Cyprus Mail

EU patience frays as Greek PM refuses ‘blackmail’ (Update 3)

Greek Finance Minister Yanis Varoufakis said that he does not intend to present new reform proposals at the Eurogroup meeting

By Alastair Macdonald and Karolina Tagaris

A war of words between Greece and EU paymaster Germany escalated on Tuesday with Athens’ new leftist prime minister refusing what he called “blackmail” to extend an international bailout and vowing to rush through laws to reverse labour reforms.

Financial markets held their nerve after the latest talks among euro zone finance ministers broke down late on Monday and EU partners gave Greece until the end of the week to request an extension or lose financial assistance.

Many investors believe that whatever the rhetoric, both sides will find a face-saving deal before Athens’ credit lines expire in 10 days. If they fail, Greece could rapidly run out of cash and need its own currency.

However, the European Central Bank is not about to cut off emergency funding for Greek banks this week, a source familiar with the situation said. And both sides continued to insist that Greece will reiamn in the euro.

Greek Prime Minister Alexis Tsipras told lawmakers in his Syriza party that the government – elected to scrap the bailout, reverse hated austerity measures and end cooperation with the “troika” of EU, ECB and IMF lenders – would not compromise.

Greece would no longer be treated like a colony of a pariah in Europe, Tsipras said. He accused “certain circles” in the euro zone of seeking to undermine his government and German Finance Minister Wolfgang Schaeuble of losing his cool and making comments that degraded Greece.

Schaeuble, 72, hammered home a take-it-or-leave-it message, wondering sarcastically whether Tsipras and his “famous economist” of a finance minister knew what they wanted or were making the right choices for the Greek people.

“The question still remains if Greece wants a programme at all or not,” he told reporters in Brussels after another day of meetings in Brussels. “All of us… want the euro zone to stay together.

“But everyone must do their part and it’s a decision that’s up to Athens alone … On Feb. 28, at midnight, it’s over.”

Seasoned Eurocrats complained that Tsipras and his team were unprepared, unrealistic and oblivious to the dangers they are courting by refusing to roll over a 240-billion-euro credit deal and demanding easier terms.

Tsipras, 40, said he was in no rush and would not give in to “blackmail” from technocrats – a new hint that he hoped hitherto unresponsive EU leaders would step in and clinch a political agreement with him, which they declined to do last week.

EU officials were trying to work out whether his fierce rhetoric was aimed at bolstering domestic support to avert any backlash against eventual compromise, or signalled he was retreating from a deal.


Greek Finance Minister Yanis Varoufakis – an academic economist – dismissed suggestions his only option was to ask for the bailout to be extended. He said he had been ready to sign a text that Greek officials said called for the “loan agreement” to be extended as part of a “transition” to a new deal.

An “honourable solution” was possible, Varoufakis insisted.

His French counterpart, Michel Sapin aired a compromise idea to let Greece run a smaller budget surplus and said reaching a deal was largely a matter of phraseology, since there was consensus that there would be no write-off of Greek debt.

But it was not clear that Sapin’s ideas had any backing from Germany or other euro zone hardliners.

Tsipras raised the stakes by vowing to move fast to scrap labour market deregulation brought in by his conservative predecessor to meet international creditors’ demands for less protection for workers’ rights.

His statement contrasted with Varoufakis’ apparent readiness in Brussels to postpone measures to unpick the bailout programme for several months in return for continued funding.

Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurogroup of 19 countries using the common currency, stuck to his guns, saying Athens must seek an extension: “It’s really up to the Greeks. We cannot make them or ask them. We stand ready to work with them, also (over) the next couple of days.”

Schaeuble and others emphasised the unanimity Greek faced across the table, with some ministers from eastern Europe noting that a minimum wage Tsipras plans to raise is as high as average salaries in some countries where taxpayers funded the bailout.


Some other ministers said the new Greek government did not seem to grasp the gravity of the situation or put forward coherent proposals in writing.

“It is troublesome that Greece has twice explained its goals orally, but no written presentation has been given yet,” said Finnish Prime Minister Antti Rinne, one of the euro zone hawks.

Time is running short and investors marked down Greek stocks and bonds after Monday’s debacle, some saying the risk of Greece exiting the euro had risen.

Three-year government bond yields rose more than a point to 19 percent, highlighting how far Athens remains unable to fund itself at manageable interest rates on the markets.

Dijsselbloem has said Friday is a deadline for a deal that would allow time for some national parliaments to ratify it.

Greek media reproduced Varoufakis’s angry narrative of events on Monday. The Greek minister said Dijsselbloem, an ally of Schaeuble, quashed a proposal from EU economics commissioner Pierre Moscovici that Varoufakis had been willing to accept.

Dijsselbloem dismissed the uproar over conflicting drafts leaked by the Greek delegation. Wording could be massaged to assuage political sensitivities, he said, but that ultimately Greece must seek funds tied to conditions.

Moscovici also denied any divisions among Greece’s partners, saying there had been no “good cop, bad cop” tactics. “We are all united, we all think a solution is possible,” he said.


Money is streaming out of Greek banks and Greeks are holding off paying their taxes, adding to pressure on public finances and the banking sector if international money dries up.

The ECB’s governing council will review on Wednesday how long it can continue emergency funding for Greek banks after it stopped accepting Greek government bonds as collateral earlier this month. A person familiar with the situation said there should be no sudden end to support. A failure of the debt talks could lead to the imposition of capital controls.

Investment bank Barclays said the breakdown of talks had raised the risk that Greece would leave the euro zone and raised the prospect that Tsipras would have to call a referendum on whether to accept a deal with strings or ditch the euro.

Chris Scicluna of Daiwa Capital Markets said the failure raised the risk of a “disorderly conclusion”. But he added: “All is not lost and we see no need for panic just yet.”

Related Posts

First Africa-bound grain ship arrives in Ukrainian port

Reuters News Service

Hungarians protest at looser logging rules to tackle energy crunch

Reuters News Service

China sanctions Lithuanian deputy minister for Taiwan visit

Reuters News Service

China’s Xi plans foreign trip including meeting Biden -WSJ

Reuters News Service

Novelist Salman Rushdie attacked, wounded on stage at New York event

Reuters News Service

Russian oil flows to Czech Republic will resume on Friday

Reuters News Service


Comments are closed.