Greece fails to agree rescue package with eurozone finance ministers

By The Guardian

Greece has edged closer to leaving the eurozone after talks with European finance ministers broke up with no agreement on a new rescue package for the debt-stricken country.

A Greek official close to the talks in Brussels described the insistence on keeping the current bailout programme as unreasonable.

“The Greek authorities have indicated that they intend to successfully conclude the programme, taking into account the new government’s plans,” stated a draft of the rejected communique, which had been crossed through. A Greek official said the euro group had attempted to repeat the existing programme, which was unacceptable to Greece.

Both sides began the talks in entrenched positions. Arriving in Brussels for the discussions, Wolfgang Schäuble, Germany’s finance minister, said he was not optimistic of reaching a deal. “I’m quite sceptical, the Greek government has not moved apparently.”

Earlier, Schäuble accused the Syriza-led coalition government headed by Alexis Tsipras of “acting irresponsibly” and said he felt sorry for the Greek people.

Schäuble’s comments prompted an instant retort from the Greek government, with a spokesman in Athens saying that Berlin was also acting irresponsibly.

Pressure has been mounting on the finance ministers from the 19-strong euro group to find a way of negotiating an extension of Greece’s credit line before the current programme expires at the end of the month.

Greece’s government has called for bridging loans to help it avoid a short-term cash crisis while it negotiates a less onerous bailout deal with the rest of the eurozone.

“We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must,” Greece’s finance minister, Yanis Varoufakis, wrote in an article in the New York Times on Monday.

Varoufakis, an economics professor who specialises in game theory, insisted Greece is not bluffing about its negotiating tactics. He wrote: “I am often asked: ‘What if the only way you can secure funding is to cross your red lines and accept measures that you consider to be part of the problem, rather than of its solution?’ Faithful to the principle that I have no right to bluff, my answer is: ‘The lines that we have presented as red will not be crossed. Otherwise, they would not be truly red, but merely a bluff.’”

With Germany and Greece deadlocked, eurozone ministers voiced scepticism about getting an agreement on Monday. Peter Kažimír, Slovakia’s finance minister and deputy prime minister, said he expected to return to Brussels for another meeting soon. “It is difficult to expect conclusions tonight, it’s too early.”

Greece’s current financing expires on 28 February and Monday’s euro group meeting was billed as the last chance to secure a deal. But expectations are rising that another “final’ meeting could be held later this week.

The first formal negotiations between Greece and its eurozone partners sinceSyriza swept to power last month broke up last week without any breakthrough.

The gloomier mood surrounding the talks made it more expensive for the Greek government to service its national debt, currently 175% of annual national output. The interest rate on three-year Greek debt rose by almost 1.5 percentage points to 17.15%, while the interest rate on 10-year bonds was up by just under 0.25 points to 9.74%.