Greek documents baffle Eurozone officials

Documents containing overhaul plans and growth estimates distributed by Greek Finance Minister Yanis Varoufakis to some of his eurozone counterparts have baffled officials involved in the talks between Greece and its international creditors.

Officials say that the files differ greatly from what has been discussed in technical talks in Brussels in recent days and underline how Mr. Varoufakis continues to complicate progress toward a financing deal.

The 36-page document, entitled “Greece’s recovery: A blueprint” and seen by The Wall Street Journal, was presented by Mr. Varoufakis to his counterparts in Paris and Rome, as well as senior officials in Brussels while touring European capitals over the last week, according to four European officials.

Spokespeople for Mr. Varoufakis and the Greek government couldn’t immediately be reached for comment.

Greece’s leftist-led government is currently locked in negotiations with its international creditors–the International Monetary Fund, the European Central Bank and the European Commission–over its next slice of financial aid as part of a EUR245 billion rescue package.

Disagreements over cuts to Greece’s pension system and changes to its labor market that make it easier to dismiss workers have held up a deal on further bailout aid between Athens and its creditors. While talks between technical experts from Greece and the institutions overseeing its bailout, which resumed last week, have become more constructive, differences on thorny areas remain wide, European officials say.

The contents of the paper focus on the future of the Greek economy, and how it can return to growth. “Perhaps it is time to visualize a recovering Greece before we unlock the present impasse,” the document says, before going into the various areas where the country plans to reform.

While some of the reforms the document outlines are the same ones agreed in the continuing negotiations–such as the creation of a fully independent tax commissioner–the paper also differs in several areas from what is currently being discussed between technical experts representing Greece and the institutions overseeing its bailout.

“There is hardly any connection between his blueprint and the ongoing ‘negotiations’,” an EU official said. “It seems like a fine program for a country that does not have any financing problems, but just wants to catch up and be a nice tourist destination,” he added.

An area where officials identify as significantly different to what is currently discussed between experts from both sides is the creation of a “bad bank”–an entity that would house and wind down Greek lenders’ bad loans. “Conveniently, the financing of the bad bank is not treated–he said he would send us the cheque” the official said.

Mr. Varoufakis’s document also predicts Greece’s economy will grow just 0.1% this year, below the 0.5% forecast this week by the European Commission. In the talks in Brussels, Greek officials have been pushing for a higher growth estimate than the one published by the commission. For 2016, Mr. Varoufakis’s files expect 2% growth, also below the 2.9% forecast by the commission.

“The problem is that Varoufakis doesn’t seem totally in line with Tsipras,” another official said, adding that it isn’t clear to what extent the files represent the government’s position. This has caused confusion in the talks, officials say.

Some officials, however, played down the significance of Mr. Varoufakis’s intervention and point to a reshuffle of Greece’s negotiating team early last week in which the finance minister’s influence was reduced. As long as that remains the case, they say, his paper doesn’t bear much significance.

Still, the confusion is likely to further impede progress in negotiations, which officials say has been sluggish in recent days, keeping the cash-strapped country from accessing desperately-needed aid for a while longer.

Greece has been draining cash reserves in recent months to meet domestic obligations, the payment of civil servant’s salaries and pensions, while also meeting debt repayments.

The country’s next big hurdle is a EUR750 million loan repayment to the IMF due May 12, having made a smaller payment this week. While Greek and EU officials have expressed concerns about whether the country can make the payment, Mr. Varoufakis, speaking at a business conference in Brussels on May 7, suggested such concerns were unfounded. “We certainly intend to pay the IMF,” he said.


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