French President Francois Hollande opened the prospect of striking a political deal with Greece to unlock bailout aid, as three-way talks with Prime Minister Alexis Tsipras reached deep into the night.
Hollande, speaking on Thursday as he arrived for a European Union summit in Latvia, said the meeting with Tsipras and German Chancellor Angela Merkel would help pave the way for an accord to be hammered out by finance ministers at the end of May or early June. Negotiations between the three leaders began in a Riga hotel on the Daugava River after dinner and stretched beyond midnight.
“With Tsipras we want to find solutions to restore confidence and release the funds that have been planned,” Hollande told reporters before the summit. “So it will be a friendly talk, but a talk in which we have to be able to draft solutions.”
Hollande’s comments build on signs of determination to end the stalemate that has buffeted Greek markets since Tsipras’s election in January at the head of a coalition committed to ending austerity. The French and German leaders called two days ago for the pace of talks to pick up, and Merkel is already considering making a keynote speech to sell any deal to the German public and members of her Christian Democratic-led bloc.
Greece’s benchmark ASE Index rose 0.6 percent on Thursday, as the Stoxx Europe 600 Index added 0.4 percent to 407.87 at the close of trading.
The Greek government believes momentum has been building toward an end-May agreement with creditors that would alleviate the country’s cash crunch, according to an official from Greece attending the EU leaders’ meeting in Riga.
Tsipras planned to highlight progress made in the staff-level negotiations between Greece and its creditors when he met with Merkel and Hollande, the official told reporters, asking not to be named because the talks are private.
For all the signs of optimism, other policy makers warned of hard negotiations yet to come as officials haggle over pensions, wages and other contentious points of detail needed to free up the remaining 7.2 billion-euro ($8 billion) tranche of aid. Without an agreement, Greece risks a default that would put in question its future in the 19-nation euro region.
Merkel didn’t comment on Greece when she arrived for the EU leaders’ meeting, instead focusing on the summit agenda of the bloc’s relations with six eastern nations including Ukraine.
She and Hollande helped broker a cease-fire agreement in Ukraine during all-night discussions in February with President Vladimir Putin in Minsk, Belarus, another of the EU’s so-called eastern partnership states.
Hollande said that the discussion with Tsipras would “help prepare for the expected deadline, especially the eurogroup” meeting of euro-area finance ministers “at the end of May or in early June.” That suggests an extraordinary finance ministers’ meeting on Greece since the next regular gathering isn’t scheduled until June 18.
BlackRock Inc., the world’s largest money manager, said it judged the chance of Greece leaving the euro area at 20 percent to 25 percent. While Greece remains a “major existential risk,” a debt deal is likely to be reached, according to Ian Winship, a London-based money manager at BlackRock.
“The Greek people seem keen not to leave,” said Winship. “At the end of the day, Mr. Tsipras may have to go with whatever is being offered by Europe. We don’t think Greece is going to leave.”
France and Germany are not trying to force the matter for the rest of Europe, according to Hollande.
“We are working to facilitate the process and at the same time to pass on certain messages useful to Greece and useful to Europe,” he said.