11 May – Eurogroup in Brussels

Discussion over progress and agreeing on a communiqué.

Jeroen Dijsselbloem: Let me try to, I won’t do much to this statement. Let me try once. What if I were to say, we therefore welcome the intention of the Greek authorities to accelerate their work with the institutions. By putting that way you are saying that it is your intention to put in the extra effort… It does not sound as if someone is criticising you. You are saying that we shall do what it takes.

Yanis Varoufakis: You are tempting me to say that I would like the institutions to say they same thing. But I won’t say that, because I want to be helpful. We shall accept this even though we state for the record that there are two sides and thus both must accelerate their efforts and rate of concession.

Jeroen Dijsselbloem: I am sure everyone is ready to continues putting in the work…

Actual communiqué:
The Eurogroup today took stock of the state of play with the ongoing negotiations between the Greek authorities and the institutions. We welcomed the progress that has been achieved so far. We note that the re-organisation and streamlining of working procedures has made an acceleration possible and has contributed to a more substantial discussion. At the same time, we acknowledged that more time and effort are needed to bridge the gaps on the remaining open issues. We therefore welcome the intention of the Greek authorities to accelerate their work with the institutions, with a view to achieving a successful conclusion of the review in a timely fashion. The Eurogroup reiterated that its statement of 20 February remains the valid framework for the discussions. Once the institutions reach an agreement at staff level on the conclusion of the current review, the Eurogroup will decide on the possible disbursements of the funds outstanding under the current arrangement.

Speaker 1 (00:00):

… closely and they’re supposed to conclude the package by June. On the statistics, let me draw your attention to the commitment to a man you know modified dependence of endemic statistics Institute as a start. A draft decision is now being discussed, involvement of experts from Eurostat. Uh, so there are really welcome progress. Despite this progress, uh, we are not yet, as I said, close to reaching the staff level agreement. Let me highlight some key areas where further work, uh, remains to be done.

Speaker 1 (00:36):

First, we are to agree, uh, yet on fiscal package for 2015 and 2016 and critical measures to fill, uh, substantial gaps. We need to see a couple of large, uh, parametric reforms that deliver, a, a key a yield to some ’15 and ’16. Uh, authorities have brought in the idea of an important reform of the, uh, VAT rating system, uh, exemption to be restricted to goods and services to the mentally consumed by low income outsource. Uh, this would be, uh, more than promising move, uh, but we must move, uh, this idea from an option under discussion to clear a quantifiable proposal that delivers a, a, a large net fiscal growth.

Speaker 1 (01:24):

We also need [inaudible] consolidation that is expenditure based and not only revenue based. Uh, potential reform can contribute. We offer our support to help design reforms that ensure sustainability correspond and strengthens incentives to work. Uh, on the privatization program, uh, several tenders have not gone, uh, ahead, implying scale-back. This is somehow disappointing, uh, uh, as it can generate significant lower proceeds than foreseen.

Speaker 1 (01:58):

Uh, talks of [inaudible 00:01:59], uh, are key for the overall, uh, make recommend scenario and should continue in the coming days, uh, to produce a robust list of actions. On a product market reforms, uh, more work needs to be done. Uh, on a welcome positive note, we seem to be converging of measures to open up gas markets and strengthen the energy regulator. But plans to rethink reforms in the electricity sector may need to be further strengthened. Labor markets globally remain an area of concern.

Speaker 1 (02:33):

Uh, we share the goals of the modern, uh, system of collective bargaining and to reflect social demands in this difficult period. But we, uh, should steer clear of any return to the fraud practices of the past. And similarly, proposals of minimum wages should reflect current market conditions with an unemployment rate, which is still at 25%. Uh, Greece needs modern, uh, labor market institutions to provide a better employment opportunity. Finally, uh, allow me to, to stress Commission support, uh, for measures to alleviate the [inaudible 00:03:13], uh, impact of the economic crisis and to help Greece, uh, build permanent, uh, getting social safety nets.

Speaker 1 (03:21):

Uh, the approach is to target root problems under [inaudible 00:03:25], uh, be it poverty, uh, amongst the elderly of the risk of uh, homelessness. And we need [inaudible 00:03:33], uh, targeted instruments, measures that directs resources, uh, uh, those most i-in need. Uh, general approaches, uh, will not suffice and uh, will not bring the results we all, uh, seek. We can work together and affordable schemes that provide immediate support, uh, in the near term.

Speaker 1 (03:55):

So, and one last word about next steps. Uh, overall, uh, we can say, uh, we will, uh, commit to any statement that goes into that direction of course. Uh, we can say that there has been good progress on the process and, uh, promising at scoring in a number of areas. However, uh, continual work, uh, must still be done to secure a credible blanket that meets the approach we agreed on, uh, the 21st … the 20th of February. Uh, I therefore, uh, call upon Greek authorities to redouble their efforts, uh, and work intensively in the Brussels [inaudible] in the coming days.

