Following is the unofficial transcript of an interview with Giorgos Stathakis, Greek Economy Minister by Julia Chatterley of CNBC.
Julia Chatterley (JC): So the government has been accused of not presenting fresh proposals at this Eurogroup, can you clarify what happened because there's different sides seem to be saying different things?
Giorgis Stathakis (GS): Well there are two Greek proposals that were on the table since last week and there was a third proposal by the European partners which was put on the referendum. So practically the proposals were there, there was a discussion today on how it is possible to merge and compromise on a number of ideas that are on the table and I think that was the nature of the discussion today.
JC: So a concrete request wasn't ready but will be ready by Wednesday?
GS: Yes, that's the one version. And the second issue you raised, of course, has to do with the refinancing of the Greek economy – again, was put on the table today.
JC: So are you requesting a short term financing program now or a medium time program because if we look at the situation with the banks now and I think most people think that time is of the essence, a short term program is what needed just to bridge the upcoming ECB bonds and the things that the government has to deal with short ryanterm?
GS: The discussions, up to last week were looking forward for a solution of a duration of 18 months until the end of 16. And I think this would be the ideal solution because a short term solution would renew more or less uncertainty on whether there would be a proper solution and would keep uncertainty on (not understood). So we are trying the ideal solution is to get on, to go on and find a solution of 18 to 24 months would be a permanent solution to the Greek problem.
JC: So that's the question you are going to put on the table tomorrow?
GS: Exactly.
JC: Is there an acceptance within the government that because of the time delay now, because of the capital control, the impact that's had on the economy… the deal that you might end up given or end up achieving this week, is actually going to be tougher than it would have been two weeks ago?
GS: I think that we should…Europe has always been a balanced game between obviously the rules and democracy. I think we should take into consideration the Greek referendum and try to find a more balanced approach, a more compromised approach that would also find, produce less austerity because this is the message and a more viable solution to the Greek problem.
JC: A lot of people will look at that referendum and say, look the people were saying no to austerity but the country needs more money – those two things don't necessarily tie up if your country needs to take more measures to bridge your financing gap, it needs more reforms. That referendum doesn't change anything. It just makes the government's life harder because again you've made promises to the people that you will achieve for them and yet the Europeans haven't budged. Do you expect the Europeans to give more ground after that referendum?
GS: Well, it is not a new programme. There is a programme going on to Greece, based on this idea you get money, you have to do this kind of reforms for the last four years. The end result was that the Greek economy has a recession of 25 percent. The greatest recession ever recorded in times … since 1929. Unemployment rate of almost 30 percent. So there is a programme which has been implemented the last four years. The new government and the referendum actually indicate a very simple proposition. We have to find a more balanced approach than the one implemented in the past. That is our idea. We have been working on it. We came very close to such a deal last week. We think that with some political prowress, both sides can find the solution.
JC: I mean you and I actually were both in Brussels at that point, I know you were there because the conversations that I have had, you were working very hard to try to reach a deal before the referendum was called, do you think you could have reached a deal that day without a referendum?
GS: Well we came very close but the last proposition unfortunately was not the one that was making this compromise but this belongs to the past, let's go tomorrow and find the best solution and don't look back. Probably there were problems on our side, on the side of the European negotiators but it is irrelevant nowadays, we have to do the right thing now.
JC: Some people argue that you called the referendum because there were disagreements within the party and this was not a deal that you were able to sell in the Parliament. Given what we've seen in the last 24 hours, the agreements between all the leaders of the party, are you confident that no matter what the details of a deal, if it gets agreed this week, it will get passed through the parliament?
GS: it is true that our government, while being in the negotiation process, we made a lot of compromises which had nothing to do with our programme and our political mandate. But we thought that was a proper approach in order to get a deal. Obviously nowadays after the referendum, there is significant support of the Greek people to this government, to Alexis Tsipras, we have a very clear message. This allows us to be quite certain, any agreement reached by Alexis Tsipras, and the current government will go through the Parliament. On top of this, the Greek government goes to Brussels with full agreement of all democratic parties in Greece after discussions that went on among leaders of the Greek parties yesterday morning.
