NEWS

EU hangs tough, waiting for Greece to bend as euro wilts

European Union finance ministers piled pressure on Greece on Tuesday to remain in an international financial rescue programme as the euro weakened on fears of disruption when Athens’ credit lines expire in 10 days time.

But as he returned to meetings on other, routine, matters with his EU counterparts in Brussels after the collapse of talks on Monday night, Greek Finance Minister Yanis Varoufakis dismissed their argument that his only option is to come back to them and ask to extend a bailout rejected by Greek voters.

> he said, offering no detail on what Athens was willing to propose. >

Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurogroup of 19 countries using the common currency, stuck to his guns, however, saying Athens must seek an extension: >

Formally, Tuesday’s meeting of ministers from all 28 EU states concerns other matters. But time is short and investors marked down the euro and European shares after Monday’s debacle, some saying the risk of Greece exiting the euro had risen.

> Austrian Finance Minister Hans Joerg Schelling said. >

Dijsselbloem has said Friday is a deadline for a deal that would give time for some national parliaments to ratify it before the expiry on Feb. 28 of the 240 billion euro credit package that rescued Greece from bankruptcy three years ago.

> From Britain, the biggest EU state not using the euro, finance minister George Osborne said > and warned failure to reach a deal would be >.

Echoing the alarm EU officials have voiced about the negotiating tactics of the left-wing government Greeks elected last month to end hated austerity programmes, Osborne added: >

In Greece, however, novice Prime Minister Alexis Tsipras and his team continue to enjoy strong public backing after years of cutbacks demanded by international creditors. Much of the media reported Varoufakis’s angry narrative of events on Monday.

The Greek minister said that Dijsselbloem, a close ally of hawkish German Finance Minister Wolfgang Schaeuble, had quashed a proposal from EU economics commissioner Pierre Moscovici, a former French finance minister, that Varoufakis had agreed to.

> Greek daily Efimerida Ton Syntakton said.

Dijsselbloem dismissed the uproar over drafts leaked by the Greek delegation — one of which they rejected as > [ID: nL5N0VQ3Y6], the other they accepted. He said wordings could be massaged to assuage political sensitivities — Tsipras is committed to ending the current bailout programme — but that ultimately Greek must seek funds with strings attached.

> Dijsselbloem said, describing Greek demands to be allowed to wind back austerity as too vague at present to let Athens do away with the > of the bailout.

EURO SLIPS Money is streaming out of Greek banks and Greeks are holding off paying their taxes, adding to pressure on public finances and the banking sector if international money dries up.

Austria’s Schelling said the EU was waiting for figures on cashflows from Greece to make decisions. While insisting he saw no Greek exit from the euro, he echoed EU complaints that Athens may not be taking the situation seriously enough: > he said. >

The Greek government says it is others who are deaf to its view that austerity has spread poverty and wrecked its economy.

The euro shed 0.15 percent to $1.1339, dropping from Monday’s high of $1.1429 and back near the bottom of its prevailing $1.1270-1.1534 range.

Investment bank Barclays said the breakdown of talks had raised the risk that Greece would leave the euro zone and raised the prospect that Tsipras would have to call a referendum on whether to accept a deal with strings or ditch the euro.

Chris Scicluna of Daiwa Capital Markets said the failure raised the risk of a >. But he added: >

The European Central Bank has allowed the Greek central bank to provide emergency lending to the banks, but a failure of the debt talks could mean the imposition of capital controls. The

ECB must decide on Wednesday on an extension of special credits.

[Reuters]