EU chiefs take up Greece baton as Merkel-Tsipras ready to meet

European Union leaders will take up the baton on Greece when they gather in Brussels on Thursday after finance ministers from the euro area postponed decisions on the country’s future financing until next week.

The summit of the bloc’s 28 chiefs will probably be delayed past its scheduled 1 p.m. start by all-night peace talks in Minsk involving German Chancellor Angela Merkel and French President Francois Hollande. Both leaders are due to fly directly to Brussels from Belarus, where Russian President Vladimir Putin announced that a cease-fire in Ukraine had been agreed from Feb. 15, a deal that pushes back the prospect of more EU sanctions on Russia over its role in the conflict.

The summit offers a first opportunity for Merkel, the main proponent of austerity in return for international aid, to meet Greek Prime Minister Alexis Tsipras, elected last month on a platform of ending Greece’s bailout program. The encounter comes amid a standoff over the future of Greek aid after talks at finance-minister level that stretched into the night failed to bridge differences over the program the Greek government blames for economic hardship.

“I know there are rules, I know there is flexibility in rules,” Luxembourg’s Prime Minister Xavier Bettel said as he arrived for the Brussels talks. “We have to see what we said before is still the right thing today, but with the flexibility planned. We should not be fetishists.”

Mutual Understanding

With Greece’s current bailout expiring at the end of February, finance ministers met for six hours in Brussels into early Thursday without signing off on any conclusions on the way forward for the region’s most-indebted nation. That leaves open how Greece can avoid running out of cash and avert a possible exit from the 19-nation currency union.

Greek bonds slid, with the yield on three-year notes rising 66 basis points to 21.41 percent. The benchmark Athens Stock Exchange General Index rose as much as 4.1 percent, and was 3.2 percent higher at 818.66 as of 11:05 a.m. in Athens.

“We understand each other much, much better now than we did this morning,” Greek Finance Minister Yanis Varoufakis told reporters after the finance chiefs broke up. “Europe manages to find agreements even if it’s at the last moment.”

Greece needs its next bailout installment of about 7 billion euros ($7.9 billion) or some other financing to keep from defaulting on its international debt payments. Tsipras’s new, anti-austerity government has said it no longer wants to abide by the terms of the bailout program, asking instead for bridge funding while negotiating a new deal.

Ground Covered

The euro fell as much as 0.3 percent to $1.1303 after Jeroen Dijsselbloem, the Dutch finance minister who chairs the euro group’s talks, said ministers couldn’t agree on a common approach. The euro briefly spiked to as high as 1.1352 earlier, when officials suggested an accord on steps forward was within reach. It traded at $1.1326 as of 9:07 a.m. in London.

“We covered a lot of ground but didn’t actually reach a joint conclusion on how to take the next steps,” Dijsselbloem said at a press conference. “There has to be a political agreement on the way forward.”

Finance chiefs will return to Brussels on Feb. 16 to try to break the deadlock after Greek negotiators were said to have wavered on a commitment to extending the country’s existing bailout from the European Commission, the European Central Bank and the International Monetary Fund.

Syriza’s Mandate

Greece is “very optimistic” that an accord will be reached on a new aid package, a government official said. The main disagreement was over whether the basis for talks is the existing rescue than expires at the end of the month or a revamped program sought by the Greek government, the official told reporters in Brussels.

Tsipras’s campaign pledge to end the bailout and its austerity mandates has hung over the talks. Agreed language on a bailout extension was within reach, only to be rejected later by Greek negotiators who said they had to consult with superiors in Athens, German Finance Ministry spokesman Martin Jaeger said.

Varoufakis didn’t comment to reporters on the snag. He said Greece is seeking to balance its existing bailout deal and its responsibility to voters after the anti-austerity Syriza alliance won elections in January. He said the talks on Wednesday weren’t designed to reach a final agreement and leaves room for more negotiations.

In Athens, thousands rallied in front of the Greek parliament Wednesday in support of the government’s anti- austerity stance. Tsipras posted a photo of the rally on his Twitter account, saying popular protests “across Greece and Europe” are “the source of our strength.”