17 March – Euro Working Group Teleconference

Marco Buti (00:01):

… coming in the next eh, in the next days and erm even if erm the Greek authorities manage to overcome erm the erm, the erm [inaudible 00:00:14] of the next couple of days, the situation would become… let’s say erm, pretty critical in early erm… in early April. So I think this is basically… just to set the scene in very general terms… so there is a need clearly to summarize the, the two… erm you know, accelerate the pace of the discussions in Athens and go in-depth erm, on the substance of erm, of issues. Erm if you agree Thomas, I give the phone to Declan who may add erm, some additional points.

Thomas Wieser (00:52):

Sure, thanks very much [inaudible 00:00:55].

Declan Costello (00:56):

Yeah, thank you. Erm, so just, just to add a bit more detail. So the meetings themselves, the technical-level meetings began on Friday. Erm this follows erm, first the meeting of the so-called Brussels Group which established the procedure and the arrangements for these [inaudible 00:01:10][crosstalk 00:01:10].

Thomas Wieser (01:10):

[inaudible 00:01:10].

Declan Costello (01:09):

The discussions- [crosstalk 00:01:14] The discussions began erm with the massive- [crosstalk 00:01:17]

Computer (01:16):

Has entered the conference.

Declan Costello (01:19):

Erm the [inaudible 00:01:20] teams and the fiscal teams erm, starting on Friday erm, and then today the erm Financial Markets Instructional Reforms Team are, are starting their work. Erm, I won’t go into too much detail, I guess the, the main points here is that the frequency, the intensity and the detail of the interactions is not what we have witnessed erm, in the past and I think doesn’t provide us with the assurance that we would be able to erm, be able to reach a successful conclusion erm, by, by the end of April, unless there is a very, very big erm, acceleration in the face of, of interactions. Erm, we seem to be struggling on a number of points, erm, still.

Declan Costello (02:07):

Erm, I think first, erm, there seems to be a difference of interpretation between ourselves and the Greek colleagues on the scope of, of the negotiations. Erm, we’re certainly sticking to the view that we need a comprehensive approach erm, touching upon all key policy reform areas. Of course within that we can look at a number of individual proposals put forward by the Greek authorities but we, we stick to the need to, to have this kind of comprehensive approach and be able to, to you know, to, to touch upon all key, erm, all key areas. Erm, in contrast I think the Greek colleagues seem to be having a more narrow, erm, more limited erm, focus of the discussion, concentrating erm, not exclusively, but almost exclusively on some of the key issues which they want to advance. Just to underline, we are prepared of course to discuss these, but, within a comprehensive erm, approach.

Declan Costello (03:02):

Also I think there seems to be a difference of view on the, the depth of information exchange which needs to take place [crosstalk 00:03:09]. Erm, as you know in the context of, of review. We really need to erm… the devil is in the detail. We really need an in-depth understanding, a fact-finding of what the situation is erm, what… how policies, or the implementation of policies to date, to, to date. And also to get a clear understanding… you know fact-finding at this stage of the policy intentions, of the government… erm, both the previous commitments but also any new measures they would envisage. So again, erm, we really see the need to step up the, the pace of intensity erm, of work here.

Declan Costello (03:42):

Maybe I’ll just turn to the issue of the, erm, the unilateral actions and communications. We, we’re still erm, we’re still witnessing and experiencing, you know, a plethora of erm, policy announcements which come from different parts of the government which make it very difficult to, to really get a grasp on the, on, on the policy, on the policy intention. Erm, we have particular concerns about the bill being erm… which we think, we, we expect to be adopted tomorrow. Erm, as Marco mentioned there are some humanitarian measures erm, related to erm, access to electricity, housing and food, and here [crosstalk 00:04:20] it would, you know, we would welcome erm, having a bit more detail in terms of the implementation… the design of these measures, the budgetary costings. There was supposed to be a technical meeting on this today but unfortunately it was cancelled.

Declan Costello (04:32):

Erm, but I think a wider concern is, in a sense, it still seems to be erm, turning into a bit of an omnibus bill erm, where different elements are being added to it. But when the bill was introduced to Parliament there was a number of additional chapters included in it, in this bill [inaudible 00:04:47] humanitarian. Erm, one for example was the erm, removal of the position of the, an anti-corruption coordinator. Erm, this was a previous erm, commitment under the program. Again we don’t… erm we, you know we, we understand the intention of the government is to really erm, work hard and be ambitious in this area, but it’s difficult for us to understand why a position erm, which was agreed before is being eliminated [crosstalk 00:05:10] without clarity, at this stage, on what… you know, what would replace it and what would come next.

