Greece not playing a game of chicken on debt

Greek Foreign Minister Nikos Kotzias said on Friday he respects Germany just not German politics, nor the way Berlin views Greece’s economy, which faces the prospect of running out of money if it cannot agree to new bailout terms with creditors.

Kotzias is part of the leftist government that took over in January after an anti-austerity campaign promising to roll back reforms and cutbacks agreed by the prior government to improve Greece’s finances.

Kotzias said Greece and its euro zone partners need to compromise on creating political policies that will foster growth and allow the country to pay its debts.

Asked if he is simply asking the rest of Europe to trust Greece, he said: “No. To be pragmatic. Trust is a very important thing but they have to be pragmatic.”

“Do they want to support us to have growth… or do they decide to have Greece struggle, to punish Greece and to create an example of what happens to a country that has a left government,” Kotzias said at the end a four-day visit to Washington and New York.

German Chancellor Angela Merkel said in Brussels on Thursday that everything must be done to prevent Greece from going into bankruptcy.

However, Friday’s meeting of euro zone finance ministers in Riga brought a stark warning to Athens that its leftist government will get no more aid until a complete economic reform plan is agreed.

Greece has scraped up enough cash to meet its obligations, but faces a big test on May 12 when it is due to pay a 750 million euro payment to the International Monetary Fund. Now the question is how long could it last without fresh funds.

He further dismissed talk the 19-nation euro zone currency area could better handle a Greek default now versus the financial crisis that resulted in a Greek bailout of 240 billion euros.

“It is like a game of chicken, but not the kind of game you know. What our friends are forgetting is that we don’t have gas to move… We like to come back to compromising and at the end we will do it,” said Kotzias, a fluent German speaker.

“So you are not giving a solution to Greece, you press the Greek government? What can be the solution? Golden Dawn is coming. Nobody has an interest in that, so that is why they will find a solution,” said Kotzias, highlighting the far-right political party that is the third largest in parliament.

Greece hopes to fill its coffers by building pipelines, most likely filled with Russian gas bound for Europe.

Russia last year aborted the $40 billion South Stream pipeline via Bulgaria after European Union objections.

Kotzias said a technical group will meet in May to discuss financing and logistics for a pipeline that passes through Turkey, Greece, the Former Yugoslav Republic of Macedonia, Serbia and then into Hungary and perhaps include Austria.

According to a Russian calculation, an investment in the Greek portion of the pipeline could be between $2 billion and $2.5 billion, Kotzias said.

He stressed western companies and banks rather than the Russian government would fund the pipeline building under EU rules.

As for money Greece might collect in advance on future profits from the pipeline’s operations, Kotzias said the Russian’s told Greece it was a figure close to what Bulgaria would have earned from South Stream.

“I’m not very sure exactly, but it is about $5 billion,” Kotzias said.

US energy envoy Amos Hochstein travels to Athens in two weeks offering an alternative and potentially broader pipeline plan that would also include Albania and Bosnia, Kotzias said. [Reuters]

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