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Meeting Over Greek Debt Ends in Acrimony Meeting Over Greek Debt Ends in Acrimony
(about 2 hours later)
BRUSSELS — A meeting of eurozone finance ministers on Greece's debt crisis broke up in acrimony Monday evening, further dimming hopes of a speedy resolution to problems that could result in the new Greek government's soon running out of money. BRUSSELS — The standoff between Greece and its European lenders appeared to reach a new low on Monday as European officials handed Athens an ultimatum: agree by Friday to continue with a bailout program or risk the funding that the country needs to avoid a default.
In an email to reporters just before the meeting ended, a Greek official dismissed the latest proposal by Greece’s European creditors as “unreasonable and unacceptable.” The proposal had called for Greece to abide by the current terms of its bailout program. The demand appeared to be part of a strategy by eurozone creditors to get Prime Minister Alexis Tsipras of Greece and his finance minister, Yanis Varoufakis, to back away from the anti-austerity pledges that swept them to power last month. In exchange, eurozone officials said they would consider rolling back some of the austerity terms at a later date.
Greek officials have been seeking to revise or scrap the current bailout plan to allow them more flexibility in their budgeting plans. But the strategy appeared to have backfired. Mr. Varoufakis expressed outrage at a briefing with reporters late Monday, saying that the other countries appeared to be effectively holding a gun to his head.
The insistence on holding Greece to its prior commitments showed the eurozone ministers were “wasting their time,” wrote the official, who under government policy could not be identified by name. “In the history of the European Union, nothing good has ever come out of ultimatums,” Mr. Varoufakis said. “I have no doubt that in the next few days any notion of an ultimatum is going to be withdrawn.”
The meeting broke up a short time later, with Greek representatives and eurozone officials heading off to hold dueling news conferences. The European part of Greece’s bailout program is to expire at the end of the month, raising the risk that the country could default on loan repayments and become the first member of the euro currency union to leave. An emergency meeting of the same group of finance ministers from the 19-country currency union also ended in failure last week.
Jeroen Dijsselbloem, the Dutch finance minister and head of the Eurogroup of eurozone finance officials, said the group thought Greece should seek an extension of its current bailout program. Even if Greece could persuade its European neighbors to agree to a new program, it would not be strikingly different from the current one and would hold Athens accountable to budget targets. The urgency of Greece’s financial situation was underscored on Monday by a report from JPMorgan Chase indicating the Greek banks were losing deposits at the rate of 2 billion euros a week. If that pace continued for the next 14 weeks, the banks would not have enough reserves on hand to issue new loans, according to the report.
“The rules and regulations talk about strict conditionalities,” Mr. Dijsselbloem told reporters. “It would still be about fiscal sustainability.” Greece, meanwhile, has suggested that it could turn to Russia or China for help if its talks on debt relief and a rollback of austerity measures break down. American officials have expressed concern about the implications of any breakdown in the discussions, since that could propel Greece further away from Europe.
He said Greece and its eurozone partners would need more time to reach a deal. Jeroen Dijsselbloem, the president of the group of ministers from euro area countries, said that an accord could be reached “immediately” to roll back some of the harsher austerity terms that have infuriated Greek citizens — but only if Athens agreed by Friday to continue with Greece’s 240 billion euro bailout. That would unlock 7 billion euros of sorely needed funds.
The day had not started well. Greek and German officials traded public barbs, and nervous investors sold off Greek stocks and bonds. Mr. Varoufakis said Athens viewed such promises as “nebulous,” and he accused Greece’s European partners of reneging on an earlier proposal that would have formed the basis of an accord. He said he was ready on Monday afternoon to sign a deal that was apparently put forward by Pierre Moscovici, the European commissioner for economic and monetary affairs. That deal recognized Greece’s humanitarian crisis and spoke of a four-month intermediate program that would form a transition until a “new contract for growth” was provided for Greece.
The European part of Greece’s bailout program is to expire at the end of the month, raising the risk that the country could default on loan repayments and become the first member of the euro currency union to leave it. An emergency meeting of the same group of finance ministers from the 19-country currency union ended in failure last week. “Unfortunately that splendid document that I was prepared to sign was withdrawn minutes before the euro group began by the euro group president,” Mr. Varoufakis said, referring to Mr. Dijsselbloem. It was then “replaced by another document” that pressured Greece to sign an exension of the bailout, Mr. Varoufakis said.
The urgency of Greece’s financial situation was underscored on Monday by a report from JPMorgan Chase indicating the Greek banks were losing deposits at the rate of 2 billion euros a week. If that pace continues for the next 14 weeks, the banks will not have enough reserves on hand to issue new loans, according to the report. An agreement would be impossible, he added, because the new Greek government was elected specifically to reject the bailout and its austerity terms.
None of the ministers arriving at the meeting were optimistic about reaching a definitive agreement during the session later on Monday. Some even spoke about the possibility of holding a third meeting on Friday. “We have a substantial disagreement on whether the task is to complete a program that this government was eleced to challenge the logic of, or to sit down with our partners with an open mind and rethink this program from scratch,” Mr. Varoufakis said. “This program is part of the problem, not part of the solution,” he added. “It would be an act of subterfuge to promise our partners” that Greece would complete it, he said.
The German finance minister, Wolfgang Schäuble, told German radio on Monday that he was “very skeptical” about the chances of a deal later in the day. He also accused the anti-austerity Greek government of behaving “pretty irresponsibly.” Mr. Schäuble said the Greek prime minister, Alexis Tsipras, was “insulting those who have helped Greece in the past few years.” The Europeans, for their part, continued to view the demands by Athens as intransigent.
