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Eurozone Finance Ministers Hold Emergency Meeting on Greece Bailout After Talks, Eurozone and Greece Fail to Settle Differences Over Debt
(35 minutes later)
BRUSSELS — Eurozone finance ministers were gathering in an emergency session here on Wednesday, under pressure to devise a stopgap plan to keep Greece solvent as it tries to revise or even scrap the terms of its international bailout agreement. BRUSSELS — Eurozone finance ministers failed to narrow their deep differences with Greece on Wednesday over how to keep the country from running out of money as it tries to revise the terms of its bailout.
The session of the Eurogroup — a committee of finance ministers from the 19 countries using the euro — could be a stormy one, as the newly elected, leftist-led Greek government presses for relief from tough austerity measures. Those restrictions were a condition of Greece's being granted a total of 240 billion euros, or about $272 billion, in loans from its European neighbors and the International Monetary Fund since 2010. Greece needs to receive its next loan installment, €7.2 billion, or otherwise bridge the financial gap, to keep from defaulting on its international debt payments in coming months. But the new government of Prime Minister Alexis Tsipras has vowed to no longer abide by the terms of the bailout program, which he and many other Greeks blame for the country's economic woes and high unemployment. After holding more than five hours of talks here with Yanis Varoufakis, the combative finance minister from a newly elected anti-austerity government in Athens, the ministers said they would need to meet again on Monday.
A central player in the meeting that was expected to run well into the evening on Wednesday is Yanis Varoufakis, the combative new Greek finance minister who has described the bailout program as an economic disaster for his country. Mr. Varoufakis is expected to present plans for a short-term financial bridging arrangement — one that would relax at least some of the austerity conditions. “We covered a lot of ground but didn’t actually reach a joint conclusion how to make the next steps,” Jeroen Dijsselbloem, the president of the Eurogroup of finance ministers told reporters after the meeting. “There has to be a political agreement on the way forward” before concrete negotiations can get underway, he said.
That defiant stance won the backing of Greek lawmakers who passed a vote of confidence in the new governing coalition on Tuesday night in Athens. The ministers were meeting in an emergency session to consider the leftist-led Greek government’s push for relief from tough austerity measures. Those restrictions were a condition of Greece’s being granted a total of 240 billion euros, or about $272 billion, in loans from its European neighbors and the International Monetary Fund since 2010.
Even if the eurozone finance ministers are unable to come to terms Wednesday night, they will probably still be aiming to prevent Greek tensions from spilling over into a summit meeting of European Union leaders scheduled for Thursday in Brussels. The leaders are supposed to be addressing the Ukraine crisis and ways of responding to terrorism in Europe. Greece still needs to receive its next loan installment, €7.2 billion, or otherwise bridge the financial gap, to keep from defaulting on its international debt payments. But the new government of Prime Minister Alexis Tsipras has vowed to no longer abide by the terms of the bailout program, which he and many other Greeks blame for the country’s economic woes and high unemployment.
The finance ministers may, therefore, try to get the situation into a holding pattern, resuming work on the Greek proposals when they meet again on Monday for their regularly scheduled monthly session. The meeting in Brussels was called to give Mr. Varoufakis the opportunity to explain his plans to his eurozone counterparts all at once.
That was the indication from Jeroen Dijsselbloem, president of the Eurogroup, as he arrived at the meeting on Wednesday. “The Greek government still is in a program with the eurozone, so that’s the starting point,” Mr. Dijsselbloem told reporters. Characteristically casual in a tieless, untucked shirt, Mr. Varoufakis told reporters after the meeting that the experience had been a “fascinating” opportunity to discuss “all the facets of the Greek crisis.”
He said he expected no clear outcome from Wednesday’s session. He added, “We’ll have to listen to their new ideas and ambitions.” Another goal of the Wednesday night meeting was to prevent Greek tensions from spilling over into a summit meeting of European Union leaders scheduled for Thursday in Brussels. The leaders are supposed to be addressing Ukraine crisis and ways of responding to terrorism in Europe.
The meeting could be tense nonetheless. Ministers were hoping to get the situation with Greece into a holding pattern, so that work on the Greek proposals could get underway as soon as possible. If ministers did not quite reach that goal, they came close, according to diplomats who spoke on condition of anonymity.
Mr. Varoufakis will come face-to-face with Wolfgang Schäuble, his stolid German counterpart who has demanded that Greece broadly stick by its previous commitments to reform and to austerity in return for continued aid. In a meeting of the two last week in Berlin, neither seemed to have convinced the other. Over the course of the evening, the ministers had been expected to release a joint statement in which the Greeks pledged to keep most of their previous commitments, and that laid out plans technical discussions to continue on Friday and during the weekend. But that plan had to be dropped at the end of the meeting after ministers could not agree additional language, demanded by Greece, on the gravity of social conditions in the country.
Also at Wednesday's meeting is Michael Noonan, the Irish finance minister who has led his country through years of painful austerity after an international bailout, and has criticized the Greek administration for making “impossible” proposals to close their funding gap. The goal was “to successfully to conclude the plan” but “it’s not done,” Pierre Gramegna, the finance minister of Luxembourg, told reporters at the end of the meeting.
