Greece set on path for collision with its lenders

Greece appears to be on a collision course with the eurozone after new Finance Minister Yanis Varoufakis said on Friday that Athens would not extend the current bailout deadline beyond the end of February and would refuse to deal with the troika.

Varoufakis made the comments during a news conference following a meeting with Eurogroup chief Jeroen Dijsselbloem, who also held talks earlier with Prime Minister Alexis Tsipras. The Greek finance minister argued that Sunday’s election result had given the government a mandate to end the bailout agreement with its creditors and not extend the February deadline.

“This platform enabled us to win the confidence of the Greek people,” he said. “Our first action as a government will not be to reject the rationale of questioning this program through a request to extend it.”

In contrast, Dijsselbloem said that no final decision had been taken on whether the bailout deadline should be moved further into the future, thereby ensuring that Greece receives the pending 7.2 billion euros, which is due to be released upon completion of the outstanding troika review.

“We will decide before that time what happens next. That is the position where we are… No conclusions are drawn yet,” Dijsselbloem said.

He also warned the Greek government not to make any moves without consulting with creditors after Tsipras’s ministers announced their aim to roll back numerous reforms carried out over the past few years.

“Taking unilateral steps or ignoring previous arrangements is not the way forward,” he said.

Varoufakis insisted that the SYRIZA-led coalition is willing to negotiate the details of a new deal with lenders and would propose its own “deep reforms” as part of negotiations.

“Our intention is, with an absolute will to cooperate, to persuade our partners… that our common interest in Europe is served best by a new agreement that will emerge following talks between all Europeans,” he said.

Dijsselbloem also dismissed SYRIZA’s calls for a European debt conference.

“You realize that this conference already exists and it’s called the Eurogroup,” he said, referring to the monthly gatherings of eurozone finance ministers.

The real flashpoint, though, came at the end of the news conference when Varoufakis drove home the point that the government would not work with the troika, which it considers “shabbily constructed and anti-European.” Instead, the minister said, the government would cooperate with the “legitimate institutions of the European Union and the International Monetary Fund.”

These comments appeared to annoy Dijsselbloem, who gave Varoufakis a brief handshake, whispered something in his ear and then walked out briskly.

In Germany, Finance Minister Wolfgang Schaeuble warned Athens against strong-arm negotiating tactics in its effort to win debt relief. Rules need to be kept, and trust and reliability were the basis for further solidarity, the DPA news agency reported him saying.

“There’s no arguing with us about this, and what’s more we are difficult to blackmail,” Schaeuble was quoted as saying in Berlin.

“We are prepared to offer all cooperation and solidarity,” he said, but only if Greece abides by its agreements.

“The discussion about a debt cut or a debt conference is divorced from reality,” Martin Jaeger, a German Finance Ministry spokesman, said in Berlin earlier.