Ministers lambasted Greek finance minister Yanis Varoufakis for not reaching an agreement with creditors two months after the eurozone extended Greece’s loan programme until the end of June. Officials warned that time is running out with Greece heading for bankruptcy unless it can do a deal to receive aid soon.
Academic-turned-finance minister Varoufakis was called “a time-waster, a gambler and an amateur”, a source privy to the closed-door talks told the news service Bloomberg. Jeroen Dijsselbloem, head of the eurogroup of finance ministers, told reporters in Latvia it was a “highly critical” meeting as Greece had still not agreed a comprehensive and detailed list of reforms.
Although there were positive signs, there remained “wide differences to bridge on substance”, he said.“We are all aware that time is running out ... too much time has been lost.”The lack of progress at the talks in Latvia came as little surprise to financial markets but the continued gridlock fanned fears of a Greek exit from the eurozone.
The state is scrambling to find funds to pay almost €2bn (£1.4bn) in wages and pensions and almost €1bn to the International Monetary Fund in the coming weeks. Economists say that without the latest chunk of funds under its bailout agreement Greece is unlikely to be able to meet all those commitments.
Athens is waiting for the final €7.2bn (£5bn) in rescue money, but it has been held up after the country’s leftwing government scrapped previous commitments to privatise state assets and cut welfare provision. Dijsselbloem warned on Friday that after the lack of recent progress it would be very hard to consider a new programme for Greece to cover its funding needs beyond June.
He ruled out giving Greece an early slice bailout cash. Malta’s finance minister Edward Scicluna declared: “I would describe today’s meeting as a complete breakdown in communication with Greece.” ECB president Mario Draghi also betrayed his exasperation and warned that central bank could impose tougher conditions in return for keeping Greek banks afloat.
Weeks ago, the Riga meeting had been pencilled in as the moment when the eurozone could sign off an aid payment for Greece, but in the event ministers vented their frustration with Varoufakis for Greece’s failure to bridge the gap with creditors.Varoufakis said the talks were “intense”, but remained confident that the two sides will resolve their differences in time.
“We agreed that an agreement will be difficult but it will happen and it will happen quickly because that is the only option we have,” he told a press conference. Varoufakis later declared: “We want an agreement and we are willing to make compromises to achieve this ... The cost of not having a solution would be huge for all of us, Greece and the eurozone”.
Before the meeting Varoufakis had written that Greece was prepared to make some concessions, including “rationalising the pension system” and pushing on with some privatisations. But, in a hint of the tensions within the eurogroup, Varoufakis also said Greece’s creditors had to “let go of an approach that has failed”.
The yield or effective interest rate on Greek government borrowing remained at dangerously high levels on Friday, as investors pondered whether the indebted country would end up being ejected from the single currency.
The yield on three year bonds was 24.7%.“Greece doesn’t seem to want to exit voluntarily so it’s more likely that, at least for the time being, the government will simply run progressively out of euros,” Benedict James, a lawyer at Linklaters.
“This is likely to lead to the imposition of capital controls and issuance of government IOUs as a sort of quasi-currency, as happened in Argentina and California. That may be a precursor to a full exit of the euro,” he added. In the meantime, Greece’s real economy was suffering badly from the prolonged uncertainty, warned economists at Bank of America Merrill Lynch.
“We are all suffering from Grexhaustion, markets, Greek officials, European officials. But the most important victim is the Greek economy,” they wrote in a research note.
theguardian.com
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