Creditors unmoved by Greece's bailout promises

9th February 2015, Comments 0 comments

Greece and its creditors were at loggerheads again Monday after the new Athens government insisted it would not back down over its massive bailout, sparking new jitters on financial markets over fears of a euro exit.

PM Alexis Tsipras's request for emergency EU funding to tide the country over while it renegotiates its huge debt baffled German Finance Minister Wolfgang Schaeuble.

"If they want our help, there needs to be a programme" agreed with creditors, rather than emergency assistance, he said, adding: "I still don't understand how they (Greece) want to do it."

Tsipras said he was "optimistic that we can reach a compromise" over the country's debt crisis, but struggled to convince his EU counterparts as the clock ticked down to a key Eurogroup meeting on Wednesday.

His finance minister Yanis Varoufakis said he would go to Brussels as "neither a 'yes man' nor a 'no man'," but promised to temper his aim to please the Greek people with his "duty to find a solution".

A finance ministry source said Greece wants a new economic deal with its EU creditors to enter into force from September 1.

The new leaders' overtures have fallen on deaf ears, with British PM David Cameron moving to draw up contingency plans for a Greek exit from the euro (or "Grexit") and Germany snubbing the request for aid.

Schaeuble, who is known for his acerbic comments on Greece's situation, said: "It is not us who need a programme. Germany has no need of a programme."

Fears that the country is heading into the financial mire were fuelled by Tsipras's rousing speech to parliament Sunday in which he swore he would stick to his anti-austerity guns.

The Greek stock exchange plunged over 5.0 percent on Monday after the premier refused to extend the much-loathed 240 billion euro ($270 billion) bailout, with Berenberg financial analysts saying chances of a Grexit were 35 percent.

- 'Likelihood is zero' -

Athens is under pressure to woo its international creditors as quickly as possible because the European portion of Greece's bailout is due to expire at the end of the month.

A meeting of eurozone finance ministers next Monday is seen as the last chance for Greece to back down and request an extension to the current bailout or reach an interim deal.

European Commission chief Jean-Claude Juncker called on the government to be realistic, saying it "must not assume that the overall mood in Europe has changed so much that the eurozone will unconditionally adopt the government programme of Tsipras".

He also said he did not expect any new deal on Athens' demands to be reached at an EU summit in Brussels on Thursday.

Varoufakis had earlier warned of the damage a Greek exit could inflict on the zone, telling Italian state television that Athens' departure would spark a domino effect leading to the collapse of the bloc.

The eurozone "is like building a house of cards. If you take out the Greek card, the others will collapse," he said.

- 'Little time to spare' -

Experts said Tsipras had missed a step by failing to woo Greece's creditors in his parliamentary speech.

"With very little time to spare, Tsipras let an opportunity pass to reassure Greeks, the European partners and markets that his government will do what it takes to keep Greece in the euro," Berenberg's Christian Schultz said.

ING Credit Strategy said that it was "difficult to see how Europe can avoid fallout from the weekend speech by Alexis Tsipras," adding, however, that while "the clock is indeed ticking for some interim solution... whether Eurogroup will cave this week is questionable."

French Finance Minister Michel Sapin summed up the dilemma for EU leaders, saying that Greece need to be assured it would not be "at the mercy of any sort of panic situation on the markets."

However, "we cannot simply say, we'll finance, we'll finance" Athens without "respect for European rules" in exchange.

In comments likely to fuel the flames, Germany's economy minister rejected calls by Greece for Berlin to pay reparations for World War II damages by the Nazis, insisting the issue was concluded 25 years ago.

"The likelihood is zero," said Sigmar Gabriel, who is also Germany's vice chancellor, in response to Tsipras's claim that his country had a "moral obligation" to request reparations and payment for a forced wartime loan.


© 2015 AFP

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