of all, uh, the, um, continued, uh, non-objection to increasing the ELA was based, uh, on rules that say that ELA would be continued to be given by the Bank of Greece to banks that have, uh, a colla- adequate collateral and are solvent.

Mario Draghi (01:23:07):

Now, the recent developments are actually questioning, putting into question, uh, both the, both these, both these features. Uh, the [inaudible 01:23:17] now are they doing a weekend are between 400 more, 500 million investors [inaudible 01:23:24] about, uh, 300. Uh, sorry, 30, 30. And I shouldn’t say [inaudible 01:23:31], say withdrawal or deposits, uh, fro- from the banks. So we are in a full, full-fledged basically crisis and therefore the collateral will soon not be available, won’t be adequate. But there’s also another, uh, aspect whereby collateral may not be adequate and that has to do with the, the developments in the financial markets, decreasing interest rates, which basically decrease the value of the collateral.

Mario Draghi (01:24:02):

There’s also another aspect, however, it has to do with solvency of the banks. Uh, pretty soon, uh, the SSM, ECB as SSM will have to undertake an assessment, a solvency assessment of the Greek banking system and clearly, clearly, uh, the, uh, the government bond or the government, uh, issued assets, uh, will have to be subject to [inaudible 01:24:31] and this will, uh, will increase the evidently the, uh, s-, the fragility of the banking system, also putting into question the solvency. And this is all only for the government paper. The government paper is of two kinds, the government bonds and the rest which is DTA and DTCs, namely deferred tax assets, deferred tax credits.

Mario Draghi (01:24:54):

This adds up on to the already difficult situation of the non-performing loans towards the private sector. So, uh, all these, uh, developments that have been outlined, uh, put into question the two basic pillars upon which ELA has been, uh, has been granted so far. What to do about banks. Of course, uh, the, uh, Bank of Greece is the resolution authority at this point in time so we’ll consider and with the, with the help of course the of the, of the, of the Commission and the ECB whether to adopt a moratorium or a resolution with Greek banks or a bank holiday. We won’t be specific on all this point, uh, at this pointl in time.

Mario Draghi (01:25:40):

Uh, incidentally, I just answered your point, Yanis, about [inaudible 01:25:48] you, you said, uh, for, for buying the SMPs. It seems to me that actually this course of action is such that you, uh, to the uncertainty of using, or having or a commitment to have ESM that who would replenish the fund, uh, the HFSF fund, you preferred the certainty of losing the HFSF money altogether because that’s what really happened basically, that the, that money will be gone this week. So it won’t be able, either for [inaudible 01:26:26] or for anything else.

Mario Draghi (01:26:28):

Um, one last point about what, uh, we do, uh, what the ECB will do, uh, as far as the, uh, the [inaudible 01:26:37] are concerned. So that I would say the robustness of our toolkit is, is, uh, is now in place, uh, we can count on that. It’s also supported by this month ECG’s ruling particularly where the court noted that it’s permissible for the ECB to safeguard for inappropriate monitoring policy transmission and the singleness of our monetary policy. So, that means that the Governing Council is determined to respond to such a situation by making full use, full use of the flexibility afforded by the measures already in place where we would certainly revisit the size, the, the composition, but also to activate other policies from [inaudible 01:27:26] all other policies [inaudible 01:27:29] necessary.

Mario Draghi (01:27:31):

One word as, uh, as a conclusion. This, I mean we discussed, we went through this scenario of a gradually weakening banking system at the very beginning of our discussions here. I remember in this Eurogroup. Now, these scenarios now unfolded. It, it’s, uh, it’s unfolded and the main consequence since four or five months ago is that the recession simply got worse and worse. And the reasons why for this recession are two: uncertainty and lack of credit. And the recent developments have only increased both, uncertainty, uh, and will further worsen the line of credit. Thank you.

Jeroen Dijsselbloem (01:28:21):

Thank you, Mario. [inaudible 01:28:22].

