Volatile, highly confrontational discussions between the Greek government and the institutions providing the country with international bailout funds reportedly saw a breakthrough Wednesday, in anticipation of an important two-day meeting of European leaders in which the Greek situation is expected to dominate discussions.
In a statement released after the markets closed, the European Commission, or EC, which is the administrative arm of the European Union, noted that "the authorities and staff teams agreed on most of the core measures needed to restore the momentum of reform."
The EC also said there would not be any more high-level meetings in Athens, as "discussions on remaining issues will continue from respective headquarters and through technical representatives in the field with a view to reaching full staff-level agreement over the coming days."
The Greek government has spent several weeks talking to representatives of the European Union, the International Monetary Fund and the European Central Bank -- the so-called troika -- to convince those institutions the country was doing enough cutting back on spending and implementing reforms. The troika wanted additional cuts to approve the next tranche of rescue funds. As late as Tuesday night, conversations were reported to have been stalled over significant disagreements.
It appears that some kind of impasse was broken Wednesday, with Yannis Stournaras, the country's finance minister, telling London's Financial Times late in the day, "We are in full agreement on almost all the issues. ... What remains is to reach a compromise on labor reforms and civil servants, then finalize measures to reform products and services markets in order to bring down prices."
Those words mark an almost 180-degree turn from comments made by an anonymous labor official on Tuesday that "there is still disagreement on many issues."
The Financial Times suggests the main bone of contention earlier in the week was likely a proposal by the troika to change Greece's labor law, so that it slashed the amount required for workers' severance when private sector companies dismiss employees. Giannis Vroutsis, the country's labor minister, was reportedly incensed by the requirement and threatened to unilaterally withdraw from negotiations if the proposal was kept on the table. All reports seem to indicate he was overruled by the Finance Ministry.
Greece was able to score some victories during the negotiations: Mass firings of government employees were delayed until late 2013, and it is widely believed the troika will recommend that Greece be reprieved from reaching 2014 debt reduction targets for two years. It is not clear if a demand by the country that the minimum wage remain be frozen indefinitely was accepted.