Tsipras backs down on many Greece bailout demands
 Greek prime minster Alexis Tsipras will accept most of the bailout creditors’ conditions offered last weekend, but is still insisting on a handful of changes that could thwart a deal according to a letter he sent late on Tuesday night. The two-page letter to the heads of the European Commission, International Monetary Fund and European Central Bank and obtained by the Financial Times, elaborates on Tuesday’s surprise request for an extension of Greece’s now-expired bailout and for a new, third rescue rescue worth €29.1bn. Senior eurozone officials involved in the talks cautioned Mr Tsipras’s remaining demands in the letter werre “not a handful of minor changes” and would have “significant fiscal impact” and may not be acceptable to creditors. News of the letter sent equity markets higher, with the FTSE Eurofirst 300 up 1.5 per cent to 1,532.03, having hit a low of 1,499.98 earlier in the day. On the bond markets, safe retreat German Bunds are tumbling, with yields now up by 0.04 percentage points to more than 0.80 per cent for the 10-year debt. Prices on ‘peripheral’ bonds from Europe’s shakier areas such as Italy, Portugal and Spain are higher. The letter was sent as eurozone central bankers were preparing on Wednesday to raise the heat on Greece and its banks by restricting their access to emergency loans, a decision that could topple at least one Greek bank. Although the bailout’s expiry at midnight Tuesday night means the extension is no longer on the table, Mr Tsipras’ new letter, which marks a significant climbdown from his previous position, could serve as the basis of a new bailout in the coming days. Eurozone finance ministers are due to discuss Mr Tsipras’ new proposal in a conference call at 5:30pm, Brussels time (4.30pm BST). Mr Tsipras’ letter says Athens will accept all the reforms of his country’s value added tax system with one significant change: keeping a special 30 per cent discount for Greek islands, many of which are in remote and difficult-to-supply regions. Eurozone officails said keeping the exemption would significantly increase the size of the government’s budget shortfall and, more significantly, would perpetuate a highly complex VAT system. The complexity is one reason Greece has exceptionally low revenue from VAT. On the contentious issue of pensions, Mr Tsipras requests that reforms passed in 2012 be implemented more slowly. He also requests that a special “solidarity grant” awarded to poorer pensioners, which he agrees to phase out by December 2019, be phased out more slowly than creditors request. |
