Greece re­jects bailout ex­ten­sion

Financial Mirror (Cyprus) - - FRONT PAGE -

Talks be­tween Greece and eu­ro­zone fi­nance min­is­ters over the coun­try’s debt cri­sis broke down on Mon­day night when Athens re­jected a pro­posal for a six-month ex­ten­sion of its in­ter­na­tional bailout pack­age as “un­ac­cept­able”.

The un­ex­pect­edly rapid col­lapse raised doubts about Greece’s fu­ture within the euro area af­ter a new left­ist-led gov­ern­ment vowed to scrap the EUR 240 bln bailout, re­verse aus­ter­ity poli­cies and end co­op­er­a­tion with EU/IMF in­spec­tors.

Eu­ro­zone Chair­man and Dutch Fi­nance Min­is­ter Jeroen Di­js­sel­bloem said Athens had un­til Fri­day to re­quest an ex­ten­sion, oth­er­wise the bailout would ex­pire at the end of the month.

The Greek state and its banks would then face a loom­ing cash crunch, while the Euro­pean Cen­tral Bank is ex­pected to de­cide on Wed­nes­day whether to main­tain the emer­gency lend­ing as­sis­tance (ELA) to Greek banks that are bleed­ing de­posits at a rate of EYR 2 bln a week.

Seem­ingly determined not to be brow­beaten by a cho­rus of EU min­is­ters in­ton­ing that he needed to swallow Greek pride and come back to ask for the ex­ten­sion, Fi­nance Min­is­ter Ya­nis Varo­ufakis voiced con­fi­dence that a deal on dif­fer­ent terms was within reach within days, but warned that the lan­guage of ul­ti­ma­tum never worked in Europe.

He cited what he called a “splen­did” pro­posal from the Euro­pean Com­mis­sion by which Greece would get four to six months credit in re­turn for a freeze on its an­ti­aus­ter­ity poli­cies. He said he had been ready to sign that - but that Di­js­sel­bloem had then pre­sented a dif­fer­ent, and “highly prob­lem­atic” deal.

A draft of what Di­js­sel­bloem pro­posed, swiftly leaked by fu­ri­ous Greek of­fi­cials, spoke of Athens ex­tend­ing and abid­ing by its “cur­rent pro­gramme” - anath­ema to a gov­ern­ment which, as Varo­ufakis said, was elected last month to scrap the pack­age.

Com­mis­sion of­fi­cials de­nied of­fer­ing a sep­a­rate plan and the man Varo­ufakis said pre­sented it, Eco­nomics Com­mis­sioner Pierre Moscovici, stuck to the same script as Di­js­sel­bloem.

Greece must ex­tend its bailout on the cur­rent con­di­tions, he said, even if that could be couched in lan­guage that did not em­bar­rass Prime Min­is­ter Alexis Tsipras be­fore his sup­port­ers.

Di­js­sel­bloem, who in­sisted he was will­ing to be flex­i­ble on ter­mi­nol­ogy that has be­come highly charged for Greek vot­ers, said fur­ther talks would de­pend on Greece re­quest­ing a bailout. The talks, which had been ex­pected to last late into the night, broke up in less than four hours - less even than a pre­vi­ous meet­ing last week af­ter which EU of­fi­cials voiced con­cern and as­ton­ish­ment at the Greeks’ lack of prepa­ra­tion.

Ger­many, the eu­ro­zone’s main pay­mas­ter and Greece’s big­gest cred­i­tor, stuck to its hard line.

Ger­man Fi­nance Min­is­ter Wolf­gang Schauble said be­fore the talks that Greece had lived be­yond its means for a long time and there was no ap­petite in Europe for giv­ing it any more money with­out guar­an­tees it was get­ting its fi­nances in or­der.

In a com­bat­ive New York Times col­umn, Varo­ufakis spelled out Greece’s re­fusal to be treated as a “debt colony” sub­jected to “the great­est aus­ter­ity for the most de­pressed econ­omy”, adding: “The lines that we have pre­sented as red will not be crossed.”

An opin­ion poll showed 68% of Greeks want a “fair” com­pro­mise with eu­ro­zone part­ners while 30% said the gov­ern­ment should stand tough even if it means re­vert­ing to the drachma. The poll found 81% want to stay in the euro.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.