Documents leaked to me last night shed new light, but not total clarity, on the dramatic breakdown of talks in Brussels over a new Greek bailout deal.

On Monday afternoon the Greek delegation in Brussels told journalists a draft agreement presented at the start of the finance ministers meeting was “unacceptable”. A vigorously crossed out sentence, in the writing of finance minister Yanis Varoufakis, indicated disapproval.

Varoufakis (pictured, below), in a tense press conference, then claimed he had been ready to sign an earlier draft presented to him by EU Commissioner Pierre Moscovici.

Challenged to produce the draft, he did not immediately do so, and someone on the EU side briefed journalists it probably did not exist.

‘Close of business’

At 11pm UK time I was leaked a document described to me as that draft. Dated 18:20 on Sunday night, it was clearly at variance with what had been on offer Monday. I released it via Facebook and Scribd.

Then, at 11:28pm a different source informed my that the document sent to me was an earlier draft, and that the finally agreed one was headed “close of business” (see below). It was substantially different, and even more acceptable to the Greek side.

I released this also and by now the Greek media was in a frenzy.

Not only did the document exist, but it said: “The above forms a basis for an extension of the current loan agreement, which could take the form of a (four-month) intermediate programme, as a transitional stage to a new contract for growth for Greece, that will be deliberated and concluded during this period.”

As this is exactly what the Greeks wanted, it explains the shock, and the urgent nature of their briefings to journalists Monday afternoon when it was replaced by a much harder form of words.

However there are loose ends. Moscovici, as a member of the commission, is there to advise but he is not the man with the money. The Greeks are negotiating with the Eurogroup, representing the creditors, not the European Union.

Also none of the documents I’ve seen were signed. It is possible that two sides went away from each drafting session with misconceptions.

Information asymmetry

So if we step back from the overnight furore, where does it  leave us?

First, with information asymmetry. Journalists are used to coming away from Brussels with scant information – snippets of verbal briefings. It’s impossible to reveal the sources of three (!) documents I’ve been leaked – but though they were each different, the release benefited the Greek side.

The Eurogroup, IMF and commission are sticking to the old rules, speaking off the record to a few journalistic insiders, and that has left them stumbling to get their side of the story out. We have to bear this in mind whenever a blazing headline happens.

Second, we are close to a deal. The substance of the “close of business” document is that Greece gets to implement 30 per cent of its anti-austerity programme; it gets flexibility on this year’s budget balance (ie is not required to hit 4 per cent), and it gets a four month extension – and alteration – of the old agreement as a transition to a new agreement.

Today negotiators will continue to try and build on that. The question is whether they will run into the recurrent obstacle again: intransigence from an alliance involving Germany and the governments of peripheral countries who are going to look timid if Greece achieves what they did not: Spain, Portugal and Ireland.

Inherent danger

A large part of the commentariat, plus many politicians in the hardline countries, have staked their reputations on the scenario: force the Greeks into a humiliating climbdown or exit from the euro.

Just as the Greeks have a vested interest in securing a temporary deal, allowing them to do part of their programme, their opponents have an interest in forcing total submission.

Last night, with its frantic claim and counter-claim, shows the danger inherent in the situation. Fatigue, misinformation, misunderstanding, media rage, Twitter rage (which is media rage times 10) and mismatched time zones can turn a rational outcome into an irrational one.

Given what the Greeks themselves were “cool with” on Sunday night, the prospect of bank insolvencies, sovereign debt default, capital controls and Euro exit would seem an irrational outcome.

But it could happen, and within weeks, unless there is a deal by Friday.

Below: the “close of business” document.


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