Speaker 1 (04:37):

We have to have an agreement as soon as possible, not only, uh, so that Greece can meet its obligations, but also because it procedures to make a program disbursement outcomes and take at least four weeks to complete. We’ve got their parliamentary, uh, approvals that need to be met. Once, uh, its review has been, uh, successfully concluded, then we can proceed [inaudible 00:05:02], which for a follow up arrangement, uh, in line with the, uh, February Euro statement, which remains [inaudible 00:05:09]. Uh, the outcome automatically depends on, on political will and commitment, uh, from both sides.

Speaker 1 (05:16):

So from the legal parties, uh, and the Commission stands ready and to fully engage with the Greek authorities alongside institutions, you, as it is done in past weeks. Uh, that’s our impressions and, and comments. Merci Pierre. Um, Benoit?

Speaker 2 (05:44):

Thank you for your management of Alexander [inaudible 00:05:47]. Uh, he was the first president of the EMI Uh, and in that capacity, he led the foundations of the, of the ECB. And uh, as a member of the, uh, of the [inaudible] committee. Uh, he was certainly a foremost, uh, proponent of the view that, uh, police interactions in the monetary union have to be, uh, governed by proper [inaudible] framework. So there is still much, much to learn from it and from him.

Speaker 2 (06:13):

Um, moving to Greece, um, let me say a few words on the, uh, market, uh, and uh, banks liquidity situation. Um, markets are certainly waiting for the outcome of today’s, uh, meeting. Um, the, um, higher volatility recently displayed by Greek [inaudible] markets, uh, evidenced, uh, nervousness about the unfolding developments. Just to give you a, a measure, a measure of it, the Greek two year government yield, uh, has [inaudible] between the 18.6% and 25.6% [inaudible 00:06:47] Eurogroup, just to give you a measure of the, uh, nervousness of financial markets.

Speaker 2 (06:53):

Uh, the liquidity condition of banks remain extremely strained and fragile. Um, deposit outflows have accelerated, uh, following, uh, the last Eurogroup meeting, uh, on the 24th of April. This influx reflects the decree on cash pulling of, uh, government of public sector deposits, uh, which is in itself not an unwelcome development. It’s just a mechanical consequence of, uh, public sector entities withdrawing money from their bank account, which is fine. And, uh, and uh, consistent with the, uh, uh, general objective of ensuring the solvency of the state. But it also reflects, uh, deposit uncertainty.

Speaker 2 (07:27):

Uh, currently is a Greek banking system receives 114, 1-1-4, billion of central bank liquidity, which is 64% of Greek GDP and by far the highest of any, uh, euro zone country. Uh, liquidity will continue to be extended by the, uh, Central Bank of Greece, uh, as long as Greek banks are solvents, uh, and have, uh, sufficient collateral, uh, and as long as, uh, this liquidity extension, uh, does not constitute monetary dependence of the government. Uh, however we should be aware that collateral is limited, uh, and that the value decreases when, uh, Greek government bonds raise. Uh, [inaudible] governing council, uh, continues to be assessors of the [inaudible] collateral use for [inaudible] purpose, uh, including the applicable haircuts.

Speaker 2 (08:16):

Um, these had been discussed in the governing council last week, uh, and the governing councils closely, uh, monitoring the situation. So the bottom line here is a financial situation of banks is, uh, increasingly fragile, uh, and it’s crucial that we see next steps, uh, to come to an agreement, uh, to help restore market confidence and, and deposit of confidence. So in this perspective, we welcome very much the confirmation by the government that the, uh, uh, payment to the IMF tomorrow, uh, will be made. Uh, and let me just, uh, uh, let me just, uh, uh, comment that, uh, any, uh, um …

Speaker 2 (08:56):

That the government not, uh, uh, meeting an international commitment would have a, uh, severe and po-potentially devastating, uh, impact on the, on the [inaudible] system, uh, which would be [inaudible] harm Greek economy. Um, on the um, review. Uh, and just, uh, to follow up on what Pierre has said, on the process, we also welcome, uh, the, uh, notable improvement in the discussions in the, uh, in the Brussels group. Um, still the process is far from optimal. Uh, logistic, logistical constraints have slowed down progress.

Speaker 2 (09:31):

Uh, direct discussions with relevant ministers, uh, would have been desirable. And this is not only a question of efficiency, but also a question of ownership by the, uh, various ministers. So it’s crucial, uh, that the Brussels group discussions has a backing from the entire, uh, government. Turning to substance, uh, we’ve seen progress in, now in some of the existing policy differences, uh, that relates to the macro economic collections for ’15 and ’16 as Pierre has said, had said, uh, where it should not be too difficult to agree on the common deadline. Uh, also, the authorities have shown openness to consider a significant simplification of the VAT, uh, system for reducing the number of freights and limiting the exemptions.