Speaker 5 (05:15):

[crosstalk 00:05:15][foreign language 00:05:15].

Declan Costello (05:15):

Erm, in addition to some of the proposals actually tabled by the government itself, a number of amendments are now being tabled… erm, are presented to parliament during the parliamentary process. And, and these are potentially quite significant, touching on areas erm, such as collective bargaining and effecting public procurement, and we think that these are going in a direction which is not consistent with previous reform commitments so, again, our strong… our strong erm, request, would be erm, on the part of the authorities… you know for these types of, these types of additional elements, we really don’t understand the need to progress so quickly erm, these are complicated areas and there is a need to respect erm, not only the previous commitments but also, in the case of public procurement, the, the, the European provisions which, which apply in this regard.

Declan Costello (06:02):

Erm, I think it would be erm you know, a pity, erm, if this was to proceed with adoption without having the… taking the time for the due consultation. I’ll stop here fellas.

Thomas Wieser (06:14):

Thanks very much erm, that’s, that’s erm, really very [inaudible 00:06:17]. Benoit or Rasmus…

Benoit Couré (06:23):

Erm, yes Thomas, good afternoon to all of you, Benoit speaking. Erm, I can be extremely short erm, on, erm, on most of the issues erm and start by saying that I erm, concur with what erm, Marco and Declan just said erm, 100%. I can subscribe to every word that Declan just said. So we, we certainly welcome very much, they type of [inaudible 00:06:49] that the technical discussions have now started and erm, it is very promising but we see erm, these discussions as being erm, severely constrained erm, both by erm… initially by organization issues which Marco mentioned, erm, which erm now seem to be settling but erm, it is just a fact that having two separate erm, discussions and teams in Athens and in Brussels erm, creates additional erm, costs, transaction costs and [inaudible 00:07:18].

Computer (07:18):

Has entered the conference.

Benoit Couré (07:21):

[inaudible 00:07:21] making things simpler. Erm, this is now being overcome erm, but the discussion remains erm, constrained also as erm, as Declan highlighted, by erm, the lack of erm, breadth in the discussion. Erm, so we are still not covering the full spectrum of the issues erm, that are erm, being erm, listed erm, in the erm, in the MOU. And on those erm, reforms that are priority for the Greek government, which is accepted and erm, and compliant with the overall discussion, erm, we see a temptation erm, of unilateral action, erm and erm, I don’t have anything to add with, to, to what Declan said on erm, the, erm humanitarian erm, bill. Also the erm, new erm, instalment law, erm, is a matter of concern for us erm, we see a number of elements erm, that erm, are erm, elements of concerns. The, the law is extremely generous, in terms of the, the number of people and the level of income that would be covered. And also in terms of governance, erm, it seems to sideline erm, the Secretary General for Public Revenue. Erm, which is not the spirit of erm, the erm, governance reform of the tax administration which erm, generally erm, was erm, was the direction in which the Greek authorities were going.

Benoit Couré (08:46):

So I’m not going into too many details but there are elements of erm, unilateral action erm, which erm, are a matter of concern to us and the erm… I can fully subscribe to Declan’s conclusion that, if we want to erm, successfully conclude the review erm, in due time erm, there is a need, there is an urgent to erm, to step up the pace and intensity of the discussions. Erm, it’s not too late but erm, we are really running out of time here. Erm, and so there will be a need for a very significant acceleration erm, in… also in terms of the, of the breadth of the discussions.

Benoit Couré (09:21):

Erm, as regards the liquidity situation of the banks, erm, here we have better news. Erm, the liquidity conditions of the banks have started to level-off. Erm, deposit outflows have stabilized in recent weeks. Erm, but of course erm, future developments remain highly dependent erm, on the perception erm, of the overall situation of the progress and the discussion and on the perception of the funding erm, needs of the state. But the Central Bank operation so far, has been, has been broadly stable and erm, as is now erm, being erm, known… and week after week erm, the governing council of the ECB has not objected to increases erm, in, in emergency liquidity assistance. Erm, last week, and again erm, most likely erm, tomorrow, will be erm, not objecting to a, a further increase erm, in the liquidity which is provided by the Central Bank of Greece to the Greek banks.

Benoit Couré (10:24):

So liquidity is being provided to the private sector erm, and as you know erm, the erm… we are not providing liquidity erm, to fund the Greek government, which would be in breach with the treaty. So erm we maintain, we’ve maintained a monitoring threshold erm, in terms of the amount of T-bills held by Greek banks erm, that are in the ELA, to make sure that any additional liquidity, which is being provided by the Central Bank of Greece erm, is used to fund the private economy and is not being used [inaudible 00:10:55] fund erm, the government, at a time where the government does not have market access. I can stop here.

