The European Commission believes that the third evaluation of Greece’s fiscal programme will conclude smoothly, hopefully by early January 2018, but some form of external supervision after the end of the current programme in August appears to be on the cards.
According to a high-level European Commission source, whose views reflect the thinking of Commission President Jean-Claude Juncker, a «hybrid oversight scheme» is likely after the end of the current bailout memorandum.
The Commission source outlined four possible scenarios for post-memorandum Greece.
The first, which nobody wants, is a fourth memorandum. The second is a clear exit from the programme with no conditions attached, which is unlikely, as it requires the consent of the markets. The third is the establishment of an emergency credit line, with conditions and external oversight attached.
The fourth and most likely possibility is a hybrid scheme, combining a guaranteed return to the markets along with external supervision, which will require a debt restructuring so as to guarantee a smooth return to the markets.
The Commission believes that the question of Greek banks has already been largely resolved by their earlier restructuring and recapitalisation.
At the same time, Juncker remains a proponent of Turkey’s EU prospects, in large measure because the end of Turkey’s accession process could well signal a fresh and much larger migration crisis than anything seen to date.