JC: What about the red lines? Because again we heard from Alexis Tsipras after the referendum talking about the need for debt riddance, what if the Europeans won't agree to debt riddance, if they just axe some language about debt talks in the future, is that going to be enough?
GS: I think that the debt is objectively an issue, it is there, IMF report last week indicated that Greece has to pay 10% of its GDP annually for the next 30 years and this is not possible as you know by an economy so we do have to find a solution that will make the repayment process viable.
JC: But it could be pushed back rather than debt being written down?
GS: That's the one more issue for negotiation and I think we need a short term solution for the repayment of the debt 15 – 18, which is an issue, which has to be solved through refinancing, go through some form of reprofiling… and we have the long term issue, which may be discussed in the framework that we agree with the European partners… at a better time…
JC: The IMF said all along, reform first, then we talk about the debt. Is that going to happen in this case?
GS: IMF has one issue that has to do with its constitution, it cannot finance a country with non-viable debt, non-sustainable debt and the second issue is that IMF is, they appropriate institutions which have view, a strong view on the issue of the debt so IMF has done a number of propositions which, I think that they are very positive in terms of finding a solution to this issue.
JC: A lot of people say the trust is gone. That the Europeans don't trust the government… your government call them terrorists just a week ago. So there's been a lot of bad blood. How do you get over that? How do you re-establish trust with the eurogroup and trust that… implements any deal signed? That's the other issue here. Mr. Dijsselbloem says he doesn't trust your government to implement.
GS: Well I think that Europe has a very long tradition of compromising and having bridges among political differences. Obviously we are a different style of government. That's one thing all the Greek people like very much, I think that trust can be build very easily as long as we follow a line of agreeing, agreement and compromise. And that's the best thing you can do.
JC: But maybe more acceptance on their side… of a different approach?
GS: We fully understand their approach I think. Their point is very obvious. Everybody's a democratically elected government in Europe. Everybody has to take into account considerations of their electorate… the governments of all European countries. It's correct. It's absolutely correct and we appreciate that. we will follow this line of argument.
JC: Analysts looking outside, at the banking sector, saying actually, by the end of this week, even by Friday they may have burnt through their liquidity buffers. Do you accept that a deal must be signed this week to protect the banks?
GS: At least we need a very strong indication that a deal is in the process of being made. This may be the sign that the euro sign needs. May produce tonight. I think this may be more than enough for ECB, from tomorrow morning to solve the issue of liquidity for the coming weeks. The deal is necessary for solving the real problem of the banking systems and other problems of the Greek economy.
JC: But you are hoping as Wednesday morning… you get more liquidity, more ELA from the ECB.
GS: within… yes, within this week, yes. we need… we should get more liquidity. The current programme, the current availability I think is ok for this week. But it won't last more than that.
JC: And what if you don't?
GS: Well I don't think that as long as the Greek banking system is part of the European banking system, and has ECB on top of it, I don't think the ECB will allow any kind of liquidity problems to reach to the extreme point. I think ECB has done an excellent work through the last five months, and will continue to do so.
JC: while these negotiations are continuing, the ECB backs stop you.
GS: Yes.
JC: What about paying pensions and salaries next week? Because there's concerns you've got 500 million bill next week, you've got an IMF payment… 450 million euros next week as well. How are you going to pay those things? Because there are people saying the government will have to use some form of IOU from next week?
GS: I think that the issue of wages and salaries – in any case they are paid through the Greek budget, who is more or less running on a balanced base. What was a problem for the last few months, but I would say for a year or so it's that we repaid the loans of Greece through the last 12 months, to the IMF, ECB, through internal resources. We have to mobilise internal resources. This will not continue, cannot continue in the coming future. Everybody knows that. That's why we are not able to pay the IMF at the time last month. Obviously we need a deal that will include the refinancing of the Greek debt. This is the only solution. We will not get money for the Greek economy but we will get money for repaying the debts that are due in July and August as you know, they are… it's a big payment period in terms of loans.
