Greece vs. Schauble on “new” program

Greek side believes second review could move forward in next EuroGroup meeting

With the timeframe of the completion of the second review of the Greek bailout program uncertain, and the possibility of the IMF departing from the program becoming more likely, the Greek side is “battling” it out with the harshest proponent of more austerity, German Finance Minister Wolfgang Schauble.

Despite Mr. Schauble’s stark warning to the Greek government to refrain from pushing for the departure of the IMF from the program, cautioning that such an outcome would mean a new program would be necessary, sources in the Greek government downplayed the threats considering them as political rhetoric for his domestic audience.

The Greek side believes the IMF has effectively abandoned the Greek program since July 2015, meaning that the real pressure is on Mr. Schauble, who will have to explain to his parliament what the next moves should be on the bailout program.

The same government sources say that the second review will eventually be completed, not ruling out notable the possibility of notable progress achieved during the EuroGroup on January 26, where Greek Finance Minister Euclid Tsakalotos is expected to present his plans for extending the automatic fiscal contingency mechanism (known as the cutter).

Despite the Greek side’s analysis that Mr. Schauble’s stance as of late is merely for domestic consumption, sources say that the German Finance Minister is in the process of examining ways to impose a stricter oversight of the progress of the Greek program, with some even suggesting he is considering implementing a regular audit through the German parliament, once a new program is devised without the IMF. Some sources believe Mr. Schauble, who made it clear to Athens that the current program would be obsolete and need reforms in the event the IMF left, would also raise the threat of a “Grexit” in negotiations with Greece to achieve a tighter oversight of a new program.