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CNBC Interview: Minister of Finance for Netherlands, Jeroen Dijsselbloem

Following is the unofficial transcript of a CNBC interview with Minister of Finance for Netherlands, Jeroen Dijsselbloem, by Julia Chatterley at the IMF Spring Meetings, Washington, on Monday 20th April 2015.

Julia Chatterley (JC): You've warned that we shouldn't go into a game of chicken over the negotiations with Greece – isn't that exactly what we are doing at this stage?

Jeroen Dijsselbloem (JD): Well, that's the reason why I warned not to go there. I think we need to find a compromise which we can, we've said in February and agreed with the new Greek government that we could redesign the current program, put in their new political priorities, and of course, still maintain the program on track. I think that's possible and we should get it done.

JC: Progress is very, very slow.

JD: It is very slow, yup. We started, of course, directly after the Eurogroup agreement of February but a lot of time was lost on the organization side, on getting the right data put together and we really need to organize it better.

JC: Is that still a problem? Are we still having trouble getting hold of the right information, actually getting into the finance ministry, pulling out the facts and figures that we need?

JD: Well as you know we did some adjustments to the, the regular process of the Troika and fact-finding missions etc. The Greeks asked us to do it differently and we were willing to do that but in the end we still need hard data to understand the situation in Greece. We need to have realistically designed reforms and plans so we can work out what they will do and how they will work into the budget and what they will do in economic terms. We still need those basics to put an agreement together and that's proven to be quite difficult.

JC: Because you've given them more flexibility actually it's complicated the issue?

JD: Um, the redesign of the process has been a complicating factor. The very strong political will of the new government wanting to go in a completely different direction, which is only in part possible. I mean, some of the issues are real issues in the Greek economy and in the functioning of the public sector of course haven't changed because there is a new government. We still need to deal with those so they're still on the table.

JC: No deal expected in Riga next week, is the best that we can hope for that we get some kind of agreement on May 11th at that Eurogroup?

JD: Erm, it's hard to say. I think we should certainly work more concentrated, 24-7 as far as I'm concerned, really pick up pace. Also because the situation in Greece and the real economy is of course deteriorating, awaiting the new deal, awaiting the new approach and we need to deliver that quick.

JC: And what about the financing? I mean, for many people we weren't expecting them to be able to make the payments to the IMF that they've made – what about them pushing to May?

JD: Um, it's hard to predict, new money seems to be found in different places - in government, in public sector. But there comes an end to that approach, at one point. So that also stresses the urgency that we should feel and should put into the process to get it done.

JC: There's a talk of a potential gas deal between Russia and Greece and locking in a few billion euros for Greece. Are we happy to see them get short-term funding from, from other countries, particularly Russia in the current set-up?

JD: All I know is that the Greek government, the Greek people want to have a solid future inside the Eurozone. And that's a great motivator for them but also for us. That is exactly the same kind of perspective we have – We want a financially stable and independent Greece within the Eurozone.

JC: Would it be preferable to sort these problems out ourselves?

JD: We have to sort it out. We have to sort it out within the Eurozone. We stand ready to support them further but it has to be a credible program and it has to really solve the key issues in the Greek economy and in the functioning of government. So it's not going to be easy, there is no easy way out, and I think, as always, the politicians have to be brave enough to tell their electorate that there are also tough measures to be taken.

JC: I mean, that's part of the problem here, because there's no sense in the communications that we're seeing from the government, actually that they're preparing the people for an agreement with the Eurogroup. And as you keep saying, there's tough decisions that still have to be made. Are we prepared that they're not willing to compromise here?

JD: I think Prime Minister Tsipras has a very strong mandate and still a very high level of trust in his country. And sometimes as a politician, to lead, you must also use the mandate that you have. You must sometimes lead your people into a future, even when that means taking tough measures in the short-term. There has to be a perspective in the longer-term and I think Prime Minister Tsipras has already proven when he came to an agreement with the Eurogroup in February that he is that kind of politician that can lead Greece into that kind of future. And I think that's the way to progress.

JC: Some of these reform decisions could ultimately fracture this government and what we see behind the scenes there is the third largest party in the country is, is Golden Dawn, that's a very difficult decision for him to make. How strong is that mandate when, ultimately, we could see a third of Syriza party fracture?

JD: I can't speculate on what the different fractions within parties do or feel or what they will support or will not support.

JC: But it's influencing his decision making process, surely?

JD: Of course. So maybe he will have to broaden his support in parliament from other parties also. When the future of Greece is at stake I think that is a legitimate political stance to say "I need broader support. I'm also going to call on other parties to get this done." I mean there are big interests here at stake, we're talking about the future of Greece, so I think that should strengthen our commitment.

JC: Nomura said this week that we are closer to a Grexit that we've ever been. Is that right?

JD: No, I don't think so.

JC: It's alarmist?

JD: It is alarmist. I think we're all very motivated. The member states of the Eurogroup but also the Greek population, the Greek politicians. Greece's future is inside the Eurozone and that can be done but being a member of the Eurozone also means that you also have to comply to some of the agreements that we have and certainly to the basic rules that we have within the monetary union. You cannot be part of monetary union but have your own rules. I think that's the kind of reality that politicians also have to live up to and explain to their electorate. You cannot say to Brussels, "I will comply, I want to stay inside the monetary union" and tell your electorate at home, "We'll ignore the rules and go our own way" . And that goes for every country, not just for Greece.

JC: But that's exactly what they are doing.