Speaker 2 (10:13):

Uh, discussions are continuing onto the appropriate fiscal targets. Uh, and we also welcome the government’s intention to, uh, bolster the autonomy of the, uh, revenue administration. Um, so in these areas and agreement [inaudible] within a relatively, uh, short period of time. Uh, that said a, um, an agreement on [inaudible] surplus targets, which would not be underpinned by, uh, the credible package, uh, of fiscal savings, uh, would lack credibility. Uh, and, uh, there are o- other important areas where differences, uh, between the political proposals of Greek government, uh, and what would be required, uh, for conclusion of the review, uh, are still very large.

Speaker 2 (10:52):

Um, so I’m not doing to restate what Pierre just said. Let me just reemphasize a few examples, uh, of policy areas where significant further work is needed. Um, apart from the possible simplification of the VAT, uh, system, uh, the government has not made any substantial proposal for, uh, solid structural revenue expenditure of these consolidation measure, which, uh, underpins a point that any fiscal targets should be backed by, uh, uh, permanent and, and tangible, uh, measures preferably on the, on the, on the uh, on the spending side.

Speaker 2 (11:27):

Uh, privatization targets are still for substantially short for program requirements and they’re not very specific. Um, the, um, policies for the pension sector, uh, still, uh, lack a, a coherent strategy. Uh, and the, uh, from an ECB standpoint, the non-performing loan, uh, eh, problem, uh, requires special attention. It is, uh, essential that the code of [inaudible] procedure is passed by the parliament as quickly as possible, uh, without allowing the invested interest to, uh, weaken it, uh, [inaudible 00:11:59], uh, consultation process.

Speaker 2 (12:02):

Um, the government’s policy intention is there is area of pensions are clearly, uh, [inaudible] to what is needed to ensure sustainability. So, uh, here we need to have a, uh, a full discussion on what, uh, will ensure the s-s-s, the sustainability of the pension system, uh, and achieve, uh, [inaudible] fairness. Um, in the area of labor market policies, uh, the, uh, governments, uh, intends to unwind, uh, major reforms of existing programs, um, and there are no intentions to pursue, uh, any of the additional policy initiatives for [inaudible] the programs.

Speaker 2 (12:36):

So again, this is a scenario where that can be pluses and minuses, but, uh, we, uh, we, we have to discuss the pluses and not only minuses. Uh, regarding product market reform, uh, the government’s policy intentions still lack, uh, ambition and fall short of the program, uh, requirements. Uh, and we also believe that the government should move ahead with the social welfare review and, uh, consider the national [inaudible] guaranteed minimum income scheme. That is a very important point, uh, because that is about achieving fairness, uh, uh, in the structural reform, uh, program.

Speaker 2 (13:12):

And, uh, we believe that fairness would be better ensured through a, uh, a, an overlay, uh, general scheme done by, uh, twisting all, uh, individual reforms, uh, toward the distribution, toward the distribution and fairness would be better achieved, uh, through a, uh, uh, uh, uh, a general scheme, uh, uh, allowing other reforms to focus on, uh, on efficiency. Um, so taking all of these together, uh, there has been a narrowing of differences in the limited number of areas. Uh, policy gaps remain large, uh, in others. And the conclusion is that that’s still, uh, a considerable distance, uh, of conclusions of the review.

Speaker 2 (13:48):

Uh, we need rapid progress, uh, in those areas, uh, where differences remain large. This requires further technical work, uh, in parallel with discussions with the Brussels group, um, and it requires significant, uh, movement from the side of the Greek government. So it’s all possible given the improved, uh, uh, work, uh, uh, atmosphere and improved, uh, trust and working relationships in the Brussels group. It’s all’s, it’s all possible, but there’s still a lot of work.

Jeroen Dijsselbloem (14:17):

Thank you. Paul?

Poul Thomsen (14:21):

Thank you Jeroen. So, i, I agree that, uh, we agree that, uh, there has been progress, uh, both as far as process and as far as substance, uh, concern. On the process, uh, uh, the dis-discussion in the Brussels group have become more open, more cooperative and, and, and better focused on lead negotiator report directly to the prime minister. And this is indeed a, a good news. And I joined Pierre and Benoit for, uh, having listened, uh, uh, uh, to the call for, for improving the process. This being said, uh, the process could clearly improve further.

Poul Thomsen (15:07):

I think it’s important that we are open about this in lieu of the urgency of the situation and the need to be sure that the process does not become an obstacle to a timely conclusion. The main remaining problem is that ministers responsible for policy implementation are still not participating in the discussion. No minister have yet been to, eh, included in the deliberations in Brussels, uh, in, in the Brussels group. As a result, while technical experts finally joined the discussion as last week, they too often still do not have sufficient political gui- political guidance and the information received at the technical and political levels is sometime inconsistent.