Thomas Wieser (11:03):

Thanks erm, thanks very much erm, Benoit. Erm, Paul, are you online?

Paul Thomsen (11:10):

Yeah I just joined so I do not have the… I do not know what the [inaudible 00:11:17].

Thomas Wieser (11:16):

Let me just say a few words. Erm, there was a erm, mess-up with the template erm, used for the invitations so erm, you received it very, very late and my apologies for that. [crosstalk 00:11:28].

Paul Thomsen (11:29):

[inaudible 00:11:29] understood.

Thomas Wieser (11:29):

The question-

Paul Thomsen (11:29):

So I-

Thomas Wieser (11:30):

The question was, to Declan, Marco and then Benoit erm, to debrief us on the erm, current erm, discussions erm, underway in, erm, Athens. Erm, on, on how satisfactory or not they’re going, breadth, outlook, erm, and erm, what erm, the take is on the liquidity situation of the sovereign and you’ve now heard Benoit on the liquidity situation erm, of the banks. So that’s erm, the aim of the exercise for today, so if you could erm, provide your view erm, from Washington please.

Paul Thomsen (12:10):

Okay so, I, I can be very brief erm, we think the process is highly unfinished actually. Erm, we think it’s clear that the authorities are not really interested in engaging in discussion of the review. Erm, it’s clear that they consider the mission mostly a nuisance erm, being there. Erm, and erm, some of the communication highly inflammatory statements by officials about erm, the technical people that are there, are, are, are, simply not acceptable. Erm, we’re not making progress erm, of erm, any significant progress erm, you know I, I, I assume that Declan has gone into, into sufficient detail but this is not leading us towards concluding [inaudible 00:12:59].

Thomas Wieser (13:03):

Okay. Erm, short, short and precise. Erm, as I said at the outset, it appears that George, George [inaudible 00:13:13] is unable to join erm, today. In his stead, Theocarakis?

Greek Representative (13:23):

[inaudible 00:13:23] Yes hello erm, I’m sorry to report that the behavior of the technical teams, in the opinion of my government and my Prime Minister, has violated the terms agreed by the Brussels Group, in particular the agreement erm, that in Athens, only technical… the teams would collect only facts. So my Prime Minister has now elevated the matter unto the highest political level. Which means that the solution is now to be reached, not at the technical level, but at the political level, which is much above the Euro Working Group level. So in this sense, I do not think this teleconference serves a useful purpose and I’m clearly and unequivocally not authorized to say anymore here. Thank you.

Thomas Wieser (14:14):

Well, erm, that seems to be quite in the spirit of what erm, Declan, Marco, Paul and Benoit erm, have erm, been talking about, so that’s a good confirmation in a way. Erm, any questions colleagues… or comments? [crosstalk 00:14:29].

Speaker 9 (14:29):

Erm Thomas, can I come in please?

Thomas (14:33):

Yes please, go ahead.

Speaker 9 (14:36):

Erm, it’s, it’s a bit hard to react after what we’ve just heard but erm, it gives to me certainly the impression that erm, the Greek authorities do not intend to stick to the agreement reached in the Euro Group and they do not intend to engage in serious talk. And to me, the question now is, does it actually make sense to carry on? And if erm, our Greek colleague says, this is to be elevated to erm, a higher political level, erm somebody must remind them that the only people who take the decisions are the people in the Board of Governors of the ESM. And nobody can force them to take any decisions and they are bound by the ESM treaty and most of us are bound by national laws. [crosstalk 00:15:33] So no decision can be taken anywhere else and that should be clear to the Greek authorities even though- [crosstalk 00:15:41]

Speaker 9 (15:40):

Somebody erm, obviously is not allowed to say anything sensible on this matter, thank you.

Thomas Wieser (15:48):

Thanks a lot, anybody else?

Speaker 10 (15:52):

[inaudible 00:15:52].

Thomas (15:53):

Thomas this is Thomas, if I may?

Thomas Wieser (15:54):

Yes please, come in Thomas.

Thomas (15:58):

Thank you, it’s only on two very quick points. The first one is that [inaudible 00:16:04] just try to remember erm, my picture from weeks ago, erm whether we are riding at that horse, and I guess we now know the answer. The second point is, erm, that erm, in public communication it should be clear Thomas that, we are still offering the Greek colleagues erm, the cooperation. So it’s not us to stop the cooperation, it should be crystal clear. Erm, and erm, that would also be a crucial point maybe, when we prepare our erm, heads of state erm, for erm, Thursday or Friday, that again, we are willing to cooperate, we always have been willing to cooperate, this is a very important public erm, message. Thank you.

