Greece drops key bailout demands


Published: Friday 20th February 2015 by The News Editor

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Greece heads to another round of negotiations today after dropping key demands for a bailout settlement.

But the country still faced stiff opposition from lead lender Germany, which criticised Athens’ latest proposals as a “Trojan horse” designed to dodge its commitments.

Eurozone finance ministers agreed to hold their third meeting on the Greek debt crisis in just over a week after Athens formally requested a six-month extension of loan agreements with rescue creditors that expire this month.

Going back on recent election campaign pledges, Prime Minister Alexis Tsipras’ new left-wing government said it would honour debt obligations and agree to continued supervision from bailout lenders and the European Central Bank.

Late last night, Mr Tsipras held telephone conversations with French president Francois Hollande and German chancellor Angela Merkel after Germany sharply criticised the Greek offer during preparatory talks in Brussels.

Greek media, including state television, widely quoted a German representative at the talks as saying the Greek offer “rather represents a Trojan horse, intending to get bridge financing and in substance putting an end to the current programme”.

Germany argues that Greece has failed to provide detailed alternatives to cost-cutting reforms imposed by the previous government that helped the country balance its budget after decades of excessive borrowing.

Greek and European markets were largely unaffected by the German response. Europe’s Stoxx 50 index rose 0.64%, but Athens is under increasing pressure to break the impasse with lenders.

“If there’s no agreement in the next few days there is a risk of (a bank run) because liquidity in Greek banks is very limited and there are many who say that capital controls are very close,” said Evangelos Sioutis, head of equities at Guardian Trust Securities.

Although Greece emerged from the recession with a primary budget surplus last year, it faces a spike in debt repayment in 2015 with hopes of a full return to markets hit by renewed uncertainty and a resulting surge borrowing rates.

Mr Tsipras ousted traditionally dominant political parties in January 25 elections, promising to scrap bailout agreements and supervision.

He also pledged to demand a massive write down of Greece’s 240 billion euro (£155 billion) bailout debt so that his government could tackle a dramatic surge in unemployment.

But in its latest proposals yesterday – carefully worded to avoid reference to the bailout agreement or “memorandum” – it scaled back those aims to seek more modest primary budget surpluses, budget-neutral growth measures, and calls for a deal later this year to improve bailout loan repayment terms.

Greek officials appeared visibly irritated by the latest German objections.

“All the conditions are there for a transition agreement to be achieved,” deputy prime minister Giannis Dragasakis said.

“At this moment it appears that there are powers that would like Greece on its knees, exactly so they can impose their will.”

Published: Friday 20th February 2015 by The News Editor

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