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6th Oct 2022

Greece up for 'clash' with eurozone ministers

  • Greece is up for a fight with the eurozone (Photo: Flickr/Kate Gardiner)

Greece is not excluding a clash with eurozone finance ministers on Wednesday (11 February) over its plan to replace the outgoing bailout with a 'bridging programme' until September.

"If you're not willing to even consider a clash, you're not negotiating," Greek finance minister Yanis Varoufakis told the Greek parliament on Tuesday, ahead of a confidence vote which the new government passed with 162 votes out of 300.

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"We're not seeking a clash. We will do everything to avoid it. But you're not negotiating if you've ruled it out," Varoufakis added.

The economist-and-blogger turned finance minister will have his baptism of fire on Wednesday evening in Brussels, where he will present his government's ideas on how to avoid bankruptcy and roll back some of the austerity measures linked to the current bailout programme that ends on 28 February.

The new 10-point plan includes bond swaps to reduce Greece's debt mountain of 175 percent of GDP and linking debt repayments to economic growth.

This idea is unlikely to fly, but another one, to reduce the budget surplus from 3 percent of GDP this year to 1.49 percent is more likely to find some sympathy among eurozone peers, provided Greece sticks to the reforms plan.

Varoufakis told the Greek parliament that around 30 percent of the programme was "toxic" and that he will not accept any new debt being piled on his country's bill.

The idea of a bridge programme has so far been met with scepticism, particularly in the Netherlands - whose finance minister Jeroen Dijsselbloem leads the Eurogroup and had a frosty meeting in Athens last week- and Germany, where Varoufakis met finance minister Wolfgang Schaeuble and had an equally tense press conference.

"I want to repeat today, no matter how much Schaeuble asks it, we are not going to ask to extend the bailout," Greek prime minister Alexis Tsipras said Tuesday in the Greek parliament.

"Schaeuble is proposing irrational things, to ask for a perpetuation of the mistake," he said in reference to the 2010 bailout deal.

Time is pressing as the European Central Bank has turned off one of the cheap money taps to Greece and could cut off Greek banks completely in the absence of a deal with the eurozone by the end of the month, meaning that the country would go bankrupt.

Dijsselbloem on Tuesday told Dutch television news channel RTL Z he is "extremely willing" to look for a solution.

"Financing goes hand-in-hand with demands and conditions. That's exactly where the tensions lie" he said.

For his part, EU economics commissioner Pierre Moscovici said in an interview with AFP that any solution should be found "within the context of a common framework which exists already, which is that of the existing programme."

The likelihood of a deal on Wednesday evening is small, with an EU commission spokeswoman on Tuesday downplaying expectations.

"We have low expectations that any final agreements will be reached tomorrow or at the European Council" on Thursday, EU commission spokeswoman Mina Andreeva said during a press conference.

EU leaders are gathering on Thursday, mainly to discuss anti-terrorism measures and the aftermath of a peace deal attempt in Minsk between Russia and Ukraine. But Greece will inevitably feature in the discussions, as it will be the first time for Tsipras to attend the European Council.

A further meeting of eurozone finance ministers will take place on Monday, 16 February.

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