Christine Lagarde (01:28:22):

Tha- thank you very much. I would, uh, I have to say that from, uh, a personal perspective as well as from an IMF perspective, I was also shocked, uh, when I found out at the very early hours of the morning that negotiations had stopped, uh, with the team and that referendum was announced by the prime minister of Greece. I was certainly not involved in the consultation process that may have taken place in that respect and it came as a, as, as a massive, uh, surprise and a very sad development of this. Um, clearly many of you have expressed, um, the frustration, the sadness, which I, I, I share as well. And, you know, acknowledging that this is a complete, uh, breaking point where what has just been described by Alessandro and supplemented by Mario is likely to unravel in the next hours.

Christine Lagarde (01:29:26):

I have to add that the, uh, probable, uh, consequence of that, although, I haven’t heard anything to the, to the contrary, might be the international community at large in the fall of the IMF, which is, uh, possibly not going to receive the, uh, bundled payments that failed during the course of June and which are due for payment on Tuesday, uh, close of business and for which, uh, I believe that a little bit of preparatory work needs to take place. Uh, I would like to, uh, receive some, uh, assurance or one way or the other. And I also understand that the proposal to use the ESM as we as a, as a proxy, uh, for Greece was at some stage proposed and we’d be interested to explore that alternative on behalf of the international community, which is also at the table.

Christine Lagarde (01:30:20):

I would just like to submit one thing, um, I just cannot understand why, why Greece says that there has been a total lack of confidence on the part of the creditors at large, including all the Euro area member states as indicated by the [inaudible 01:30:41]. And at the same time when the negotiators recognized that between the three institutions’ joint proposal and the Greece late, and Greece later proposals, there is hardly any difference. And we’re so close, which I have slight doubt about. But if it is true that the Greek position is very, very close to the three institutions, then to actually bridge that gap of lack of trust, it’s really on Greece to make the gesture of moving in that direction and actually to decide not to go in that direction, not to go and clench a conclusion.

Christine Lagarde (01:31:25):

That would mean accepting the proposal by the three institutions, assuming it would be endorsed by the Eurogroup numbers, of course, I don’t understand why this is not happening, and it falls on the Greek party to actually do that. Now, I understand equally that [inaudible 01:31:41]. It also rely heavily on assurance that subject implementation, the creditors, European partners will be there to support financially, to organize the debt operation if necessary, as provided under the DSA in order to give some financial future. But things clearly need to come in that sequential order, given the breach of trust that has taken place.

Christine Lagarde (01:32:12):

So that’s really what I would like to say. Why do you you not, why do you not take that step, given the shortage of trust and the closeness that [inaudible 01:32:26]? Thank you.

Jeroen Dijsselbloem (01:32:48):

Yanis, I think I would like to give you the floor, a number of questions were raised [inaudible 01:32:48].

Yanis Varoufakis (01:32:47):


Jeroen Dijsselbloem (01:32:47):

…it’s fair to give you a also a chance to respond.

Yanis Varoufakis (01:32:48):

Thank you, Jeroen. I shall begin with a question that, uh, and the comment that my good friend on my right here, Luis, made. Um, Luis, today in the Eurogroup, we are making very important decisions, but nevertheless, as it has been said so many times, uh, ministers in this format do not negotiate as such, we don’t have the capacity to negotiate in this format. We negotiate with the institutions and the institutions, and we have been in negotiations for a long while now, and indeed when it comes to the SLA, Christine, we have come very close. It’s the rest of the package which we cannot possibly accept as it is. I explained it, I’ll explain it again.

Yanis Varoufakis (01:33:32):

But, colleagues, nobody needs to be reminded that Tuesday is a hard deadline. As we are approaching, we’re approaching it over the last few days, it became abundantly clear to us that the institution’s basic offer to the Greek government was, uh, not sustainable for the reasons that I’ve outlined and I’ll outline again. In view of this hard deadline on Tuesday and the expiration of, uh, the agreement and the fact that we are moving into this awful uncharted territory, we called for a referendum in order to minimize the very high probability of an accident. As I said to you repeatedly, we do not believe that even if we campaigned very strongly in parliament in favor of the proposal of the institutions we would manage to push it through parliament. And then we would have three weeks, four weeks of uncertainty, so we would crash again. Again, even more certainly.

