NEWS

Tsipras ‘certain’ eurozone will back loan, Merkel demands more

Greece’s leftist prime minister said on Friday he was certain euro zone finance ministers would accept Athens’ request for an extended loan but Germany demanded > in Greek reform commitments.

The start of an emergency meeting of the 19-nation Eurogroup in Brussels was postponed until 1530 GMT to allow more time for preparatory talks among Greek, euro zone and IMF officials.

Hours before the talks, Prime Minister Alexis Tsipras said in a statement to Reuters: >

A report by German magazine Der Spiegel that the European Central Bank was making contingency plans for a possible Greek exit from the currency area if the talks fail, on which the ECB declined comment, highlighted the high stakes.

German Chancellor Angela Merkel, speaking after talks in Paris, said all EU partners wanted to keep Greece in the euro but added: >

Finance ministers arriving from other euro zone states lined up to insist the letter had to be complemented with more guarantees for creditors that Greece will fulfil strict conditions in its international bailout to win their agreement.

But Athens is determined to loosen austerity to revive its economy.

Tsipras had a long telephone call with Merkel on Thursday and has spoken repeatedly to the leaders of France and Italy in the search for a solution that allows his radical government to hold its head high.

> he said.

His finance minister, Yanis Varoufakis, said on arrival for the Brussels talks that Athens had gone > and it was up to its partners go the rest of the way.

> Varoufakis said.

French President Francois Hollande, who promised Tsipras he would work on Merkel to find a solution, insisted there was no scenario envisaging a Greek exit from the single currency.

> The European Commission said it was confidence a deal was possible on Friday if all parties were reasonable, >. The Dutch junior finance minister said he would ask the Greeks to give clearer guarantees they would live up to all the terms of its bailout deal.

Maltese Finance Minister Edward Scicluna echoed widespread exasperation with Greece when he told MaltaToday on Thursday: >

Officials of euro zone hawks said their mood was cautiously more optimistic but a deep lack of trust in Greece’s new leaders, including Varoufakis, a combative Marxist economist and blogger, was hard to overcome.

> an official of one hawkish European country joked.

The 240 billion euro bailout expires at the end of this month and Greece could run out of money by the end of March without new external funds, people familiar with the figures say, driving it nearer to the euro zone exit.

Adding to pressure to reach a deal, Greek savers withdrew their money from the banks at an accelerating pace despite government assurances that there is no plan to introduce capital controls to stem the outflows.

Deposit outflows rose to over 1 billion euros in the past two days, some of the highest daily levels seen this year, two senior banking sources told Reuters.

Greeks are nervous ahead of a three-day weekend, given memories of capital controls imposed on Cyprus in 2013 over a long weekend, a senior banker said. Monday is a market holiday.

Tsipras, elected last month on a platform of scrapping the bailout, says austerity has strangled his country’s economy and caused a humanitarian crisis.

U.S. Treasury Secretary Jack Lew weighed in to urge compromise in calls to his Greek, Dutch and French counterparts.

DEADLINE? Eurogroup chairman Jeroen Dijsselbloem has said Friday is the deadline for Greece to reach a deal since any extension or change to the bailout agreement that expires on Feb. 28 would have to be approved by several national parliaments.

However, EU deadlines often slip and Merkel has in the past agreed financial rescues only at the very last moment when she could tell Germans the future of the euro zone was at risk.

Berlin is Greece’s biggest creditor, owed 50 billion euros as its share of the EU/IMF bailouts. As Europe’s biggest economy, it would take a hit in the turmoil that might ensue if Greece defaulted and left the euro area.

However, whether for tactical reasons or out of deep exasperation with Athens, Berlin has conveyed the message that a Greek exit, while not desirable, would be manageable. German Finance Minister Wolfgang Schaeuble, who has taken the hardest line, has pointed to calm on world markets this week.

European shares were steady on Friday, trading close to Thursday’s seven-year high, but the euro fell and borrowing costs for peripheral euro zone governments rose in a sign of nervousness about the outcome with Greece.

[Reuters]