JC: So just to be clear, whether or not you get the deal, you've got the cash to make pensions and wage payments next week?
GS: As long as we end on a balanced budget, yes.
JC: And as far as the IMF is concerned, next week, not likely to be paid, but you hope for a deal…
GS: Through internal resources, no, it's impossible.
JC: All through this process people have wondered what strategy of the Syriza government is, whether the longer term goal actually is to force the situation that we found ourselves in, with the capital controls and ultimately return to the drachma? Can we draw a line under that and say that the main body of the Syriza party, no matter what the voices are, within factions, is to remain within the Eurozone?
GS: We were elected as a government with a strong mandate and at the same time with a clear cut policy we have… we want to stay in the Euro and this was the mandate also of the referendum. We went up, we came to the referendum saying we will stay in the Euro, we want to stay in the Euro, we want a more balanced program and that's our basic idea. The issue of the drachma , this government has no such mandate. So our commitment is to find a solution, it has been all along and I think we will get a solution within the Euro.
JC: People would argue that your promises, the mandate that you have been given now and the mandate you have effectively given yourself with this referendum, again no more austerity and also keeping Greece within the Eurozone, isn't achievable. So if one has to go, what is it?
GS: I think that everybody realises that the idea of Grexit is not good either for the Greek economy because it would have very negative effects on the Greek economy nor for the European economy because of a whole number of instability issues that it will produce for the European economy. So it is in the benefit of both sides to find a solution. That's our approach all along and I think that very few voices in Europe would not choose to get a deal, make a compromise and find a solution rather than keep on this uncertainty produced by the idea of Grexit.
JC: Do you believe that? Do you believe actually that they want to keep you in because we hear noises around these meetings that they have and they there's many countries and representatives are now actually don't care either way. They think that Greece is actually pretty much isolated. There's not going to be a spillover effect. It's up to this government to step up here, because the ball is in your court. Particularly after the referendum. Because you are talking about proposals that you offered to the people, and said to reject them. So there is that real dichotomy there. You can understand why people are confused about what this government wants.
GS: Well, the government wants a more balanced programme. With less austerity. A more viable solution to the question of the debt. And the option, that the Greek economy will soon be back on track, and get growth again. So it's quite straight forward what we've been arguing all along.
JC: It's just isn't possible financially.
GS: And I think that the idea that more austerity will bring the Greek economy back on track is questionable. In any case, I forget politics. As an economist, whoever says that there will be no domino effect from a Grexit… and that the euro zone, and the world economy is highly protected… I don't think it's a proper idea. We should not dare to go into unchartered waters. It's a very dangerous game, it does not deserve it. Most people, most countries, most governments, would lose a lot of money for no apparent reason. Let's get a deal and differ… differences… at this point, two or three billion… let's make a compromise on the fiscal adjustment programme. Rather than endanger such a huge uncertainty… inconsistency the European and world economy.
JC: Angela Merkel and Francois Hollande reacted very quickly after the referendum result on Sunday. They organised a meeting in Paris. Do you think that's an indication actually that there is underlying, the rhetoric, a real concern about what a Grexit could mean for this union?
GS: Yes, I think that obviously you had to go back to the negotiation table. That was the only sensible thing to do. The European leaders did the right thing and… let's hope for the best.
JC: very quickly – last question. What's your message to international investors about Greece… after the last five months… and concerns about what this government is trying to achieve and what it's actually doing here? How do you address their concerns that you aren't looking for a deal here. What's your message to investors about what you're going to achieve in the next few days?
GS: Well we have been in close contact with international investors… Syriza and personally, for quite some time… in the last year and a half. Our message is quite straight forward. We want Greece back on a growth path which is the essential thing for investors and everybody. If we get the right deal, that will be the real way out.
JC: And your bonds are priced to default – so to those that are speculating a default… that Greece will default, are they wrong?
GS: They have been wrong for the last two or three years. I hope they will be wrong once more.