Greek finance minister met with 'scepticism' in Berlin debt talks

 Greece's finance minister faced criticism and a stern reminder of his commitments to his EU partners on Thursday as he met his tough-talking German counterpart for the first time to ask for debt forgiveness, AFP reports.

Wolfgang Schaeuble voiced "scepticism" over proposals by Greece's new anti-austerity government as he and Yanis Varoufakis failed to find common ground at a bruising meeting in Berlin to discuss the country's massive debts.

"We had long and intensive discussions, but we were not in complete agreement," Schaeuble told a highly-anticipated news conference in Berlin, seated next to Varoufakis after their first face-to-face meeting.

"We agreed to disagree," he added, while Varoufakis retorted: "We didn't reach an agreement. It was never on the cards that we would. We even didn't agree to disagree from where I'm standing."

Greek Prime Minister Alexis Tsipras and Varoufakis -- whose radical left Syriza party stormed to victory in elections on January 25 -- have gone on a whistle-stop tour of major European capitals in recent days to build support for a renegotiation of the country's 240-billion-euro ($275-billion) EU-IMF bailout.

Tsipras said it was time for both Greece and Europe to "turn the page" on austerity as parliament convened Thursday, the first time since the elections.

The government has blamed its fiscal problems mainly on the austerity shackles fixed by Germany, arguing the restrictions have choked growth in an economy that has shrunk by a quarter.

   'No to blackmail' 

 The new Greek finance minister's stop in Berlin followed a high-stakes visit to the European Central Bank in Frankfurt a day earlier.

Just hours after that visit, the ECB surprised the markets by announcing it would no longer allow banks in Greece to use its junk-rated government debt as collateral for loans, in a severe blow to Greece and ratcheting up the pressure.

But Greece defiantly said it would not be "blackmailed" and insisted its banks were secure.

In a show of support for the new government, some 5,000 demonstrators gathered in Athens late on Thursday to protest against the ECB decision.

"We have nothing to lose, that's why we're defending the government," said Stavroula Drakopoulou, a 55-year-old teacher.

About 500 people also took to the streets in Thessaloniki, Greece's second city, holding up banners proclaiming "No to blackmail" by the ECB.

In Berlin, Varoufakis, dressed in his customary open-necked shirt, sought to reassure Germany that his government was only eyeing steps to promote the interests of the "average European".

"What we request at this stage is perhaps the most precious of commodities -- time," he added.

    'Gulf' in views 

 Both Schaeuble and Varoufakis insisted that a debt write-down or "haircut" was not up for discussion, at least for now.

"We agreed -- if I understood correctly -- that the issue of a debt haircut is not relevant at present," Schaeuble said.

"We didn't discuss a haircut," Varoufakis agreed, and added that the new government in Athens would do "everything in our power to avoid any default."

Schaeuble said he was "sceptical" about some of Greece's proposals and insisted that Athens' negotiations on its debt "must be held" with the so-called troika of creditors, comprising the EU Commission, the ECB and the International Monetary Fund.

Tsipras has demanded an end to the Troika oversight system.

"I was unable to hide my scepticism... that some of the measures do not go in the right direction," Schaeuble told reporters.

Christian Schulz, of Berenberg Bank, said the meeting had highlighted both a "gulf" in views and "some tentative bridge-building" by the Greek government but that the only agreement was that Greece should remain in the euro.

"While Schaeuble sees Greece and the eurozone on a positive path with some more work to do, Varoufakis sees Greece in a depression and effectively bankrupt at least since 2012, a blatant attack on the eurozone rescue strategy which Germany's leadership spent considerable political capital on," he said.

French President Francois Hollande said the ECB's decision to shut off Greeks banks from a key channel of financing put the responsibility to reduce debt squarely on the shoulders of "states and governments... And it's perfectly legitimate."

The ECB move certainly rattled investors, with Europe's stock markets sliding, the Greek stock market plunging more than nine percent, while the euro also fell. Greece's borrowing rate also soared above the symbolic level of 10 percent.

But in an attempt to soften the blow, the ECB gave the green light to make up to 60 billion euros ($68.5 billion) in emergency liquidity available to Greek banks, a source close to a national central bank told AFP on Thursday.

Analysts said the hardball tactic adopted by the ECB was risky and could backfire.

"The risk is that the ECB's decision will undermine the confidence in the Greek banks, which have already suffered significant deposit withdrawals before and after the January election," Natixis economist Jesus Castillo warned.