Merkel deal looks unlikely

ISTANBUL: The risk of a clash between Greece and its euro partners grew as German Chancellor Angela Merkel signalled little willingness to compromise over the conditions attached to the country’s bailout.

Ms Merkel said she’s looking for a “viable recommendation” from Greece as it tries to drum up support for a €10 billion (368 billion baht) bridge plan ahead of a euro-area finance ministers’ meeting today.

While French Finance Minister Michel Sapin said on Monday that a plan for bridge funding was needed, such an accord would require an easing of Germany’s stance in the standoff between Greece and its creditors over conditions attached to its €240 billion lifeline.

The impasse risks leaving Greece without funding at the end of this month, when its current bailout expires, and puts Europe’s most-indebted state’s euro membership in danger.

German political leaders have said they will not extend more assistance to Greece without strings attached. Ms Merkel said in Washington on Monday that the existing aid programmes are the basis for Greek talks.

“I’m waiting for Greece to come forward with a viable recommendation and then we’ll talk about it,” she said.

Greece’s public debt currently stands at more than €320 billion, about 175% of gross domestic product.

About €100 billion of that debt needs to be cancelled for it to be manageable, Matthieu Pigasse, head of Lazard Financial Advisory, hired by the Greek government as adviser on issues related to public debt, said yesterday.

Such a reduction would bring the country’s ratio of debt to GDP to 120% in 2020 and make Greece’s burden more “sustainable”, he said.

“Each European government knows, that the debt is today unsustainable or untenable,” he said.

In an attempt to stave off a funding crunch and buy time to push creditors to ease austerity, Greece’s Finance Minister Yanis Varoufakis is set to present a proposal at today’s meeting that will ask for an €8 billion euro increase in the stock of Treasury Bills the country is allowed, said a government official who asked not to be named.