Poul Thomsen (15:48):

Moreover, eh, it’s been one of the commitments by negotiators in Brussels are still offer being contradicted by public statements or, or drafting legislation by line ministers in Athens. I think bringing ministers to the table would help overcome these problems. In any case, and I, it’s important for me to stress that fund management will need to be assured before endorsing a program that ministers responsible for implementation support the agreed policies. Again, we do agree that the process improved no-notably, and this is why we are making some progress.

Poul Thomsen (16:26):

So on the issue of substance, eh, I think there has been progress so far in a, in a, in, in three areas. On the VAT reforms, eh, the authorities have, have suggested that they might consider to broaden the base by sign- essentially unifying tax rates with a few exceptions. They still need to indicate that they have sup- political support for this option and agree on tax rates and limitations on exemptions that ensure a notable positive revenue efect. But I think it’s fair to say that this is emerging as one of the potentially more promising areas for common ground for major reforms.

Poul Thomsen (17:11):

Secondly, on the autonomy of revenue administration, this is an area where the authorities initially reversed reforms, uh, that had been made in the past to increase autonomy, including by adopting legislation that, that established in effect, the panel of tax administration undermine the effectiveness of the tax administration and increase the room for political int-interference. I think they … it’s clear signals that they intend on changing course. Uh, and, and, and, and, and understands the importance of a more autonomous agency.

Poul Thomsen (17:40):

Here too, we still need to specify concrete critical details, but this also is an area where I see signs that we could agree on significant reforms. Third, insolvency framework. The authorities committed to undertake a series of reforms of the insolvency framework and, and, uh, and they have provided a draft strategy. Here too, critical details need to be specified and agreed within a comprehensive framework. So this is, this is good news. Uh, uh, uh, it is, it, it’s good news that we have progress in these areas. As others pointed out, it’s, it’s the progress on, uh, on broad objectives and principles and we need, we still need to agree on how to get, on how to achieve it. What are the concrete details?

Poul Thomsen (18:27):

In all the areas, however, including some of the most important ones, we have not made much progress and policy differences remains significant. On the 2015 budget, there are still some differences of views with regard to what should be the primary surplus target for 2015, but the more important difference is that the authorities appear to believe that the fiscal targets can be achieved without any significant additional concrete measures requiring legislative changes. While we are still in the early stages, uh, uh, the authorities appear to believe that these targets can be achieved largely to efficiency measures.

Poul Thomsen (19:06):

Uh, uh, and, and, and as I said that there’s no need for, for, for, for parametric or legislative changes. This is simply not realistic given Greece’s extremely weak administrative capacity and poor historical performance with sorts of administrative measures. The government needs to stand ready to undertake structural fiscal reforms that involves [inaudible] changes approved by parliament. In this regard, as we have said before, tax rates have already been increased too much on a narrow base and all other expenditures and pensions have already been cut to what is likely to improve unsustainably low levels.

Poul Thomsen (19:44):

It is simply not possible for Greece to meet the ambitious t- ambitious targets for the primary surplus that are still on the table without one comprehensive VAT reform to broaden the tax base and to in particular without pension reforms to reduce but remains exceptionally generous pension benefits. And suspension reform would need to produce significant savings, savings in the coming years and not in the distant future. Moving on to structural reforms, this is certainly not the time and place to go into, into a detailed discussion. The big picture is that most of the major areas for reform, notably pension reform, civil service reforms, public administration reforms and the labor market reforms.

Poul Thomsen (20:31):

Uh, in most of these areas, the s- in all of these mentioned areas, the authorities are significantly backtracking, reversing policies already in place or saying the intent to reverse policies already in place and going back on program commitments about the future. We understand and I want to be clear about that. We understand that the authorities acknowledged that no reforms are not an option and that they, the point to them is that they want to do things differently and we of course accepted. But generally they have not told us … They, they have told us what they do not want to do, but they have not told us what they want to do.

Poul Thomsen (21:11):

They, they have told us what they want to subtract, but they have not told us what they want to add. So until we know what to add, we will in a situation where there appears to be a track of undoing many of the key reforms implemented since 2010 without putting anything else in, in, in, in, in place. In conclusion, although it should improve further, the process now clearly works better. This has enabled us to finally start making some tangible progress on substance, although details still needs to be specified in all of these areas. We’ve definitely made progress.

Poul Thomsen (21:46):

Moreover we are still, there are still, uh, uh, uh, uh, important differences in some of the most, most important policy areas. In general, the government still needs to be much more concrete about what it wants to do. Let me, uh … And I, I think, uh, it’s, it’s certainly encourage, courage, encouraging that we are making progress, but we obviously still far away from, from the staff level agreement. And uh, uh, uh, I, I, I, I join my two colleagues in, in, in, in encouraging the authorities to, to redouble the effort, given the, the, the time constraint and the urgency.

