France’s finance minister warned Athens against any attempt to play Paris off against Berlin over Greece’s debt crisis, saying a Franco-German agreement was key to striking a deal that would help Greeks and ensure they met their commitments.
Greece’s demand for time to negotiate a “new deal” with its EU peers is reasonable as long as it comes up quickly with the basis for a reform plan that can be gradually beefed up, Michel Sapin told Reuters in an interview a day after he met Athens’s new finance minister.
The new, anti-bailout government led by the radical leftist SYRIZA party must start by offering commitments to the European Central Bank to ensure its banks keep getting liquidity, Sapin said at the Reuters Euro Zone Summit.
“There is no point in playing eurozone countries against each other, and especially not France and Germany because … a solution that helps Greece while making sure it meets its commitments will have to go through an agreement between France and Germany,” Sapin said late on Monday.
France, which has its own deficit problem and is pushing for more flexibility in the EU’s budget rules, has from the start offered to facilitate the new Greek government’s debt talks.
Paris was the first city Finance Minister Yanis Varoufakis visited on Sunday on a tour of EU capitals that has not initially included Berlin.
Speaking to private investors in London on Monday evening, Varoufakis floated a plan to swap Greece’s debt for growth-linked bonds, a source with knowledge of his plans said, appearing to back away from Syriza’s previous demands for an outright write-off. He was quoted as saying Greece would spare privately held bonds from losses after they suffered a major “haircut” in 2012.
Varoufakis later issued a statement in Athens saying he had been misinterpreted, without specifically saying how.
With austerity-champion Germany, Greece’s relations have been tense from the start. In his first act as prime minister last week, Alexis Tsipras visited a war memorial where 200 Greek resistance fighters were slaughtered by the Nazis in 1944, a move that did not go unnoticed in Berlin.
Sapin said he had never had closer contact than now with his German counterpart Wolfgang Schaeuble, “to avoid any misunderstanding or tensions.”
“These are things that we must explain in a friendly way and that Greek authorities can understand,” he said.
Paris and Berlin do not see eye-to-eye on all aspects, however. While Germany has said it sees no reason to scrap the “troika” of EU, ECB and IMF inspectors who oversee compliance with bailout agreements, which the new Greek government rejects, Sapin said new tools with new names could be put in place. That is one of the issues that needs to be discussed, he said.
Sapin said Greece would not get a free ride. Athens says it does not want an extension of its 240-billion euro bailout when it expires on Feb. 28 and has asked for one month to come up with proposals and further time to strike a deal.
“That timetable seems reasonable if there is a minimal political framework that is gradually spelled out,” he said. “The ECB and European partners cannot give without anything in return.”
The first step would be a deal with the ECB on liquidity assistance, then Greece would need to either accept a prolongation of its existing deal with its EU partners or strike a new one on a new program, Sapin said.
While France has opened the door to allowing Athens more time to repay its debt, Sapin reaffirmed its opposition to any debt cancellation: “There will be no haircut.”
Varoufakis said on Sunday that Athens would seek to maintain liquidity from the ECB for its banks while talks on its debt proceed. He added on Monday that he was confident the ECB would do nothing to undermine a deal to resolve Greece’s debt crisis.
Sapin welcomed the Tsipras government’s commitment to a negotiated deal with its EU partners. But after a hectic first week during which ministers said they would cancel some privatization plans, he urged Athens to be careful not to spook foreign investors it will need to get back to growth.
Sapin played down a comment by British finance minister George Osborne that a stand-off between Greece and the eurozone over Greek debt was fast becoming the biggest risk to the global economy.
The eurozone is now much better equipped to deal with such issues than when the Greek debt crisis began five years ago, Sapin said, adding: “I’m afraid that the British finance minister has not quite perceived all the changes that have taken place since then in the eurozone.”