Thomas Wieser (16:54):

Thanks very much Thomas. Erm, anybody else? Does not appear to be the case… So for me, erm, I just have a look at all the agreements, erm, I see the 20th February erm, where in the second paragraph it says, the purpose of the extension is the successful completion of the, 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.

Speaker 10 (17:37):

[inaudible 00:17:37].

Thomas Wieser (17:36):

Erm, and it also goes on to say that only approval of the conclusion of the review of the extended arrangement by the institutions in term will allow for any dispersal [inaudible 00:17:50] of the outstanding crunch of the current HFSF program of the transfer of the 2014 profits. Both are again subject to approval by the Euro Group. So erm, it strikes me as if there is a continuous erm, roll-back or attempts to roll-back at erm, each and every level of the Greek, erm, authorities of this and other erm, agreements. Erm, from what I hear from a variety of sources erm, the treatment of colleagues of the institutions erm, has I think, worldwide, never been any worse. Erm, if I draw on many years of fund erm, experience. Erm, and erm, I think we all stick to the offer that is on the table. That is quite clear, they are contained in the paragraphs [inaudible 00:18:48] of 20th February. There is a long, long list dated 23rd February erm, with a viewpoint end April. And only very, erm, detailed, structured, and technical examination of all the issues can reveal if such measures are fitting into the overall design erm, of our arrangements, or not. Erm, and if this is not the case, erm, then there can be no final and overall judgment.

Thomas Wieser (19:29):

So I do indeed erm, believe erm, we need to push on. Erm, if the Greek Prime Minister thinks that he needs to push it… pull, push or whatever, shove it to the highest political level, this is, erm, I think extremely good and I would hope erm, that erm, come Friday erm, there will be an overall agreement erm, that we will be working on the basis erm, of erm, the Euro Group statement of 20th February, which indeed also makes reference to previous agreements erm, that erm, have been had and which go back, erm as a matter of fact, erm, right back into erm December.

Thomas Wieser (20:20):

So erm, I guess erm, what erm, we should be striving for, erm, is that we all agree, hopefully after, erm, many more important people have spoken, that we could agree, erm, to significantly accelerate work at the technical level. Erm, that this puts us into the position of being able to work within the existing erm, arrangements, identify what is jointly feasible and where erm, does one have to use, or does one want to use, the existing flexibility. Erm, if one wants to use the flexibility, one has to look closely, what does that mean for the overall erm, fiscal framework erm, etcetera. [crosstalk 00:21:14] And on that basis erm, one would sincerely hope erm, that by the end of April, we come to, erm, a conclusion, which [crosstalk 00:21:22] would then lead to further erm, measures erm, on the parts erm, of erm, all of us.

Thomas Wieser (21:27):

So, if… [crosstalk 00:21:28] I think this is erm, something we still strive for, as far as I know, erm, this is erm, the strong opinion erm, of all member states with whose representatives I’ve spoken about that. [crosstalk 00:21:47] Erm, and, erm, we need to erm, hope that a fresh and renewed push [inaudible 00:21:59]. Now erm, the communication has merely given us hope-

Computer (22:03):

Has entered the conference.

Thomas Wieser (22:06):

[crosstalk 00:22:06] Erm, but just again erm, to repeat erm, that a significant degree of restraint would be highly desirable, erm, but I realize of course that now I am not talking to those who are not using that restraint, it is usually erm, at erm, other levels. Erm, so, maybe in closing, just a few words on the information, erm, which we’ve received on the national procedures erm, which are required for the EWG and HFSF board of directors’ decision on the former HFSF buffer. Erm, you’ve erm, all responded to the survey which was sent, erm, by the Secretariat, erm, the info will be analyzed erm, and there will be a proposal, how best to proceed, erm, at our next Euro Working Group meeting or even earlier at a call. Erm, and in the meantime the Secretariat will be circulating a final version of erm, the table which includes the latest information, erm, which is erm, being provided erm, to, erm, by you.

Thomas Wieser (23:18):

So [crosstalk 00:23:19] I have the, erm suspicion, erm, that the date of our next Euro Working Group meeting erm, either in conference call or in vivo, might not be the 8th and 9th of erm, April, I think was the date was the date [inaudible 00:23:34] earlier. But anyway, I have [inaudible 00:23:39]-