Greece haggles over bail-out terms

Prime minister and finance minister of Greece tour Europe’s capitals to put their case for a relaxation of the terms of the eurozone loans.

Greece’s new government has made significant concessions in its fight to get the terms of its bail-out relaxed but is still struggling to win wide support from its European partners.

Officials in Brussels are poised to call an emergency meeting of the eurozone’s finance ministers in the first half of next week to discuss Greece, partly so that the bail-out does not become a distraction from an EU summit on Thursday (12 February) that is supposed to discuss relations with Russia and the threat of radical Islamic terrorism.

Donald Tusk, the president of the European Council, issued a statement yesterday (4 February), following a meeting with Alexis Tsipras, Greece’s new prime minister, emphasising that discussions about Greece’s bailout “will take place in the Eurogroup”.

The Eurogroup Working Group, the officials who prepare meetings of the eurozone finance ministers, will meet this evening (5 February) to discuss their respective national views on Greece’s request.
After a meeting with Martin Schulz, the president of the European Parliament, Tsipras said he was “very optimistic” that together they would be able to find a “common, viable and acceptable solution”.

Tsipras’s round of meetings in Brussels yesterday also included discussions with Jean-Claude Juncker, the president of the European Commission, but the two men agreed not to make any public declaration while their negotiations continue.

Yanis Varoufakis, the Greek finance minister, met Mario Draghi, the president of the European Central Bank, in Frankfurt yesterday. Today he will be visiting Wolfgang Schäuble, Germany’s finance minister, whose government has repeatedly rejected Greece’s demands to revisit the terms of the bail-out.

Varoufakis is going outside the usual framework of bail-out negotiations to muster support for changes, which would require unanimous backing from eurozone members.

Tsipras and Varoufakis have already dropped what had been the headline demand of their far-left Syriza party, for an outright debt cut, which had been flatly rejected by several EU leaders.
Instead, Varoufakis has suggested that Greece could retain its overall debt burden, but that repayments should be indexed to Greek growth.

He is ruling out prolonging Greece’s bail-out, which is scheduled to expire at the end of this month, but is suggesting that the country could issue treasury bills to sustain its finances while negotiations with creditors continue, to reduce the risk of market panic that might follow if Greece exited its bail-out without any form of financial safety-line.

Tsipras’s government has had some support from left-leaning member states. Michel Sapin, France’s finance minister, said that Greece needed a “new contract” for its bail-out. Matteo Renzi, Italy’s prime minister, said that he believed that “the conditions exist to find an accord” and promised Greece “the greatest possible support”.

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Lolita Cigane, a member of Latvia’s national parliament who is chairing its European affairs committee, told European Voice that she expected her colleagues to reject a relaxation of the conditions of Greece’s bail-out. “We believe in European solidarity […] but also in responsibilities. If you have committed to something, you must adhere.”

Leading politicians from Finland, Germany, the Netherlands, Portugal and Spain have taken a similar line.

A further difficulty for Tsipras is the stance of the European Central Bank. Greece’s banks are increasingly dependent on short-term loans from the ECB. Several of its officials have indicated that the bank will refuse to provide them with further loans unless the country is in a bail-out programme or a similar arrangement.

The newly-elected Greek parliament will convene for the first time today and a vote on the new government’s programme is scheduled for Monday (9 February).

Tsipras is scheduled to return to Brussels on Thursday for the informal meeting of the European Council.