Markets buoyed by possibility of end to standoff as new government in Athens vows to reach deal
Greek Finance Minister Yanis Varoufakis has insisted Greece will not accept an extension to the current bailout programme.
by Katie Allen at The Guardian
Friday 13 February 2015
Greek stock markets have rallied on growing confidence that Athens will reach a deal with its international creditors next week.
In the runup to a meeting of eurozone finance ministers on Monday, the new Greek prime minister’s office vowed to do “whatever we can” to come to an agreement over a new support programme for the bailed-out country.
Talks between eurozone ministers this week failed to make progress in resolving a standoff over the desire by Greece’s new leftist government to ditch the strict terms of its €240bn (£180bn) bailout programme and the insistence from other eurozone countries, most notably Germany, that the old framework should continue.
But on Friday, the new prime minister, Alexis Tsipras, appeared to soften his stance. He agreed that Greek officials would meet representatives of the troika of lenders who supplied the bailout MONEY and imposed and policed the terms that came with it. Previously, Greece’s finance minister, Yanis Varoufakis, said the new government would refuse to engage with representatives of troika, made up of the European Central Bank, the European commission and the International Monetary Fund.
Alexis Tsipras, who appears to have softened his stance. Photograph: Xinhua News Agency/Rex
A government spokesman said Greece was straining to get the pieces in place for a deal on Monday, but he also sought to play down fears time was running out to avert a fresh crisis in the eurozone that would see Greece defaulting on the bailout programme and being forced to leave the single currency.
“We will do whatever we can so that a deal is found on Monday,” Gabriel Sakellaridis told Greece’s Skai TV. “If we don’t have an agreement on Monday, we believe that there is always time so that there won’t be a problem.”
Markets were cheered by signs the two sides were looking for common ground and the main share index in Athens rallied while yields came down on Greek government bonds. The ATG index rose 5.6% and the Athens Stock Exchange FTSE Banks Index, which has seen wild swings since the new Syriza-led government came to power last month, gained 12.7%.
The current bailout programme expires on 28 February, but Monday 16 Februaryis the last date Greece can apply for an extension, according to Jeroen Dijsselbloem, chair of the eurogroup of eurozone finance ministers.
Dijsselbloem, who is also Dutch finance minister, said on Friday he was “very pessimistic” about getting a new deal at Monday’s meeting of eurozone finance ministers. “The Greeks have sky-high ambitions. The possibilities, given the state of the Greek economy, are limited,” he told Netherlands’ public broadcaster, NOS. “I don’t know if we’ll get there by Monday.”
The possibilities, given the state of the Greek economy, are limited
Syriza swept to power on a vow to break FREE of the “cruel” conditions imposed under the bailout, which it blames for causing widespread unemployment and poverty. Greece has sought to take the same message to its eurozone neighbours, insisting that relentless cuts aimed at repaying loans have been self-defeating and an end to austerity would do more for economic recovery.
At meetings with his counterparts around Europe, Varoufakis has been adamant that Greece wants a new deal and that the bailout programme must not simply be extended.
The new Greek finance minister risked further stoking tensions with the country’s creditors on Friday when he used a German news magazine interview to liken the Troika’s actions to the CIA’s waterboarding of suspected terrorists. “Just before heart failure we are allowed to take a few breaths. Then we get pushed back under the water and it all starts over,” he told Germany’s Spiegel.
Troika officials were decent people, he told the magazine, but added: “There were also very good people in the CIA, who against their will were engaged in waterboarding and therefore found themselves in a terrible moral dilemma.”