Yanis Varoufakis (01:34:38):

Um, Alex, you mentioned disparagingly, I think, my prime minister and you said that he was, uh, referring to blackmail. That would be a terrible thing for my prime minister to have done. But then you proceeded in giving a 10-point list, I believe, then nine-point list, that could easily and fairly be interpreted as a set of outcomes from saying no to this proposal that smacks of a blackmail.

Alexander Stubb (01:35:15):

[inaudible 01:35:15].

Yanis Varoufakis (01:35:16):

My, to my Lithuanian colleague, I’ve only become a politician a few months ago and I committed never to engage in, uh, offensive statements or to respond to them. Colleagues, the reason why we are where we are, in this impasse, is very clear. Our government’s suggestion right from the beginning, which I articulated in the first meeting that I attended, was never really taken seriously. I can refer to it as the Michel Sapin principle, the principle of establishing common ground between the Mo- MOU, the existing an- MOU and our government’s priorities.

Yanis Varoufakis (01:35:56):

For a fleeting moment on the 20th of February, we agreed on that. Let me remind you that we, it took three Eurogroups to reach the 20th of February agreement, the statement in which the MOU was not mentioned precisely for that reason, to find, in exactly the way that Michel Sapin outlined on a number of occasions, this common ground between the priorities of the newly elected government and the MOU. But since then we’ve been dragged back to the OU- MOU and we’re being told that we can choose, we can make any sorts of, um, uh, we can have any sort of accommodation with the institution as long as it is the MOU.

Yanis Varoufakis (01:36:33):

And Christine, the let me now answer the question again, even if we agreed with the Prior Actions that you put forward to us, there is no legitimate funding package for the next five months. Ev- and, and, and even if we set up a site, which is very hard to do, what lies at the end of the five-month period? Another cliff, another negotiation, another deadline effect which unravels into the present and makes clear that the five months will be wasted from the perspective of establishing growth. There’s nothing to remove the fears of Grexit from accepting this proposal. And this is what, why we’re taking this to the Greek people.

Yanis Varoufakis (01:37:18):

Now, and I’ll finish here, Jeroen. Allow me to submit it to you, that refusing to extend this agreement, the loan agreement, until after the Greek people deliver their verdict on the following Sunday, especially given that there’s a very strong probability, very strong probability, that the Greek people will not listen to our recommendation and will vote for the institutions’, uh, proposal, to be signed immediately. Refusing to give them the opportunity to pass their verdict will damage the credibility of the Eurogroup as a democratic union of nations, permanently.

Jeroen Dijsselbloem (01:38:03):

Right. Colleagues. I’m going to try and come to a conclusion of this part of the meeting. I explicitly say this part of the meeting because if I think we will come to the conclusion that I have in my head, we will have to have a second part of the meeting which is about next steps. Alex and Wolfgang made that point quite early. But I think we should have the second part of the meeting. Like I said, uh, first the conclusion of this part of the meeting.

Jeroen Dijsselbloem (01:38:39):

I think it is very important to realize that the institutions have worked very, very hard, critically hard to try and reach an agreement within the framework of the statement of the 20th of February, which allowed for some flexibility on different levels. Institutions have throughout the process made use of that possibility, in that, putting in that flexibility. Some effectively said maybe too much and have expressed their concerns about the credibility of the outcome. There was no final decision made on that because there was no agreement. Okay, it needs to be stressed that the institutions abused taking into account also the current economic set back that Greece have used, the flexibility that was allowed.

Jeroen Dijsselbloem (01:39:25):

At the end of our last meeting, we stressed that the door is still open and we ask the institutions to look at the last, which came in very late, the last proposal by the Greek authorities and they have done so and if I now understand correctly, the talks continued even yesterday, even last night, until the Greek representatives at the table were called back by their government and therefore the talk stopped. That is a fair description of the process till last night. And if Yanis says, we are so close, then the question is quite fair, if so close, why walk away? Um, but the Greek government has decided pull out its people and therefore to break off the talks, however, regrettable.

