Fri | Oct 19, 2018

Greece, creditors hit stumbling block in debt talks

Published:Tuesday | February 17, 2015 | 12:00 AM

Greece and its creditors in the 19-country eurozone struggled Monday to bridge a yawning gap over the country's request to ease its bail-out terms despite a fast-approaching deadline.

Hopes for a deal at Monday's meeting took a hit after some finance ministers, including Germany's Wolfgang Schaeuble, raised concerns over the new Greek government's negotiating tactics and demands.

"I am very sceptical because the Greek government apparently hasn't moved at all," Schaeuble told reporters as he arrived for the talks of the so-called eurogroup of finance ministers.

And Greece rejected what it says was an "irrational and unacceptable" demand from its euro partners at the start of discussions in Brussels. A Greek government official, who was not authorised to speak on the record, said the proposals were a "radical departure" from what was previously discussed. "No agreement can be reached today" on that basis, he said.

The draft eurogroup statement, which the Greek authorities rejected, envisioned Athens requesting a six-month technical extension to its current bail-out programme, agreeing to "make the best use of the existing built-in flexibility of the current programme," and refraining from taking "unilateral action".

With the divisions wide, it looks increasingly like another meeting may be needed. Irish Finance Minister Michael Noonan ventured the possibility of another meeting on Friday, which would be the third in a little over a week.

The Greek government, which took power three weeks ago on an anti-austerity platform, wants to scrap its existing bail-out deal, which has been worth €240 billion (currently US$273 billion) from other countries that use the euro and the International Monetary Fund.

It blames the austerity measures the country has had to enact in return for the rescue money for many of the country's current ills. Despite a modest return to growth in 2014, Greece's economy is still around a quarter smaller than 2008, while unemployment and poverty rates have swelled dramatically.

Instead, Athens wants its creditors to agree to a new, short-term "bridge agreement" that can keep it solvent after February 28, when the current bail-out deals ends.

The government of Greek Prime Minister Alexis Tsipras has still to deliver concrete proposals of its plan, though it has insisted it does not want to extend the current bail-out programme, which is the preferred option of many of the eurozone's finance ministers.

French Finance Minister Michel Sapin likewise said he would like to see an extension agreed at Monday's meeting as that "would provide some margin of security as well as time for discussion and negotiations".

The apparent stalemate dented sentiment in markets, with the main Athens stock market closing 3.8 per cent lower.

If no deal is reached by February 28, Greece's banks could be cut off from affordable funding from the European Central Bank.

- AP