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ATHENS — Germany took a tough line against Greece over its bailout on Feb. 10, tempering market hopes that a deal between Athens and its European creditors was in the works.
Finance Minister Wolfgang Schaeuble warned that negotiations with Greece, which wants to scrap its bailout program in favor of a new one with easier terms, would be dead if Athens pulls out of the current one.He also said there was no chance of reaching a final deal at an emergency Eurozone finance ministers’ meeting on Feb. 11.The blunt comments tempered hopes in financial markets, which had rallied on Feb. 10 on hopes of a negotiation breakthrough between lenders and the country’s new left-wing government.

“The public statements (by Greece) are more confusing than helpful,” Schaeuble said, speaking in Istanbul, Turkey, after a meeting of Group of 20 finance ministers.

Greece’s new left-wing Prime Minister Alexis Tsipras won elections last month on a pledge to restructure the massive bailout debts and renegotiate the terms of the deal.

The current bailout program ends after Feb. 28, so both sides are under pressure to reach a deal.

Greece needs money to avoid bankruptcy, which could ultimately push it out of the Eurozone and force it to adopt a new currency — a development that would cause massive financial damage for the country, at least in the short term. For the Eurozone, an exit from the euro by Greece would bring huge market uncertainty.

Expectations that Greece could be granted extra time to hold new negotiations buoyed markets. Shares on the Athens Stock Exchange shot up nearly 8 percent, while the European Stoxx 600 index was up 0.5 percent.

“There are several reasons to be optimistic, starting with Europe’s track record over the past few years of finding a solution to the rolling Eurozone crisis, often in the final moments,” said Garrick Hileman, an economic historian at the London School of Economics.

But EU officials also suggested a final deal would take time and would likely not be reached at this week’s meetings.

EU Commission spokeswoman Mina Andreeva said the Feb. 11 meetings will be a first opportunity for the ministers to hear from the new government. That meeting will be followed by an EU leaders’ summit on Feb. 12.

The finance ministers convene again Feb. 16 in Brussels, hoping to find a breakthrough at that stage.

Prompting the Feb. 10 rally were reports that the Greek government is ready to compromise and accept an extension of the bailout by six months in return for some changes, such as reducing the surplus Greece has to run once debt and interest payments are stripped out.

That would free up cash for Greece. Athens would also commit to a series of reforms over the next few months, particularly on tax increases, that would help assuage some concerns voiced across Europe, notably in Germany.

“If Greek politicians can play their cards right then the Eurogroup may actually accept this plan, and Athens may be able to buy itself some much needed time to sort out its financing needs over the coming months, rather than days,” said Kathleen Brooks, Research Director at

Tsipras’ government was due to receive a vote of confidence from the newly-elected Parliament late Feb. 10, and his ministers insisted they would stick to their election pledges — halting major privatization plans and reversing austerity taxes demanded by bailout lenders.

“How much of the bailout deal do we accept? Zero percent. What percentage of the (cost-cutting) measures do we accept? About 30 percent of that agreement is toxic and we reject it,” Finance Minister Yanis Varoufakis said.

“If you are not willing to even contemplate a rift, then you are not negotiating.”

By Derek Gatopoulos and Nicholas Paphitis. Frank Jordans in Berlin, Raf Casert reported in Brussels, Desmond Butler in Istanbul, Lorne Cook in Paris, and Pan Pylas in London contributed

The post Germany Tells Greece: Our Way Or The Highway appeared first on The National Herald.

Source: The National Herald
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