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ATHENS — Greece’s government spokesman says the country will officially present its creditors later Feb. 18 with a proposal aimed to save bailout talks from collapse.

Gavriil Sakellaridis told private Antenna TV the Greek plan would involve extending the international loan agreement that has kept Greece afloat since it nearly went bankrupt in 2010.

The new radical left-led government in Athens refuses to accept any extension of the bailout deals that set the strict terms under which the loans were issued.

Deep spending cuts and income reductions deepened an economic depression and sent unemployment levels above 25 percent.

It was unclear how the proposal would be met by creditors, who have given Greece until the end of the week to request an extension of the current bailout agreement.

The move follows an ultimatum issued by Eurozone finance ministers after their meeting to find a solution for Greece collapsed Feb. 16.

They have said Greece must ask for an extension to its current bailout by the end of the week in order to reconvene a meeting.

It was unclear whether the Greek request would meet the requirements of the country’s creditors, but the news was greeted with some market optimism.

U.S. stocks moved slightly higher, and the euro also gained some lost ground against the dollar.

“Greece’s new government wants more independence, but it doesn’t want that independence at all costs,” said Anastasia Amoroso, a global market strategist at JPMorgan Funds. “The extension is good news because it buys Greece and the eurozone time to reach a long-term resolution.”

Greece’s new left-wing government won elections last month on a promise to renegotiate the country’s bailout agreement.

That deal provided 240 billion euros in rescue loans from other EU countries and the International Monetary Fund, but came on the condition that Athens imposed draconian austerity measures in return.

Time is running out for the two sides to reach an agreement. The European part of Greece’s bailout program expires on Feb. 28, after which the country will struggle to service its debts.

Earlier Feb. 17, Prime Minister Alexis Tsipras sounded a defiant note, saying Greece will not compromise in talks with its European creditors, but that it is working for an “honest and mutually beneficial agreement.”

The failure in the Feb. 16 meeting of Eurozone finance ministers has increased fears Greece may be forced out of the joint euro currency, although investors seem to believe the two sides will eventually reach an agreement.

Athens insists it cannot ask for the continuation of a program it considers wrong. Instead, it has asked for a “bridging agreement” that would ensure it doesn’t face any cash liquidity problems while it negotiates a new deal.

“Salvation will not come by extending the mistake,” Tsipras said during a speech to his party lawmakers in Parliament.

“We are not hurrying and we are not compromising,” he said. “We are, however, working hard for an honorable and mutually beneficial agreement — an agreement without austerity and the bailout agreement that destroyed Greece in these past years.”

Anything else, the Prime Minister said, “is not an agreement but a surrender that would complete the euthanasia of our country.”

Germany, the largest single contributor to the Greek bailout, has been most vocal in insisting Greece stick to its commitments.

German Finance Minister Wolfgang Schaeuble, speaking in Brussels, said it was unclear what Greece wanted.

“A lot of colleagues were asking: ‘What do they really want? Do they have a plan?’” Schaeuble said, adding: “I don’t know.”

Investors are not panicking despite the breakdown in talks. European stocks were steady, while the Athens index fell 2.5 percent. Greece’s government borrowing rates rose, however, a sign investors are more wary of a potential bankruptcy.

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The post Greece Readies Bailout Extension Plan After All appeared first on The National Herald.

Source: The National Herald
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