The “bridge proposal wouldn’t work,” Mr. Noonan said Wednesday, as he headed into the meeting. “I’m still of the view that the only space in which Greece can negotiate is with an extension of their existing program or within a program,” Mr. Noonan said, expressing a preference for granting loans to Greece only on the condition that Athens be held accountable for economic reforms and savings efforts that could be closely monitored. To reach that goal, analysts say both sides need to be willing to compromise.
“The solution for Greece is a matter of political willingness,” Guntram Wolff, the director of Bruegel, a research organization in Brussels, said earlier on Wednesday. “The first step is for the Greeks to stop their unilateral declarations to increase spending without being able to afford it,” Mr. Wolff said, and “then European creditors should somewhat delay debt repayments and offer them more of a financial cushion.”
As the ministers met in Brussels, thousands of demonstrators Wednesday night jammed into Syntagma Square and surrounding streets in Athens to support an end to austerity and back the government’s position.
Many brandished the Greek flag and waved placards reading, “Give Greece a chance!” while others denounced “European blackmail” and called for “no compromise with the bankers and the E.U.” Thousands also rallied in the large northern Greek city of Thessaloniki.
There also were rallies in support of the Greek administration in other European cities including Brussels and London.
Earlier in the day, Mr. Varoufakis met Christine Lagarde, the managing director of the International Monetary Fund, who came to Brussels in a black leather jacket that seemed to signal her readiness to take an approach equally as tough as Mr. Varoufakis’s.
“We are beginning a process and there will be plenty of work to do,” Ms. Lagarde said before entering the main ministerial session.
To keep their financial options open, Greek officials have been courting Russia and China. The overtures appear intended to put pressure on European creditors to make the kinds of concessions the Greeks have been demanding to avoid letting Moscow or Beijing drive a wedge between Athens and the rest of the European Union.To keep their financial options open, Greek officials have been courting Russia and China. The overtures appear intended to put pressure on European creditors to make the kinds of concessions the Greeks have been demanding to avoid letting Moscow or Beijing drive a wedge between Athens and the rest of the European Union.
Mr. Tsipras spoke by phone on Wednesday with the Chinese prime minister, Li Keqiang. Mr. Tsipras’s office said they had discussed plans for a Greek delegation to visit China before an official trip there by the Greek prime minister.Mr. Tsipras spoke by phone on Wednesday with the Chinese prime minister, Li Keqiang. Mr. Tsipras’s office said they had discussed plans for a Greek delegation to visit China before an official trip there by the Greek prime minister.
In Moscow on Wednesday, the Russian and Greek foreign ministers held a joint news conference, where the Russian minister, Sergey V. Lavrov, said his government would consider financial aid if Athens made a request, Reuters reported.In Moscow on Wednesday, the Russian and Greek foreign ministers held a joint news conference, where the Russian minister, Sergey V. Lavrov, said his government would consider financial aid if Athens made a request, Reuters reported.
As the negotiations in Brussels proceeded, thousands of demonstrators on Wednesday night jammed into Syntagma Square and surrounding streets in Athens to support an end to austerity and back the government’s position.
Many brandished the Greek flag and waved placards reading, “Give Greece a chance!” while others denounced “European blackmail” and called for “no compromise with the bankers and the E.U.” Thousands also rallied in the large northern city of Saloniki, called Thessaloniki by the Greeks.
Among the eurozone officials meeting in Brussels who might be able to help persuade Greek officials to hew to at least some of their prior obligations in exchange for a relaxation of austerity rules was Michel Sapin, the French finance minister. Mr. Sapin is a member of the Socialist government in France that has taken its own skeptical view of budgetary belt-tightening.
Other potential peace brokers at the meeting Wednesday night include Christine Lagarde, the managing director of the International Monetary Fund, which is one of Greece’s international creditors. As she headed into the meeting, Ms. Lagarde told reporters she “had a very good exchange” with Mr. Varoufakis earlier in the day.
Mr. Varoufakis was expected to ask his eurozone partners on Wednesday for the right to issue about €8 billion of further short-term debt above a current €15 billion limit and to seek permission to raise the amount of money that Greek banks can tap under an emergency liquidity assistance program.
There had been signs that capital was fleeing Greek bank accounts, but Michael Howell, managing director of CrossBorder Capital, played down those fears on Wednesday. He said that capital flight was “not the disaster many worried about” amid “little sign that the economy as a whole is hemorrhaging funds.”There had been signs that capital was fleeing Greek bank accounts, but Michael Howell, managing director of CrossBorder Capital, played down those fears on Wednesday. He said that capital flight was “not the disaster many worried about” amid “little sign that the economy as a whole is hemorrhaging funds.”
Mr. Varoufakis was also expected to ask European creditors to give Greece €1.9 billion in profits that they have made on their holdings of Greek bonds and to propose that some €11 billion in residual funding from the recapitalization of Greek banks be used to help Greek lenders deal with nonperforming loans.
In an effort to respond to some demands by creditors, Mr. Varoufakis was expected to pledge a crackdown on tax evasion and corruption.
Analysts say both sides need to be willing to compromise.
“The solution for Greece is a matter of political willingness,” said Guntram Wolff, the director of Bruegel, a research organization in Brussels. “The first step is for the Greeks to stop their unilateral declarations to increase spending without being able to afford it,” Mr. Wolff said, and “then European creditors should somewhat delay debt repayments and offer them more of a financial cushion.”