NEWS

Greece seeks EU summit breakthrough as capital curbs floated

Greece is pinning its hopes on Prime Minister Alexis Tsipras winning support from European leaders to break an impasse over financial aid for the cash-strapped country.

The Greek government is seeking a political deal at a European Union summit starting Thursday to unlock funds from the country’s 240 billion-euro ($254 billion) bailout package, government spokesman Gabriel Sakellaridis said in an interview on Skai TV Wednesday. Tsipras will meet with ECB President Mario Draghi, German Chancellor Angela Merkel, French President Francois Hollande and European Commission head Jean-Claude Juncker at the summit, he said.

“After one-and-a-half months of contact, we believe that for there to be a political solution, it is important for the euro-area’s big countries to weigh in,” Sakellaridis said. “We’re not downplaying technical discussions, but we want there to be a framework, and for that we’re asking for a political solution.”

Euro-region finance ministers are urging the Greek government to draw up a rigorous plan to fix their economy so the bloc’s taxpayers won’t balk at further support. As Tsipras challenges his creditors to blink first, his government’s money is running out, raising the prospect of a cash crunch as early as this month. The country faces more than 2 billion euros in debt payments Friday.

Capital Controls

Euro-region finance officials discussed the Greek situation in a conference call on Tuesday after the group’s chairman, Jeroen Dijsselbloem, said the country could use capital controls to remain in the currency union.

“It’s been explored what should happen if a country gets into deep trouble — that doesn’t immediately have to be an exit scenario,” Dijsselbloem told BNR Nieuwsradio. For Cyprus, “we had to take radical measures, banks were closed for a while and capital flows within and out of the country were tied to all kinds of conditions, but you can think of all kinds of scenarios.”

While technical discussions have begun with Greece over how to implement a Feb. 20 euro-area finance ministers’ agreement for a four-month extension to Greece’s loan, progress so far has been minimal, according to the people involved in the talks. Officials from the institutions monitoring Greece’s bailout said in Tuesday’s meeting that the Greek government is unilaterally pushing measures through parliament that have an unclear fiscal impact and without consulting them, a person familiar with the matter said.

Greece’s parliament will vote on Wednesday on measures to deal with the country’s social crisis, including subsidizing electricity, food and housing for households in poverty. The government Tuesday also submitted legislation for repayment of tax arrears in 100 installments to be voted on Friday, which it hopes will provide a boost to the state coffers.

[Bloomberg]