The Conductor(s)

The Eurogroup meeting on Monday was a disaster. Not so much in regards to the outcome but in regards to the process. Not only are both sides unable to understand the language of each other, worse, they are unwilling to properly contextualize the statements. The Eurogroup of finance ministers is the ideological locus of austerians, and it is here where German finance minister Schäuble has his most solid fan base. Varoufakis is the new kid on the block who comes with all the wrong stuff. Given his background it would have been the proper thing to dip to beat his colleagues with their own weapons, namely to start an economic-analytical attack against the established austerity concept. Given that pre-meeting Varoufakis seems to had a paper in his hands that was supposedly commissioned by French Commissioner Moskovici, he should have played this card more convincingly. Whether it was Moskovici or, as been reported, Juncker who intervened does not matter. What matters is that the EU is potentially split about its dealings with Greece. This is supposed to be a big advantage for Greece as the hardliners of the Eurogroup may have to compromise. Varoufakis did not make use of this opportunity, though, and all efforts to leak drafts after the meeting may only undermine efforts of the Commission to act as mediator.

It is clear, though, that negotiations continue. On Wednesday Greek PM Tsirpas tried to make up for the neglect of his finance minister. In a speech in the Greek Parliament he stated that Greece will ask for an extension of the current bailout agreement, and will do so on the base of the Moskovici paper. His offer is far reaching as he indicated that Greece would be willing to promise not to further roll back economic reforms; to continue running a primary budget surplus (without giving a concrete figure); and to promise to continue with its debt service. In exchange he expects a extension of the current program for four months and the ability to make its own decision which reforms should be pushed.

Will this be sufficient for a compromise? I think the road is repaired and the probability that both sides come to a compromise is back to 70%.