Thursday, 19 February 2015

Greece says 'take it or leave it'

Greece and Germany entered a war of words on Thursday, ahead of what promised to be a stormy meeting of the euro area's finance ministers on Friday. 

"A part of the German government stands opposed to the Greek people on Mr. Scheauble's responsibility," said a statement from the Greek government, in reference to German finance minister Wolfgang Scheauble. 

Greece circulated a letter from Scheauble's office, which described a written Greek request for a six-month extension of its financial support from European countries as a "Trojan horse". 

"The Greek letter is not clear at all, but opens immense room for interpretation," read the German letter, circulated by the Greek government. "It is totally unclear how the Greek government wants to pay its bills over the coming weeks with the current short fall in tax receipts," the German letter said. 

"This is why the letter is not in line with the last Eurogroup position. It rather represents a Trojan horse, intending to get bridge financing and in substance putting an end to the current programme. On this basis it makes no sense to start drafting a Eurogroup statement on Friday."

A meeting of the single currency's finance ministers, the Eurogroup, was still scheduled to take place Friday afternoon, though it was unclear if all 19 members would agree to attend. 

A German statement earlier in the day rejected Greece's request for a loan extension. Greece countered with its own rebuttal. 

"The Greek government submitted a letter to the Eurogroup asking for a six month extension of the loan agreement," a government statement said on Thursday afternoon. "Tomorrow's Eurogroup has only two choices - to accept or reject the Greek request. Now we'll find out who wants a solution and who doesn't."

A 50-minute telephone call took place between Greek premier Alexis Tsipras and German Chancellor Angela Merkel, a statement from Athens said, and was "conducted in a positive climate and in the direction of finding a mutually acceptable solution."

The Greek request 

Greece's proposal, submitted earlier in the day, asked its European partners to continue to lend it money for six more months.

It says the next six months will be used to renegotiate the spending cuts and reforms Greece’s European partners have ordered it to make. But Greece needs to convince them to finance that truce, because although it now has a balanced budget, it cannot afford the 25 billion dollars in debt repayments that it faces this year.

A letter from Greek finance minister Yianis Varoufakis to Eurogroup chairman Jeroen Dijsselbloem pledged that Greece would run no deficits during negotiations, and allow creditors to continue to monitor its economy in order to verify this. 

The loan agreement that has kept Greece afloat since 2010 was supposed to end in December, and was extended to February 28. A similar Greek request on Monday divided the Eurogroup, because Greece’s new leftwing government insists on receiving the money without austerity terms. 

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