Over to you, Athens. That was the message after another working weekend in Brussels with a heated meeting of euro zone finance ministers and the second gathering in five days of euro leaders.
It’s hard to believe that just a week has passed since Greek voters danced in the streets to celebrate their rejection by referendum of the terms of an extension to their second EU-IMF bailout.
But, with Greek banks still closed, the Syriza-led government reversed their people's "Oxi" to the old programme into an exhausted "Nai" – yes – to talks over a new programme: with far tougher conditions than before, reflecting a new low in EU trust of Athens as its external financing needs spiral towards €80 billion.
For casual crisis observers the latest round with Athens is, to use Northern Ireland parlance, talks about talks. Last Tuesday, following the Greek vote, euro zone leaders asked their finance ministers to examine whether a third bailout programme for Greece made political and financial sense. ESM bailout rules stipulate that loan talks can only be opened if certain preconditions are met, including a full assessment of financing needs and a likelihood of programme success.
A house divided
Given Greece’s record of dropped deadlines, reform rollback and an unpaid €1.55 billion IMF loan, the eurogroup was a house divided.
One camp, led by France, highlighted a looming humanitarian disaster and pushed for a generous gesture to the Syriza government after its restrained referendum reaction. Facing them down was a larger camp led by Berlin, including Helsinki, the Hague, the Baltics and most of central Europe.
The Germans resent bending rules for Greece, the Baltics are tired of bankrolling richer Greeks. And all of these countries share one common denominator: bailout-weary voters.
The mood was downbeat on Saturday as ministers entered the Lex building. While Greek ATMs run dangerously low on money, the currency lacking in Brussels was trust: trust towards Greece in general and Syriza in particular.
“There’s serious difficulty as well to trust the Greek government that, two weeks ago, was going against what it is trying to implement now,” said one senior Brussels official.
Though ministers welcomed their new Greek colleague, Euclid Tsakalotos, for what one called his “modest and honest approach” – a contrast to his predecessor – his government’s reform proposals were “not being quite in the reality of the situation”.
Put bluntly, they saw the Athens application as a tweaked version of the rejected plan for a second programme extension. This document was an unrealistic basis for a third bailout, they said, as a deteriorating situation has pushed up Greek financing requirements from €35 billion application to near €80 billion.
“They seemed to think they could get twice as much money for the same conditions,” said one eurogroup source.
The sense of dread grew with rumours that Helsinki's populist Finns party had threatened to bring down the coalition it joined in May if Finland signed up to a new programme for Greece.
At the same time, Germany’s Wolfgang Schäuble irritated his colleagues when news filtered into the meeting room of a “non-paper” paper – not on the table but leaked to a German Sunday newspaper – proposing a five-year “timeout” for Greece from the euro.
By 7pm, Dr Schäuble and ECB president Mario Draghi were snapping at each other and, at about 11pm, Grexit backers had stepped up their warnings of a lack of trust in Athens. Sensing disaster, the longer-serving finance ministers Schäuble and Michael Noonan intervened.
Clearly there was still some trust, they said, otherwise they wouldn't have been talking for almost nine hours. Their intervention led to a decision to adjourn for the night by eurogroup head Jeroen Dijsselbloem, who headed into the night saying the "very difficult" talks were a "work in progress".
Sleep on it
Forcing ministers to sleep on things was a wise move, say experienced Brussels hands, and will do no harm to the Dutchman’s hopes of a second eurogroup head term this week.
Sunday dawned with news that, while the euro leaders’ meeting would proceed at 4pm, the subsequent summit of all EU members states had been cancelled. No bad omen, said some in Brussels, who feared a full EU gathering would have been to give the last oils to Greek euro membership.
As finance ministers reassembled, Mr Tsakalotos said Athens accepted the creditor terms for a third bailout. With euro zone leaders en route to Brussels, work began in nailing down the detail of a draft deal to open talks on a third bailout.
Arriving at talks, Greek prime minister Alexis Tsipras said he wanted an "honest compromise" while Chancellor Angela Merkel, giving nothing away, said there was still no guarantee of agreement in "hard talks" ahead.
The reason was clear: reform measures in the new agreement were copperfastened by robust legal nails, ensuring future loans only in exchange for strict implementation.
The draft also contained a line from Berlin’s “non-paper” that failure to reach agreement could result in a “timeout from the euro area” for Greece. Though still in brackets, meaning not all euro zone members agreed, the threat lingered.