Those comments helped prompt a decline in Greece’s benchmark stock index, which fell nearly 4 percent on the day. Three-year Greek government notes fell for the first time in three days. Earlier Monday, the German finance minister, Wolfgang Schäuble, told German radio that he was “very skeptical” about the chances of a deal. He also accused the anti-austerity Greek government of behaving “pretty irresponsibly.” Mr. Schäuble said Mr. Tsipras was “insulting those who have helped Greece in the past few years.”
Over the weekend, Greek officials reiterated their determination to revise or scrap the bailout plan that is at the center of the standoff between Greece and its European creditors. A government spokesman on Monday responded to the German finance minister’s remarks. Those comments played a role in the 4 percent decline in Greece’s benchmark stock index on Monday. Three-year Greek government notes fell for the first time in three days.
“I could also say that Germany’s behavior is irresponsible, but I don’t want to trade characterizations,” the spokesman, Gavriil Sakellaridis, told a Greek radio station. “Who is irresponsible and who is responsible is subjective.” In response to Mr. Schauble’s remarks, the Greek government spokesman, Gavriil Sakellaridis, told a Greek radio station, “I could also say that Germany’s behavior is irresponsible, but I don’t want to trade characterizations.” He added, “Who is irresponsible and who is responsible is subjective.”
Athens wants “a solution on the political level,” Mr. Sakellaridis said. “We don’t see this like a game of poker. Neither are we bluffing.”Athens wants “a solution on the political level,” Mr. Sakellaridis said. “We don’t see this like a game of poker. Neither are we bluffing.”
Writing in The New York Times on Monday, Yanis Varoufakis, the Greek finance minister, denied he was following “some radical-left agenda,” and he called for financing that would allow for a “few months of financial stability.” Characteristically combative, and wearing his coat collar upturned, Mr. Varoufakis denied on Monday in Brussels that he was risking financial havoc by behaving as if the crisis was an academic exercise or a board game like Monopoly, with artificial cash. “I have never played Monopoly with fake money, I always played Monopoly with genuine real money,” he shot back, generating a peal of laughter at the news conference.
The German news media reported that Mr. Varoufakis was demanding a new agreement with European lenders that would substantially reduce the size of his country’s debt. Mr. Moscovici, the European commissioner, said there was little room for maneuver. “There is no alternative to a request for an extension to the program,” he said.
Mr. Varoufakis and Mr. Dijsselbloem had entered the conference center on Monday without speaking to reporters. But behind the scenes, efforts had been underway to seek a compromise. Christine Lagarde, the managing director of the International Monetary Fund, which has a lending agreement with Greece until early 2016, also prodded Greece to accept a continuation of the bailout.
Technical staff members from Greece and its international creditors met on Friday and Saturday in Brussels to seek common ground between the terms of the current bailout program and the plans of the Greek government. But that exercise apparently yielded few concrete results. “If an extension is sought by the Greek authorities from the euro group and addressed with a commitment to continue to consider the current program, then we continue to work together,” she told the same news conference. But by failing to stick to commitments that the I.M.F. still needed to assess in an upcoming review, Greece would risk not receiving its loan disbursements, she suggested.
“It was an exchange of views, not negotiations,” said Annika Breidthardt, a spokeswoman for the European Commission, the European Union executive body that has helped to oversee the Greek bailout program. The weekend meeting was “merely taking stock” of the situation, she said. Mujtaba Rahman, who oversees coverage of Europe at the Eurasia Group, a political risk consultant, wrote in a briefing note on Monday that a deal might only be done closer to the Feb. 28 expiration of the current bailout program. He said that Greece and Germany remained far apart, and that both had incentives to let the negotiations play out for some time.
There had been speculation among senior eurozone officials on Friday that an interim deal might lead to a new bailout for Greece later this year, which would be the country’s third rescue package since 2010. But reaching that point would almost certainly involve drawn-out wrangling. “Even if the Greeks were to back down over some red lines, which is possible, the political atmosphere in Europe will need to be more dramatic to justify what is essentially going to be a ‘flip’ by the Greek government,” Mr. Rahman wrote, referring to the pressure on Greece to make concessions.
Michael Noonan, the finance minister of Ireland, suggested that the stalemate between Greece and its European creditors would be greatly eased if Athens quickly agreed to continue taking part in the current international bailout arrangement and waited until “sometime around midsummer” to negotiate a new program.
If Greece asked to extend the current arrangement, “some of the roadblocks would fall away, and it would be possible then to get down to specifics,” Mr. Noonan told reporters.
“I think the ball is back in the Greek court again now,” he said, but officials in Athens need “to explain to the rest of us what exactly are they looking for.”
Mujtaba Rahman, who oversees coverage of Europe at the Eurasia Group, a political risk consulting firm, wrote in a briefing note on Monday that a deal might only come closer to the Feb. 28 expiration of the current bailout program because Greece and Germany remained far apart, and both had incentives to let the negotiations play out for some time.
“Even if the Greeks were to back down over some red lines, which is possible, the political atmosphere in Europe will need to be more dramatic to justify what is essentially going to be a ‘flip’ by the Greek government,” wrote Mr. Rahman, referring to the pressure Greece faces to make concessions.
“Furthermore, Germany’s negotiating position,” Mr. Rahman wrote, “has been extremely tough.”