Poul Thomsen (22:25):

Finally, and I should be very brief in, in, in view of the leaks from Riga and the press statements about the … misleading press statements of what I said about getting that sustainability. Let me be sure that there are no misunderstandings. To be very clear, we are not pushing for debt relief. We are not. Rather from a debt sustainability point of view, you would agree that there is an inverse relief, inverse relationship between the strengths of, of, of reforms and the amount of relief that would be required. What I said in Riga was, if there are major deviations from the program in the form of reduced targets and weakening of reforms, in that case, more financing would be needed.

Poul Thomsen (23:07):

In this regard, carrying on more debt in a situation where Greece indebtedness is already very high, would point to the need for a more comprehensive debt measures than currently assumed. Thus, we would not be able to significantly weaken the program without accepting the need for significant move from the financing and significant move of debt relief, just to clarify. Thank you very much.

Jeroen Dijsselbloem (23:31):

Thank you very much Paul. Klaus, [inaudible 00:23:33].

Klaus Regling (23:34):

Yes, thank you. And not much to add, because I agree with what, um, the previous speaker has said. But from the ESM perspective and we are after all the creditor, let me confirm that we also see good progress on the process side, although it’s not an efficient process, given the decisions that were taken out or conducted for it’s a progress. And there’s promising progress on the substance, um, by the white gap before an agreement can be reached as well as the previous speaker said, so I will not go into the detail. Thank you.

Jeroen Dijsselbloem (24:08):

Thank you. Thomas to report back from the EWG or process.

Thomas Wieser (24:13):

Thanks very much. Uh, very shortly we had, uh, a stock taking exercise in the EWG, uh, on Friday. Uh, the institutions, uh, reported … Uh, I need not go into that again. This has been done, uh, in detail [inaudible 00:24:28]. Maybe just on, uh, timing as it, as it was discussed. Uh, it’s obvious from, uh, the reports that, uh, the remaining gaps are still, uh, significant. Uh, there will need to be very significant convergence, uh, on, uh, numerous areas. And in the best of circumstances, uh, this is a very complex iterative, uh, process which takes, uh, weeks and sometimes even months.

Thomas Wieser (24:57):

We know, however, that, uh, the clock is ticking. Uh, the program expires 30th June, the liquidity situation, uh, is more than tight. So it is of the essence that, uh, removes from more discussion-oriented, uh, phase to a real negotiating, uh, phase. Uh, what needs to become quite granular and, uh, very precise, and what is being, uh, put on the table and how it’s explained and how this is tied down, uh, binding the, uh, binding for all participants. And, uh, this is, uh …

Thomas Wieser (25:37):

I think the major, uh, concern that I would have that there is not, it’s not quite clear, uh, I think, how we get, uh, from here to staff level agreements, uh, [inaudible] reports with all the parliamentary processes [inaudible] to disbursement, uh, in the remaining seven, seven weeks of the program. Thank you.

Jeroen Dijsselbloem (26:04):

Thank you. Uh, now I’d like to turn to Yanis [inaudible 00:26:07].

Yanis Varoufakis (26:09):

Thank you very much Jorun. Uh, let me start also, uh, with a comment on leaks. Um, it would be good if there were none, but if there are leaks, it would be good if they were accurate. I never heard Paul Thompson, uh, discuss, uh, debt restructuring, (laughing) in Riga and I never had any one of you, uh, hurl abuse at me or personal insults despite what was, uh, um, widely reported in the press. So please, no leaks. But if you leak, if anybody leaks, they might as well be accurate with the leaks. Now, colleagues, over the last, uh, three months and especially after the 20th February, Eurogroup agreement, we’ve been striving to find common ground between the pre-existing program and our government’s priorities.

Yanis Varoufakis (27:02):

It hasn’t been easy for reasons that were mostly political, but also partly to do with process, technical. A very belief comment here because, uh, several, uh, representatives of the, uh, institutions mentioned it, how it will expedite the process if ministers were part of the Brussels group. Let me say that this is something that, uh, uh, we have very strong views about and which we have discussed with the commission in particular – ministers only talk to ministers. And this is a principle that we have to abide by. It’s the principle of, uh, the Greek government, which I’m simply mandated to convey to you now.

Yanis Varoufakis (27:41):

Now, nevertheless, we believe that the last fortnight as was said here by others, has produced substantial progress, partly because of a tightened negotiating process that removed procedural inefficiencies, but primarily because of major concessions on the Greek side. Agreement has not been reached, despite the substantial convergence achieved. The institutions wish to suggest that this imperfect convergence may be due to our, uh, reluctance to move further. Our side could retort that convergence has not been reached, because the agreement point has, has not, uh, appeared on the horizon due to the stance of the institutions.

Yanis Varoufakis (28:27):

But it would be imprudent to enter into such a fruitless exchange at the moment. This Eurogroup meeting must help the negotiations move onward toward a successful outcome and refrain from anything that may impede that progress. This is what our mandate is at this crucial time for our currency union, for our country. So in this spirit, in the spirit of helping the process along, it is important and right that the substantial progress that has been made and the substantial concessions by our side be acknowledged in our communicate today.

