Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Greece defies creditors, seeking credit but no bailout

Stock MarketsFeb 17, 2015 01:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Greek Finance Minister Varoufakis addresses a news conference after an euro zone finance ministers meeting in Brussels

By Renee Maltezou and Ingrid Melander

BRUSSELS (Reuters) - Talks between Greece and euro zone finance ministers over the country's debt crisis broke down on Monday when Athens rejected a proposal to request a six-month extension of its international bailout package as "unacceptable".

The unexpectedly rapid collapse raised doubts about Greece's future in the single currency area after a new leftist-led government vowed to scrap the 240 billion euro ($272.4 billion) bailout, reverse austerity policies and end cooperation with EU/IMF inspectors.

Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting, said Athens had until Friday to request an extension, otherwise the bailout would expire at the end of the month. The Greek state and its banks would then face a looming cash crunch.

How long Greece can keep itself afloat without foreign support is uncertain. The euro fell against the dollar after the talks broke up but with Wall Street closed for a holiday, the full force of any market reaction may only be felt on Tuesday.

The European Central Bank will decide on Wednesday whether to maintain emergency lending to Greek banks that are bleeding deposits at an estimated rate of 2 billion euros ($2.27 billion) a week. The state faces some heavy loan repayments in March.

Seemingly determined not to be browbeaten by a chorus of EU ministers intoning that he needed to swallow Greek pride and come back to ask for the extension, Finance Minister Yanis Varoufakis, a left-wing academic economist, voiced confidence that a deal on different terms was within reach within days.

"I have no doubt that, within the next 48 hours Europe, is going to come together and we shall find the phrasing that is necessary so that we can submit it and move on to do the real work that is necessary," Varoufakis told a news conference, warning that the language of ultimatum never worked in Europe.

He cited what he called a "splendid" proposal from the European Commission by which Greece would get four to six months credit in return for a freeze on its anti-austerity policies. He said he had been ready to sign that - but that Dijsselbloem had then presented a different, and "highly problematic", deal.

A draft of what Dijsselbloem proposed, swiftly leaked by furious Greek officials, spoke of Athens extending and abiding by its "current programme" - anathema to a government which, as Varoufakis said, was elected last month to scrap the package.

"MORE LOGIC, LESS IDEOLOGY"

Commission officials denied offering a separate plan and the man Varoufakis said presented it, Economics Commissioner Pierre Moscovici, stuck to the same script as Dijsselbloem.

Greece must extend its bailout on the current conditions, he said, even if that could be couched in language that did not embarrass Prime Minister Alexis Tsipras before his supporters.

"We need more logic and less ideology," Moscovici said as EU officials fretted about how seriously the novice Greek leaders were taking their finances and how far concerns about semantics and saving political face might trump pressing economic needs.

Dijsselbloem, who insisted he was willing to be flexible on terminology that has become highly charged for Greek voters, said further talks would depend on Greece requesting a bailout. Varoufakis and the other ministers will remain in Brussels on Tuesday for a routine meeting on the EU economy.

"The general feeling in the Eurogroup is still that the best way forward would be for the Greek authorities to seek an extension of the programme," Dijsselbloem told a news briefing.

Echoing that, Moscovici insisted there was no "Plan B", a phrase bounced back in his turn by Varoufakis, who invoked the language of high stakes poker: "It's not a bluff," he said.

"It's Plan A. There is no Plan B."

The talks, which had been expected to last late into the night, broke up in less than four hours - less even than a previous meeting last Wednesday after which EU officials voiced concern and astonishment at the Greeks' lack of preparation.

The euro dropped nearly a U.S. cent on word of stalemate, though edge back to $1.1350, about 0.5 percent down on the day.

Both sides showed signs of fraying patience, with several ministers complaining of disappointment and fearing "disaster". Dijsselbloem and Varoufakis spoke of a need to rebuild trust.

Asked what would happen if Greece did not request a bailout extension, Edward Scicluna, the finance minister of the smallest EU state Malta said: "That would be it; it would be a disaster.

"Greece has to adjust, to realise the seriousness of the situation, because time is running out."

Germany, the euro zone's main paymaster and Greece's biggest creditor, stuck to its hard line.

German Finance Minister Wolfgang Schaeuble said before the talks that Greece had lived beyond its means for a long time and there was no appetite in Europe for giving it any more money without guarantees it was getting its finances in order.

MONEY FLEEING

As the meeting in Brussels broke up, a senior Greek banker said Greece's stance boded ill for the markets and the banks.

"It is a very negative development for the economy and the banks. The outflows will continue. We are losing 400-500 million (euros) every day and that means about 2 billion every week. We will have pressure on stocks and bond yields tomorrow," he said.

Varoufakis spelled out in a combative New York Times column Greece's refusal to be treated as a "debt colony" subjected to "the greatest austerity for the most depressed economy", adding: "The lines that we have presented as red will not be crossed."

An opinion poll showed 68 percent of Greeks want a "fair" compromise with euro zone partners while 30 percent said the government should stand tough even if it means reverting to the drachma. The poll found 81 percent want to stay in the euro.

Deposit outflows in Greece have picked up. JP Morgan bank said that at the current pace Greek banks had only 14 weeks before they run out of collateral to obtain funds from the central bank.

The ECB has allowed the Greek central bank to provide emergency lending to the banks, but a failure of the debt talks could mean the imposition of capital controls.

Euro zone member Cyprus was forced to close its banks for two weeks and introduce capital controls during a 2013 crisis. Such controls would need to be imposed when banks are closed. Greek banks are closed next Monday for a holiday.

Greece defies creditors, seeking credit but no bailout
 

Related Articles

Yellen says U.S. is not losing control of inflation
Yellen says U.S. is not losing control of inflation By Reuters - Oct 24, 2021 6

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen said on Sunday that the United States was not losing control of inflation, and that she expected inflation levels to...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Mark Powder
Mark Powder Feb 16, 2015 4:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This are historic events.. . First member will go out from Europe integration.. . Anyway, this is better for all sides..
Desmond Lim
Desmond Lim Feb 16, 2015 4:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Spain is watching very closely !
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email