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Greece eyes pain-free EU loan deal

18 february 2015, 16:32
0
Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem. ©AFP
Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem. ©AFP

 Greece was expected Wednesday to bid for extra debt crisis aid from the EU without strings attached, ahead of a closely-watched ECB meeting on the country's emergency funds, AFP reports.

Athens will send a letter to Jeroen Dijsselbloem, the head of the Eurogroup, requesting a six-month extension on its European loan agreement while sidestepping the duties of a full-blown bailout, Greek public television said.

"We should extend the credit programme by a few months to have enough stability so that we can negotiate a new agreement between Greece and Europe," Greek Finance Minister Yanis Varoufakis told Germany's ZDF.

The request was set to come as the European Central Bank reviews a lifeline for Greek banks known as emergency liquidity assistance (ELA), which is governed by strict criteria and cannot be used to finance the Greek state.

Europe and Greece are racing to reach a deal to avoid a Greek exit from the eurozone, after talks in Brussels ended in acrimony on Monday with both sides digging into their positions.

Prime Minister Alexis Tspiras on Tuesday said Greece had been ready to sign up to a deal drafted by EU Economics Commissioner Pierre Moscovici which hinged on a loan to buy extra time for deeper negotiations -- but it had been thrown out by the eurogroup.

   'Window for a deal' 

 The offer of a six-month, strings-free agreement appears to be a bid to resurrect that deal.

The news was welcomed in Greece, where the Kathimerini daily said talks were "intensifying, with a window for a deal," while financial newspaper Naftemporiki said Athens and its creditors were "a step closer" to a solution.

But German Finance Minister Wolfgang Schaeuble said earlier that Athens wanted something for nothing.

"They settle for saying 'we need more money now and we won't do anything anymore'," he said, adding that it was insulting to countries such as Ireland and Portugal that completed painful bailout programmes.

At the end of Monday's fruitless meeting, Dijsselbloem -- who is also the Dutch finance minister -- said Greece had until Friday to request an extension to the bailout.

Tsipras's radical left government has bitterly rejected any suggestion of prolonging a bailout programme which it says comes with fiscal obligations that have crippled the Greek economy.

But with the European portion of the 240-billion-euro ($270-billion) bailout expiring at the end of February, Greece's creditors insist it needs extra financing to stave off the risk of a default and exit from the euro.

Tsipras has fanned the debt crisis flames by announcing parliament will vote on a series of social reform bills which flout the bailout obligations on Friday, when the deadline falls.

Measures on the table include scrapping labour market deregulation, reversing an reform called for by Greece's creditors.

   'Greece has given in' 

 His refusal to play ball has raised concerns the ECB could limit or even cut off ELA access, after it closed a key channel earlier this month by refusing to accept Greek sovereign bonds as collateral for loans.

The ECB increased the volume of emergency liquidity available to Greek banks last week to 65 billion euros according to reports, and could refuse to increase it any further creating difficulties for the banking sector.eyes EU loan deal without painful bailout duties

Greece's parliament will elect a new president on Wednesday with Tsipras's candidate, former conservative minister Prokopis Pavlopoulos, needing 180 votes to secure this round.

It was parliament's failure to agree on a candidate at the presidential election in December which sparked early elections and ushered in the radical left Syriza party in January.

The chaos surrounding the debt talks has alarmed analysts, with economists at Commerzbank now predicting that a Greek exit from the euro was 50 percent likely, up from 25 percent.

Growing fears of a so-called "Grexit" hammered Greek stocks on Tuesday. But Asian markets rallied and the euro held up Wednesday on hopes of a deal settlement.

And Philippe Waechter of Natixis hailed the start of the end of the crisis, saying Greece's request for a six-month extension meant that "in the showdown between Greece and the eurozone, it's Greece that has given in."


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