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| Varoufakis extends Washington DC charm offensive after talks with Lagarde | |
| (35 minutes later) | |
| Yanis Varoufakis, the Greek finance minister, has continued efforts to drum up support in the US for his debt-stricken country as speculation mounted over the ability of the Athens’ government to survive in its current form. | |
| Extending his Washington DC charm offensive on Monday, the flamboyant finance minister held talks with senior administration officials after his meeting with Christine Lagarde, head of the International Monetary Fund, attempting to allay fears of an imminent Greek default. | |
| Emerging from discussions with Lagarde on Sunday, Varoufakis had insisted Greece intended “to meet all obligations to all its creditors, ad infinitum”. In the coming weeks, Greece faces a series of debt repayments, including a €450m (£331m) instalment to the IMF on 9 April. | Emerging from discussions with Lagarde on Sunday, Varoufakis had insisted Greece intended “to meet all obligations to all its creditors, ad infinitum”. In the coming weeks, Greece faces a series of debt repayments, including a €450m (£331m) instalment to the IMF on 9 April. |
| Greece’s leftist-led coalition is hoping to draw support from a US administration widely perceived to have taken a softer line than creditors in Europe over Athens’ need to adopt austerity. | |
| The Greek prime minister, Alexis Tsipras, was swept to power nine weeks ago on an anti-austerity platform and ever since has been haggling with Brussels, the European Central Bank and the IMF over a cash-for-reforms deal to unlock €7.2bn in aid. | |
| Related: Greek government takes desperate measures in battle to stay afloat | Related: Greek government takes desperate measures in battle to stay afloat |
| “The view in Athens has long been that the US takes a much more pragmatic approach to dealing with Greece,” said one well-placed official requesting anonymity. “From the outset, it has been openly critical of a German-dominated Europe pushing the country too hard on austerity and fearful of the effects that might have on European unity. A Grexit would spin the markets out of control. It is the last thing Washington wants.” | “The view in Athens has long been that the US takes a much more pragmatic approach to dealing with Greece,” said one well-placed official requesting anonymity. “From the outset, it has been openly critical of a German-dominated Europe pushing the country too hard on austerity and fearful of the effects that might have on European unity. A Grexit would spin the markets out of control. It is the last thing Washington wants.” |
| Varoufakis, a visiting economics professor in Austin, Texas until his decision to join the new government in January, was scheduled to meet Nathan Sheets, US Treasury undersecretary for international affairs, two days before Tsipras heads to Moscow for talks with the Russian president, Vladimir Putin, on Wednesday. | |
| The Greek finance minister has gone out of his way to improve ties with the IMF and Lagarde in particular. The hope is he will gain the support of Treasury officials in persuading lenders to cut Greece some slack. | The Greek finance minister has gone out of his way to improve ties with the IMF and Lagarde in particular. The hope is he will gain the support of Treasury officials in persuading lenders to cut Greece some slack. |
| Time is of the essence. Athens has not taken bailout funds since August last year. Unable to tap international markets, with its banks forced to rely on limited emergency funding provided on a week-by-week basis with the blessing of the ECB, it is fast running out of cash. Bank outflows have surpassed €25bn since December as a result of political uncertainty. | Time is of the essence. Athens has not taken bailout funds since August last year. Unable to tap international markets, with its banks forced to rely on limited emergency funding provided on a week-by-week basis with the blessing of the ECB, it is fast running out of cash. Bank outflows have surpassed €25bn since December as a result of political uncertainty. |
| Varoufakis’ surprise trip to Washington was reportedly instigated by Lagarde after ministers began suggesting the government would prefer to pay pensions and salaries than the IMF loan – in keeping with its philosophy to support those hardest hit by the crisis. | Varoufakis’ surprise trip to Washington was reportedly instigated by Lagarde after ministers began suggesting the government would prefer to pay pensions and salaries than the IMF loan – in keeping with its philosophy to support those hardest hit by the crisis. |
| Related: Alexis Tsipras looks to Moscow but risks becoming Putin’s useful idiot | Natalie Nougayrède | |
| Failure to meet bondholder obligations could spark a dangerous chain reaction for a country saddled with €320bn in debt – the highest debt-to-GDP ratio in Europe. As such, Lagarde was quick to say she welcomed the news that Athens would honour the loan repayment. | Failure to meet bondholder obligations could spark a dangerous chain reaction for a country saddled with €320bn in debt – the highest debt-to-GDP ratio in Europe. As such, Lagarde was quick to say she welcomed the news that Athens would honour the loan repayment. |
| Reports indicated the IMF chief had also pressed Varoufakis to agree to pension cuts and raise VAT. Both are anathema to a government that has refused outright to adopt any more “recessionary” measures. | Reports indicated the IMF chief had also pressed Varoufakis to agree to pension cuts and raise VAT. Both are anathema to a government that has refused outright to adopt any more “recessionary” measures. |
| Varoufakis, who has repeatedly said a euro exit would be catastrophic for Greece, promised to break the deadlock by improving the efficacy of negotiations with creditors. | Varoufakis, who has repeatedly said a euro exit would be catastrophic for Greece, promised to break the deadlock by improving the efficacy of negotiations with creditors. |
| “There will be topics established in order to reach deals faster and to reach better quality deals,” he told reporters. “Our government is a reformist government, we are intent upon reforming Greece deeply. This is our promise to the Greek people so having an opportunity to discuss the reform programme here at the IMF with the managing director is an excellent step towards that direction.” | “There will be topics established in order to reach deals faster and to reach better quality deals,” he told reporters. “Our government is a reformist government, we are intent upon reforming Greece deeply. This is our promise to the Greek people so having an opportunity to discuss the reform programme here at the IMF with the managing director is an excellent step towards that direction.” |
| Yet such reforms – including the sale of state assets – will not be easy. Internal dissent within Syriza, the governing party, has peaked in recent days with far-left militants, led by the energy minister Panagiotis Lafazanis, robustly rejecting any suggestion of rolling back on pre-election pledges. Lafazanis, a Marxist who openly supports improving ties with Moscow, controls around a third of Syriza’s MPs and could easily bring down the government by voting against reforms when they are brought before the 300-member house. | |
| With the young premier clearly at odds over how to deal with the hardliners, there is growing speculation, not least among eurozone officials, that a new bailout accord to keep the country afloat can only be achieved if Tsipras agrees to dismember his own party and join up with centrist forces to form a new coalition. That would require him also cutting links with his rapidly anti-austerity rightwing junior partner Anel. | |
| “Either Tsipras makes the policy U-turns being demanded of him, or Greece crashes,” said Dimitris Keridis, political science professor at Panteion University. “In that sense this government cannot survive in its current form.” | “Either Tsipras makes the policy U-turns being demanded of him, or Greece crashes,” said Dimitris Keridis, political science professor at Panteion University. “In that sense this government cannot survive in its current form.” |
| Piling on the pressure, the Greek parliament late on Monday began debating the need to form a committee to investigate how Greece ended up being “stripped of its sovereignty” under its bailout agreement and placed under the surveillance of the EU and IMF. Analysts believe the move will almost certainly inflame relations with Athens’ creditors further. | Piling on the pressure, the Greek parliament late on Monday began debating the need to form a committee to investigate how Greece ended up being “stripped of its sovereignty” under its bailout agreement and placed under the surveillance of the EU and IMF. Analysts believe the move will almost certainly inflame relations with Athens’ creditors further. |