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Meeting Over Greek Debt Ends in Acrimony Meeting on Greek Debt Produces an Ultimatum
(35 minutes later)
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. 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.
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.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.
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.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.
“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 “I have no doubt that in the next few days any notion of an ultimatum is going to be withdrawn.”“In the history of the European Union, nothing good has ever come out of ultimatums,” Mr.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 “I have no doubt that in the next few days any notion of an ultimatum is going to be withdrawn.”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 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.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.
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 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 or $2.27 billion 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.
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.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.
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. 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 bailout. That would unlock €7 billion of sorely needed funds.
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.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.
“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. “Unfortunately that splendid document that I was prepared to sign was withdrawn minutes before the Eurogroup began by the Eurogroup president,” Mr. Varoufakis said, referring to Mr. Dijsselbloem and the ministers’ group he heads. It was then “replaced by another document” that pressured Greece to sign an extension of the bailout, Mr. Varoufakis said.
An agreement would be impossible, he added, because the new Greek government was elected specifically to reject the bailout and its austerity terms.An agreement would be impossible, he added, because the new Greek government was elected specifically to reject the bailout and its austerity terms.
“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. “We have a substantial disagreement on whether the task is to complete a program that this government was elected 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 Europeans, for their part, continued to view the demands by Athens as intransigent.The Europeans, for their part, continued to view the demands by Athens as intransigent.
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.”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.”
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.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.
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.”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.”
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. 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 were 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 Monopoly money,” he shot back, generating a peal of laughter at the news conference.
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. Moscovici said there was little room for maneuver. “There is no alternative to a request for an extension to the program,” he said.
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.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.
“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. “If an extension is sought by the Greek authorities from the Eurogroup 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 a coming review, Greece would risk not receiving its loan disbursements, she suggested.
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. 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 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.
“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.“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.