Yanis Varoufakis (29:08):

We have, as you heard, moved very substantially towards an independent tax authority. We have tabled particularly radical views of this, radical by the standards of any great government. Let me refer to something that was said. I think it was Paul that said it about backtracking there initially. It’s a very simple situation. The tax authority that the, that the general secretary for public revenues is part of my ministry. I am politically responsible for it. It has a quasi autonomous, um, existence at the moment, which means that I have political responsibility for what it does without having any authority over it.

Yanis Varoufakis (29:49):

To enhance its autonomy while retaining the responsibility of the minister is to have responsibility without authority. And that is not something that is like, I think it wouldn’t be acceptable to any of you. So this is why I suggested let’s go the whole hog. Let’s render it, let’s just excise it completely from my ministry, thick walls of my ministry and turn it into a fully independent authority like the IRS for instance, which is answerable to parliament. I won’t bother you further with this. I think that we have a very good understanding of this with, with the institutions.

Yanis Varoufakis (30:24):

On the question of the NPLS, there’s been significant progress towards convergence agreement on this question. On VAT, it was, um, our side that initiated the discussion about harmonizing, having two different rates and rationalizing the system, the question of pinning down precisely what those rates must be. And I’m here referring to something that Paul said, um, is something that we’ll have to do very carefully so as to ensure that on the one hand, yes Paul, you’re right, we have to increase the, the, the VAT, uh, take. But secondly, we must not make assumptions that, uh, raise the top rate too high and have the opposite effect.

Yanis Varoufakis (31:10):

If at the moment we assume zero elasticity and we simply, um, pitch the top rate where it would have to be, if there was no increase in sales and VAT collection, then we will end up with such a high rate, the top rate, that we will, we will be doing damage to the potential tax state. So this is something that we really need to study properly and not simply, um, leave to horse trading at the Brussels group over a period of a few hours. This is very serious business, as I’m sure everybody agrees.

Yanis Varoufakis (31:46):

On the questions of pensions, our government has moved away from the 13th pension idea for people, for pensioners below 700 and towards targeting, um, pensioners below the poverty line and targeting them efficiently. Uh, I know that the term 13th pension jars with lots of you. In our culture, it doesn’t, because it wasn’t really a 13th pension. It was simply a way of calculating annual payments, uh, in terms of simply giving more installments. Uh, I think that there’s significant pro-, um, uh, progress there.

Yanis Varoufakis (32:24):

Now the idea that it’s kind of backtracking to eliminate the zero deficit clause that the previous government accepted and introduced, we would like to challenge that. I don’t want to bother you too much with this, but we have a view that city, simply cutting down pensions is not informing them. Maybe we need to cut them down. But to reform the pension system, we have to render it sustainable. And that means finding ways of boosting employment. Very importantly, reducing undeclared labor, which is now around one third of all paid labor.

Yanis Varoufakis (33:05):

And you can understand that th- … Th-th-that number is just horrific. No pension system can really be rendered sustainable when you’ve got a third of paid laborers, employees, um, undeclared in the black market, so to speak. Um, we certainly are moving towards closing down all the windows that are making earlier diamonds, not only possible, but also, um, a method by which certain corporations and companies are pushing workers off their payroll onto the pension fund system.

Yanis Varoufakis (33:40):

Uh, on the question of the Greek statistical office, they’ll start. Uh, we have drafted legisla- legislation that increases transparency, um, and accountability. These two have to go together. You can’t have an independent statistical office if it is not accountable and transparent. Now on the question, let me just say that other questions of macroeconomic focus that Paul referred to, I think we have significant convergence on the, of the two sides. Our focus of, of real GDP growth for 2015 differs from that of institutions only marginally, I would say within the realm of statistical error.

Yanis Varoufakis (34:20):

And the real difference is not so much about nominal GDP, but it’s about the deflation rate. If we agree on the rate of deflation, then we will get much closer on the, o-o-on the real GDP growth. And this is important because our rate of deflation at the moment has been exacerbated by the standoff and the liquidity squeeze. It’s a monetary phenomenon as everybody knows. Now, besides the importance of acknowledging these concessions and their contribution to the conversions that we’ve all observed, it is also important to ensure that our communicate today plays a role in securing the advances we’ve made so far.

Yanis Varoufakis (35:05):

And preventing any untoward events that might cause unnecessary plo-problems both for Greece and more broadly. I’m referring of course to my government’s capacity to function and to meet its obligations while the negotiations continue. Let me remind you colleagues that even though we have no market access, we haven’t had market access for a very long while, and we have no disbursements for eight months now. Our government is continuing to meet all its obligations to international creditors. We will be doing again this tomorrow morning.

