24 Jun 2015

Alexis Tsipras has his homework thrown back at him by IMF

Am in sunny Brussels where the whole city is excitedly waiting for David Cameron to unveil his renegotiation plans. Well, not quite.

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The place is gripped by the latest turn in the Greek drama. Alexis Tsipras’s homework has been thrown back at him by the IMF with red ink all over it. The IMF like their emergency economic plans from debtor countries pretty heavy on the spending cuts, light on the tax rises. The Tsipras plan which fumbled its way on to the eurozone leaders’ meeting table on Monday was the very opposite: tax rises took up 92 per cent of the strain.

In a way the IMF has been marking the European Commission’s work too and not very encouragingly. The Commission is very keen to see a deal and the IMF may feel its enthusiasm/desperation ran away with itself when it smiled on the last Greek offer.

The IMF could tolerate debt write-offs as part of the new deal but the north Europeans are extremely angsty about that. The talks are unlikely to resolve themselves tonight but on they go.

When David Cameron gets here tomorrow he knows he will find little appetite for long chats about his renegotiation plans. The European Council looks like it has allocated him the prestigious “end of dinner, just as people get up to go for a pee” slot for his brief presentation. He hopes to have spoken to all 27 other EU leaders by the time he gets to this little turn but there’s a decent chance Alexis Tsipras has other things to busy himself with.

After this summit the detailed negotiations begin. I mentioned yesterday that there’s an expectation and a bit of a hope in Whitehall that these are mainly done at official level using the Eurorpean Council secretariat. The European Commission President Jean-Claude Juncker has set up a unit under the European Commission’s Jonathan Faull to mastermind bits of the talks that come the Commission’s way. Much early work could involve legal opinions on what is viable and how.

The PM touched briefly on the renegotiation when he met Chancellor Merkel today in Berlin. She was very much of the view that Mr Cameron needed to talk to all leaders individually if his plan was to get off to a decent start. He’s done that (just about) but the next stage of discussion amongst officials will inevitably be much smaller groups than the full 28 and he’ll need to keep sensitivities in mind as the UK operation plunges into phase 2.

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