JD: There is a tension between the two messages. Wanting to stay inside the Eurozone, wanting to continue the co-operation with the Eurozone countries and at the same time saying "We will do everything different". You can't do everything different. Some of the rules are also for new governments. They don't change because there have been elections. And some of the issues haven't changed, some of the key problems in Greece still have to be dealt with – whomever is in government, they will have to deal with it.

JC: You sound like all the conversations that I have in the Eurozone and that is, ultimately, that finance ministers believe that we'll reach a deal at the eleventh hour and that goes back to the game of chicken that we started talking about. And this is what the Greeks feel too, they believe ultimately, that someone will blink first. I just worry that there's complacency here, that this is what's going to happen.

JD: I worry about the same thing. And that's why I've said, um, on the basis of the old agreement, we've opened up and said, "Look, you want to put in your political priorities? Welcome, try and do that. Let's work on that." We are prepared to compromise. We've always compromised and redesigned programs as we go along, over the last couple of years and are prepared to do the same for Greece. So, sitting back and waiting for the other to change its position is not the right attitude and not for us. So we're ready to talk and to compromise seriously and also that has to come from the Greek side.

JC: Do you think there's a lack of willingness on their part to recognise the compromise that you're offering here because they're in some way fixated on proving that they're changing things and proving that they won't be cowards, in a way, like some of the other program countries, 'cos this is some of the terminology that's been used?

JD: Yup. But I think that if you look at the other program countries, they've gone through a very hard period, having to take very tough and unpopular measures and yet that has strongly contributed to their recovery. If you look at the way Ireland is performing now, or Spain, they are really showing great figures now. Investments going up, consumer trust going up, demand is returning, um, and that is the perspective that also Greek politicians could offer their people. But it has to be done by taking some measures which I still think are for a large part inevitable.

JC: You've presided over some very tough times for the Eurogroup. Is this the most challenging?

JD: I don't know, I think the, um, the surroundings are more easy at the moment, growth has returned to all the Eurogroup members, even for Greece, though they're facing a setback now but growth had returned, um, and all figures are picking up which makes it easier to deal with this present problem in Greece than a couple of years ago when the situation was of course much more tense, financial markets were nervous etc. So let's use that relative calm as an opportunity to get this back on track.

JC: It makes it easier to isolate Greece too?

JD: It is more isolated at the moment. As you know, at the beginning of 2013 we had five program countries – now we have two left. Cyprus is well underway, performing very well, much better than we had even expected. So that brings it really back to one major program country which still has a long way to go. And as I've said again and again, we will support Greece in that recovery, even if it takes a long time. But it also requires commitment from the Greek government to the European and the Eurozone project.

JC: Is that part of the leverage then that the Eurogroup and the IMF have here, in that the markets more broadly are very sanguine, we only really see fear in Greek asset prices right now. Is that the way to pressure them here into making a decision 'cos ultimately it could come down to that pressure?

JD: Yeah and I think also the fact that the markets are still very critical on the situation in Greece means that Greece needs further support. Um, they're not going to be out of a program or out of support at the end of June. Also after the summer, we'll have to consider how to support them further. In the current situation, financial independence is still a long way.

JC: You're not going to wait until after the summer to do that, surely, isn't that also going to have to happen in May?

JD: First we need to find an agreement on the package for these four months. I think it would be very difficult to talk about the future if we can't even agree on what has to happen in these extra four months, so that's top priority.

JC: As you quite rightly say, if we've had this much trouble extending the program and completing the last program, how on earth are we going to try and organize a new program for them? We're going to continue to have these issues, aren't we, for the next few months (at least)?

JD: It's all about, it's all about trust. I think…(cut off)

JC: There is none

JD: But if it returns – and the way to get it back is to seriously get that deal – for these four months get their support flowing again, the financial support flowing again. If trust returns then it will be a lot easier to talk about the future. But it's crucial.

JC: Is Varoufakis the most challenging politician you've ever faced?

JD: He's certainly an interesting politician but I've met, I've met many interesting politicians.

JC: Is he a man you can work with?

JD: Sure.

JC: And you have to?

JD: We have to. I mean, I don't choose the colleagues in the Eurogroup, so I work with very different politicians from different countries, different political backgrounds and different convictions. And that's fine, that's Europe, we, we, we always succeed in the end to work together.

JC: There's a belief that, given the stance that Greece is taking here that actually if something bad does happen as far as the Eurozone is concerned, actually people could go, you know what, this is not about the Eurozone being unwilling to hold together, this is about a country that wasn't willing to remain. Do you buy into that?

JD: Um, no I think, as I said, Greeks, the Greek government, also the current Greek government is, is motivated to be part of the project and stay inside the Eurozone. But they have to come a long way in terms of the kind of reforms. They are probably more deep and more broad than in any other country. Dealing with the quality of government, public sector, sustainability, finance, trust in the financial sector. So the scope of the kind of reforms that are necessary in Greece are much wider and deeper than in any other country. We also have to be fair and give them credit for that. For them the situation is a lot tougher than for any of the other countries and again I think we should support them in that. Also if that takes a longer time.

JC: You said or agreed that trust has gone, confidence has been lost. What's the risk here particularly now that actually depositors, if anything, take the decision away from them and take the decision away from you and actually force the situation for Greece here?

JD: Ah, I think, um, once again it's in everyone's interests and certainly in the interest of the Greeks to stabilise the situation. And the best way to stabilize it is to get that deal, the short-term deal certainly on the next four months and also start talking about how to stabilise Greece in the future. It's going to be a long-term project and that requires trust for people to invest in that project and it has to come from two sides.

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