Yanis Varoufakis (35:39):

Indeed, our government, since our election has made payments to international creditors without market access or disbursements amounting to 14% of GDP in annualized terms. This is quite an extraordinary effort that must be acknowledged, together with an acknowledgment that these payments have been made at the expense of a virtual cessation of payments to local Greek creditors of the government, for instance, to suppliers of the Greek state. In addition, as is well known and I think Benoit mentioned it, we have dipped into every available reserve of the Greek, of the general Gre-Greek government, be it the health service, universities, willing municipalities, et cetera. Now, this extraordinary effort to fulfill our obligations to the IMF primarily and other creditors must receive its the acknowledgment in today’s communicate. On several occasions, we have been assured that as long as there is, as there is progress in the negotiations and convergence, the Greek state will have access to the liquidity necessary to carry on with its essential functions.

Yanis Varoufakis (36:48):

I believe it is beyond the out that the negotiations have been progressing well enough to justify our expectation that the assurances that are just mentioned concerning our liquidity be upheld. Now, let me inform you colleagues that this is not quite so at the moment. We have now reached the point, as we speak, where the slightest perturbation in our tax revenues from a day to day basis or in our expenditures … Let me give you an example: suppose there is an extensive forest fire of the kind that will become forthcoming soon, given the change in seasons. Any such perturbation may well cause an accident.

Yanis Varoufakis (37:26):

Also, and this is important having dipped into se-, so many organizations reserves, we run a serious risk that essential services may be jeopardized by unforeseen, yet not improbable events. In short, the assurance that as long as there is progress in the negotiations, the Greek state will have access to the liquidity necessary to carry on with its essential functions is currently not fulfilled, I’m afraid. It is for this reason and with the view to allowing the negotiations to converge fully into an agreement point that our government requests of today’s Eurogroup, that our communicate contains whatever phraseology (laughs) is necessary to allow the relevant institutions to top up our state’s liquidity to a level consistent with the reassurances I just mentioned.

Yanis Varoufakis (38:17):

Lastly, let me ask a question that no one has asked me in this context out of courtesy, I think, but which I’m sure that many of you have on your mind. If our liquidity is so low, why don’t we just move faster in the negotiations? Why do we not bridge the gap on the outstanding issues much more quickly? I’m sure this is the question that most of you have in your mind. Let me answer this question, colleagues, that the answer is that we had determined that the agreement, which will result from these negotiations will be wind that we shall see through.

Yanis Varoufakis (38:55):

That we shall be able to look at you in the eye at the time of signing the agreement and genuinely say, “We, the Greek government, can do this,” but the see this, we must believe that the fiscal targets, the pension labor market reforms, the product market reforms and so on, that all those parts, elements of the agreement, will be targets that we can reach maybe with a huge effort. Not maybe, definitely with a huge efforts and it would be the forms that we can excite the Greek people into supporting, unlike the previous unhappy experience with the programs reform agendas.

Yanis Varoufakis (39:35):

So signing off on an agreement that we do not think is right, that we do not think will achieve the Greek targets would be an act of dishonesty to our partners, to you, and to our people. I have no doubt that no one in this room would want us to sign off, uh, dishonestly. Repeating mistakes and misdemeanors that past Greek governments committed. So to conclude, much prog-progress has been made. More progress is necessary. We can reach an agreement soon. But to get there, we need a communicate this evening that creates the right atmosphere both in here and outside and allows all of us, including the institutions, to do what it takes to smooth in the bath to the agreement point that I’m sure we’ll, we all want. Thank you Jeroen.

Jeroen Dijsselbloem (40:35):

Thanks. Thank you Yanis for your insights. Um, if I were to summarize, which is always risky after such an introduction,. I would say that on the process, uh, there have been clear improvements. We’ve heard from different sides. On substance, some progress on some issues. Um, but certainly institutions have made us aware of some major differences still being there. Now, Yanis has said that they feel that they have compromised already, uh, to a large extent. Um, I think it’s quite clear that, uh, the process as it has improved, uh, should continue full force, um, and will require more time before these [inaudible] and Greek authorities put a result, uh, to us, to Eurogroup.

Jeroen Dijsselbloem (41:28):

Uh, I think the basis on which they work is clear. It’s been put in the statement of Eurogroup, the 20th, and on that basis, work should continue with great speed. Um, having said that, uh, I will give the floor to ministers. At the end of that round, uh, would like to, uh, ask you to look at a short statement, which is in my mind, uh, realistic of tone, uh, some positive, uh, uh, sentiment in there, but certainly realistic in terms of the work still ahead. But first I would like to give the floor to, uh, ministers for any questions or comments at this point.

Jeroen Dijsselbloem (42:17):

If not, then we can simply say that we took stock, uh, of the state of play of the, uh, work being done. Um, I think it’s good to distribute, uh, the statements, unless that has already been done, you know. It will be done, which will be short, which we’ll refer back to the agreement of the 20th of February, which has, uh, a line in there about the progress made and also about the [inaudible 00:42:47].

Yanis Varoufakis (44:21):

[inaudible 00:44:21].

Speaker 8 (44:22):

[inaudible] statement [inaudible 00:44:24].

