24th May 2022

Eurogroup, Greece fail to agree on bailout extension

  • All eyes were on Yanis Varoufakis, the new Greek finance minister (Photo: Council of European Union)

A first meeting between the new Greek finance minister and his eurozone peers ended on Wednesday (11 February) without a joint statement, as Athens is still refusing to accept an extension of its bailout programme.

The seven-hour long talks were praised for "covering a lot of ground" and for allowing Greece’s Yanis Varoufakis to make his case ahead of a regular Eurogroup meeting next Monday, Eurogroup chief Jeroen Dijsselbloem told press.

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"For some, an extension of the bailout programme was the preferred option, but we are not quite there yet. We will discuss this more on Monday”.

Dijsselbloem also ruled out that experts of the three international creditors - the European Commission, the European Central Bank and the International Monetary Fund - will go to Athens between now and next week.

For his part, Varoufakis told reporters it is out of the question to accept an extension of the current bailout, which he called a "failed experiment" which has run the Greek economy into the ground.

"There will be no unilateral, aggressive moves from our part, we're simply asking for some time to table proposals. The fact that we have a fresh mandate does not give us the right to do whatever we want, but it does give us the right to be heard and today we started that process," he said.

He also voiced confidence that an agreement will be found "even if it is at the very last moment."

According to Belgian finance minister Johan Van Overtveldt, the talks were quite animated.

"It went from left to right, up and down, it's hard to pick an average after today. But this will continue to be a very difficult discussion," he said on his way out.

Several versions of a joint statement were drafted during the meeting.

" The Greek authorities have agreed to work closely and constructively with the institutions to explore the possibilities for extending and successfully concluding the present programme taking into account the new government's plans," reads one draft seen by EUobserver.

German finance minister Wolfgang Schaeuble left the meeting before it ended, on the assumption that there was agreement on that point.

But after several phone calls to Athens, Varoufakis did not get the green light to sign the text.

Greek prime minister Alexis Tsipras, who will attend his maiden EU summit on Thursday, is sticking to his guns after having ruled out, in the Greek parliament, a Schaeuble-inspired bailout extension.

"I want to repeat today, no matter how much Schaeuble asks it, we are not going to ask to extend the bailout. Schaeuble is proposing irrational things, to ask for a perpetuation of the mistake," Tsipras told Greek lawmakers ahead of a confidence vote on Tuesday.

The German finance minister, but also the Austrian, Dutch and French finance ministers, say no new programme can be agreed until the existing one is succesfully concluded.

“We have this programme, and this programme either has to be concluded in an orderly manner or we won’t have a programme,” Schaeuble said on his way into Wednesday’s talks.

French finance minister Michel Sapin said that while every new government had some room for manoeuvre given its popular support, EU rules have to be abided by and the current programme is the set of rules.

At least 10,000 people marched peacefully in Athens and other Greek cities in a show of ongoing support for Tsipras' anti-austerity politics as the talks were being held in Brussels.

Syriza has already climbed down from earlier demands for an international debt conference to erase some of Greece's debt.

But it will be difficult for Tsipras to abandon all demands after he was elected on an anti-austerity ticket and a promise to restore equality in Greek society.

George Pagoulatos, a scholar at the Athens University of Economics & Business, told EUobserver he will have to agree to “credible structural reforms” to get an EU deal.

But he said Tsipras has “red lines” in terms of Greek expectations: to raise the minimum wage; to avoid privatisation of the electricity network; and to raise the lowest levels of pensions.

“In many other areas they [Syriza] can show flexibility - they can even advance their own, bolder reforms on, for instance tax evasion and avoidance by the economic elites, triangular transactions, smuggling of oil. This is most likely how they’ll try to win concessions in other areas”, Pagoulatos said.

“The rest is symbolics. But the substance is what matters. They won’t want to call it [any new EU scheme] a ‘troika’ or a ‘programme’ and then they can move forward”.

Meanwhile, if there is no a deal by 28 February, when the €240 billion bailout runs out, the European Central Bank is likely to turn off the taps for Greek banks.

It has already fired a warning shot by no longer accepting Greek bonds as collateral.

The ECB decision to end support would also mean that Greece would lose its last bailout tranche and head towards default.

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