NEWS

Greece and eurozone partners still far apart as they go into talks

BRUSSELS — Greece and its European creditors began fresh talks on Monday over the country’s request to ease its bailout terms, but expectations for a quick deal are low despite a fast-approaching deadline.

Optimism was curbed by German Finance Minister Wolfgang Schaeuble, who said hes «very skeptical» that a solution can be found at the meeting in Brussels.

Volatile Greek shares were down 3.6 percent in midday trading, while the eurozones Euro Stoxx 50 index shed 0.1 percent.

“Greece must see that you can’t keep living above your means and then keep making proposals for how others should pay even more,” Schaeuble told Deutschlandfunk radio.

Athens wants a substantial easing in the terms of repayment of its 240 billion euros (currently $273 billion) in rescue loans, which it has received from other countries that use the euro and the International Monetary Fund, as well as less budget austerity.

Greek Prime Minister Alexis Tsipras won elections on January 25 on a vow to end the belt-tightening policies that the country has been demanded to make to reduce public debt — but which have also caused the economy to shrink by a quarter and unemployment to soar above 25 percent.

Tsipras wants to scrap the existing bailout deal and replace it with a new one. In the meantime, he wants a short-term “bridge agreement” that can keep Greece solvent after Feb. 28, when the current bailout deals ends.

Greek Finance Minister Yanis Varoufakis and the chairman of the 19-nation eurozone, Jeroen Dijsselbloem, declined to speak to reporters as they arrived at European Union headquarters in Brussels, some four hours ahead of the meeting’s scheduled start time.

Germany’s Schaeuble said Athens was in no position to make demands.

“I feel sorry for the Greeks,” he added. “They’ve elected a government that’s behaving pretty irresponsibly at the moment.”

His comments came after technical talks in Brussels on Friday and Saturday, which an EU spokeswoman summarized as «an exchange of views.»

European Economic and Financial Affairs Commissioner Pierre Moscovici was more upbeat as he arrived for the meeting, saying he saw “the capacity to conclude positively.”

In an Op-Ed in the New York Times Monday, Varoufakis said Greece is not looking to avoid paying its debts.

“We are asking for a few months of financial stability that will allow us to embark upon the task of reforms that the broad Greek population can own and support, so we can bring back growth and end our inability to pay our dues,” he wrote.

Time is short. If no deal is reached by February 28, Greece’s banks could be cut off from affordable funding from the European Central Bank. A serious deterioration in Greek banks’ finances could cause depositors to withdraw money, potentially causing a collapse in the banking system. Ultimately, that could force the government to leave the eurozone — a move informally dubbed Grexit — so that it can print its own money and rescue its banks.

Any agreement with creditors will require approval by national parliaments in eurozone countries, which would add further delays.

Asked if emergency funding for Greek banks could be extended “for months,” a top ECB official, Peter Praet, said in an interview with Portuguese newspaper Jornal de Negocios that “when you have a systemic crisis, you may need flexibility in terms of duration.”

The bank’s governing council next reviews the funding permission Wednesday.

Berenberg Bank analyst Holger Schmieding said time and money are running out for Greece.

“A subtle change in tone in Athens suggests that the new Greek government has started to notice,” he said in a note. “But whether (Tsipras) has really grasped how close he has already pushed Greece to the abyss of wholesale financial crisis, recession and Grexit and whether he is ready to perform the inevitable U-turn to avoid that fate remains a very open question.”

[The Associated Press]