Yanis Varoufakis (44:42):

[inaudible 00:44:42].

Jeroen Dijsselbloem (44:56):

[inaudible] colleagues, as you see a brief statement in which the first paragraph says something about the, um, acceleration, possible substantial discussion, et cetera. The second one is about, refers back to the basis of this all, which is a statement of the 20th February and, uh, looking forward at how the process will be managed in the coming weeks if there is a result, if and when there is a result of. Um, maybe you would like to share any comments with us on the first paragraph. Yes, please Yanis.

Yanis Varoufakis (45:38):

I, I, I would like to suggest, uh, a small amendment, uh, that, uh, you will … Let me just suggest then you’ll see exactly what the, where I’m coming from. In the last sentence of the first paragraph where you say, “We therefore, with therefore, not called, we therefore call upon,” right? “We therefore call upon the Greek authorities to accelerate their work with institutions with a view to achieve,” blah, blah, blah. Uh, we recommend, “We therefore call upon the Greek authorities and the institutions to accelerate their work with a view to achieving a successful conclusion.”

Yanis Varoufakis (46:13):

Clearly our position here is that we have been working very hard. And the sentence as it stands is putting the onus right just on us. I believe that, uh, a fair assessment would be, or a fair statement would be one that simply urges both sides to get on with it, not just one side.

Speaker 8 (46:43):

[inaudible 00:46:43].

Wolfgang Schäuble (46:58):

[inaudible] it would be very … So I would not, I would not agree to [inaudible] as it’s the problem of the institutions that there has been no progress since months and months. It’s a matter of [inaudible] qualities and not a matter of the institutions. Therefore I will not call on the institutions to speed up. I only call on the Greek authorities to do what is in the interest of Greek, Greece.

Speaker 9 (47:28):


Jeroen Dijsselbloem (47:30):

Well, I think we should stick to the original statement. No one else? Um, I think Yanis that’s given the fact that this is about, uh, Greece that it is in your, predominantly in the Greek interest to have a Swift and could outcome. It would seem fair to call upon the Greek authorities, uh, to put in all the effort that is required. So I think that’s why the, it’s been drawn up like this. I think this is a fair way to put it.

Speaker 9 (48:10):


Jeroen Dijsselbloem (48:18):


Yanis Varoufakis (48:18):

You know, I appreciate the points made both by Wolfgang and you and Pierre. I’m only interested in expediting the process and making it work better. And I can assure you, I can assure you colleagues, um, that the atmosphere, especially back home in Greece will be more conducive to close of convergence and a greater speed of uh, um, the process if this statement is more balanced. The point I’m simply making is that when you are having negotiation, both sides have to make concessions. Both sides have to struggle to get to the point.

Yanis Varoufakis (49:06):

And I know that the institutions are making concessions and they are struggling like we are. And I think that the document here, the statement should convey that.

Jeroen Dijsselbloem (49:19):

Yanis, let me, uh, try to do … I’m not going to try to do too much to this statement, but let me try once. What if we were to say … This is what I’m hearing you say.

Yanis Varoufakis (49:31):


Jeroen Dijsselbloem (49:32):

What if we make it into, “We therefore welcome the intention of the Greek authorities to accelerate their work with the institutions. By putting it that way, you say that it is your intention to put in all the effort and extra effort that is needed to get that swift, uh, agreement. That’s the way … It doesn’t sound like someone is criticizing you. It is you saying, “We shall do what it takes.”

Yanis Varoufakis (50:03):

You’re tempting me to say that I would like institutions to say the same thing, but I’m not going to say that because I want to be helpful. So, we shall accept this even though we state for the record that this is a two way process. There are two people, two people, two sides and we both must accelerate our effort and our rates of concession.

Jeroen Dijsselbloem (50:24):

Thank you very much. Uh, I’m sure that everyone also from the institutional side is ready to continue the hard work that’s been put in already and to do what it takes to get that agreement in a timely fashion. So, thank you for your help there. And any other remarks on that first paragraph? If not, any remarks on the second paragraph? Then I want to thank the colleagues. Um, I think this process, uh, requires time. This is just a statement of fact, and the time will have to be used as well as possible and with great urgency. And I hope that we shall be able to come to conclusions within a limited, uh, uh, period of time from now. But this is where we are.

Jeroen Dijsselbloem (51:13):

So, I want to thank you and I will move on to the next item on our agenda, which is about Ireland. The post-program surveillance is the third review. We will be debriefed by the, uh, commission and others, uh, on the outcomes of their program surveyors and mission, which took place the end of April. Um, and, uh, but of course after the institutions have debriefed us, ask Michael to, uh, react. But first of all, I want to turn to [inaudible 00:51:53].

Speaker 10 (51:52):

Thank you. In the week of the, uh, 22nd April, the commission [inaudible] programs which [inaudible] program mission was carried out [inaudible 00:52:08], but uh, the ECB [inaudible 00:52:11].

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