Jeroen Dijsselbloem (01:40:22):

The government has rejected the joint position of the three institutions that was put on the table so far, uh, which is, in our minds, uh, uh, too early phase as on the technical side talks were still continuing and according to Yanis, we were so close, some question that if that’s true, if that it’s true. We never got to the final stage of the talks, which could have been, could have been today. The government rejected therefore the position of the three institutions that was on the table and put in a proposal to the parliament, which is being discussed as we speak, a proposal to have a referendum in a week’s time with a negative advice of proposals that were not finished, finalized, nor part of an agreement, certainly not complete as Michel Spain so rightly said.

Jeroen Dijsselbloem (01:41:23):

So it’s also fair to question what has actually been put to the Greek people, yet we’ve all said it is up to the Greek authorities. They are sovereign in their decision to call for a referendum. They must decide what they put to the people. There is some, there are some questions to be asked about the fairness of the question. So be it. Then if [inaudible 01:41:46], if the outcome is a yes the Greek government says they will implement it immediately, but questions have been raised, what is the credibility of that? We have the experience, all of us here in the Eurogroup over the last years that programs only work if governments take ownership, and the government that has strongly criticized the program, and has put it negatively to its focus, would then implement it in that scenario, would also be a great, a matter of great concern that a number of you have raised that point.

Jeroen Dijsselbloem (01:42:16):

If the outcome is no, then apparently the Greek government suggest to its people that there will be a better outcome, that they will renegotiate. But given the state of play, I don’t think that is a feasible possibility and I’m listening very careful to both the institutions and to the ministers that have said already flexibility’s run out. So that’s not very feasible, uh, way to move forward. All of this, uh, in combination with the fact that the government has been so negative on the results so far, the proposals by the institutions will go to a referendum with a negative vote and listening to you, there is no ground for an extension of the program, there is no support for that.

Jeroen Dijsselbloem (01:43:01):

And I once again express my concern and my sadness to the fact that these talks have ended, uh, by the Greek, uh, side at this point last night, un-ended, uh, unfinished. That’s, uh, indeed as some of you have said, a sad day for the Greek people. That would be my conclusion of what I’ve heard from the colleagues. I see Michael would like to react.

Michael Noonan (01:43:39):

I just wanted to ask, uh, Jeroen, do you propose now to have a communication strategy and a statement of the meeting that reflects the summary of [inaudible 01:43:48] before us?

Jeroen Dijsselbloem (01:43:52):

What I would like to do is if we are uh, uh, on the same basis, if we agree along these lines, of course, I can’t expect the others to agree with my conclusion. So, uh, then we will try and draw out, I think our reasoning, uh, statements along these lines. I think it’s important to be very precise on theses conclusions. Secondly, I think we should then close this meeting with Eurogroup. I should have a press conference to make this public and we could, at a later moment, not too late, don’t worry, reconvene for an informal meeting of ministers of finance, 18 ministers of finance, that will be my proposal to talk about further steps we have to take to protect the eurozone, uh, eurozone countries and the monetary union as a whole.

Jeroen Dijsselbloem (01:44:47):

Of course, uh, invite the institutions to be presents, their, uh, information on preparations in these scenarios are very [inaudible 01:44:55] so we need their reports [inaudible 01:44:59], uh, a different meeting, a different, uh, uh, uh, stats, that will be my proposal from the follow up. We will have to finalize that draft statements [inaudible 01:45:11] I’ll ask you to stay here, not communicate, not communicate, do not Twitter from this room. You’ll, uh, we need to do this in an orderly manner. We will draw our statement as soon as possible so we can, uh, [crosstalk 01:45:27] agree on the text body. Thanks.

Yanis Varoufakis (01:45:30):

Uh, [inaudible 01:45:31]. I have a technical question for you. Uh, is it or is it not the case that statements, statements must be agreed to unanimously?

Jeroen Dijsselbloem (01:45:48):

No, uh, if you do not agree, we will put that explicitly and save it. Uh, it is like in-

Yanis Varoufakis (01:45:53):


Jeroen Dijsselbloem (01:45:54):

… 18 minutes and one minute, so it has a different view. Uh, I, I will prepare a statement.

Yanis Varoufakis (01:46:19):

[foreign language 01:46:19].

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