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Tuesday, May 5, 2015

There's a huge gap between Greece's '2 realities,' and talks are still deadlocked

Despite a quieter atmosphere in the past week or so, Greece's bailout negotiations are apparently no closer to a deal. And every day Greece is edging closer to default. According to a senior European source cited by the Financial Times, the "two realities" — Greece's reality and the reality of its creditors — are still no closer to being reconciled. Athens is trying to unlock a €7.2 billion (£5.29 billion, $8 billion) financial-aid package to tide it over for just a few months. But the talks aren't making significant progress, according to Reuters. The things the government and its creditors couldn't agree on last week, or a month ago, or three months ago, are still the biggest problem. Pensions and labour-market reforms are the sticking points in the deal — the international institutions and European creditors that Greece needs to tap money from are demanding major overhauls, while the new Greek government sees them as red lines. This is a clash that reports from the meetings have continued to come back to. And according to the Greek newspaper Kathimerini, a government spokesman said late Monday that "liquidity is a pressing issue." Greek Deputy Prime Minister Yannis Dragasakis is heading to Frankfurt to talk to the European Central Bank's Mario Draghi, while Finance Minister Yanis Varoufakis has meetings with his French counterpart, Michel Sapin, and EU commissioner Pierre Moscovici. A Financial Times report Tuesday morning suggests that Greece's European creditors will have to write off more of the country's debt, since it is now so far off course (and running a deficit again, instead of the surplus that was expected). The report says International Monetary Fund European director Paul Thomsen told delegates in Riga at the end of April that the Greek public finances had soured to such a degree that the old plans needed revisiting. Here's the FT: With the large surplus now turning into a sizable deficit, Greece's debt levels would begin to spike again. This would force either Athens to take drastic austerity measures or eurozone bailout lenders to agree to debt write-offs to get Athens' debt back on a sustainable path, the IMF believes. Officials said Mr Thomsen specifically mentioned the need for debt relief during the three-hour meeting. "The IMF thinks the gap between the two realities is very large right now," said one senior official involved in the talks. He noted that both Athens, which was resisting new economic reforms, and eurozone creditors would probably fight the IMF on the issue. According to the consultancy Macropolis, a poll released Tuesday indicates that even with the current economic situation, a solid majority still supports keeping the euro even if that means continuing the current austerity: Macedonia Uni poll for Skai TVIn referendum on euro with new MoU vs drachma, what would you choose?Euro 55.5%Drachma 35%N/A 9.5%#Greece — MacroPolis (@MacroPolis_gr) May 5, 2015 What's more, though, very few think they would be better off if the previous government under Antonis Samaras were back in power, the number of those who think their situation has deteriorated in recent months is far higher than the number of those who see an improvement: Macedonia Uni poll for Skai TVHow's your economic situation changed since snap elections called?No change 60%Worse 34%Better 6%#Greece — MacroPolis (@MacroPolis_gr) May 5, 2015 Despite the mild sidelining of Varoufakis recently, which sent Greek bond yields plunging, the country seems to be no closer to a deal — and the clock is still ticking.Join the conversation about this story » NOW WATCH: We got our hands on 'Kinder Surprise Eggs' — the global candy favorite that's still illegal in the US


READ THE ORIGINAL POST AT uk.businessinsider.com