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Greek Debt Standoff Continues as Finance Ministers Struggle to Find Common Ground

The eurozone's financial heads failed to reach an agreement to resolve the Greek debt crisis for the second time in less than a week during negotiations in Brussels.

by Nikolia Apostolou
Feb 17 2015, 2:33am

Photo by Petros Giannakouris/AP

For the second time in less than a week, the eurozone's financial heads failed to reach an agreement to resolve the Greek debt crisis, with talks Monday in Brussels ending with the Greeks and the rest of the eurogroup seemingly further away from finding common ground than they were last week.

Jeroen Dijsselbloem, the chairman of the eurogroup finance ministers, told Greece on Monday that it must sign an extension of its current bailout program, which is set to expire at the end of February. While the majority of the EU finance ministers seemed to favor an extension, their Greek counterpart requested a four-month "bridge" that would allow "space and time" for discussions on a new contract with the EU.

Greek Finance Minister Yanis Varoufakis claimed he was presented with a draft agreement just a few minutes before the meeting started. He reportedly agreed to sign the draft, which was offered up by European Commission President Jean-Claude Juncker, only to have it switched out with another from Dijsselbloem. Varoufakis ultimately refused to sign.

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"We reiterate our commitment to the terms of the loan agreement to all our creditors," Varoufakis said. "We were prepared to take no action during this period that threatens to derail the existing budget framework or action that in the ECB's view will bring implications in the financial stability."

Varoufakis said that despite how bad things seem, he was sure the two sides would reach an agreement in the next 48 hours. Dijseelbloem seemed to agree.

"When I listen to my Greek colleagues talking about a bridge arrangement, that's a different word for an extension," Dijseelbloem said. "I would very much welcome a request for an extension, accompanying an attempt to rebuild trust among each other, then we can extend the current program. That's where we are."

Pierre Moscovici, the European commissioner for economic and financial affairs, also seemed optimistic about the possibility of an extension. "I think there's possible ground to reconcile the will of the Greek people and respect of the commitments from the Greek state," he said.

Greece might soon face financial shortfalls. The country has to repay loans and retirement bonds that will expire next month. Despite austerity measures, the Greek economy doesn't seem to getting back on track. More than a third of Greeks are living below the poverty line, suicides have risen by 42 percent, and the country has lost a quarter of its GDP.

Greece's newly elected government came to power last month. New Prime Minister Alexis Tsipras and his Syriza party have vowed to end austerity and get the country back on its feet by boosting investment, cutting government spending, and cracking down on wealthy tax evaders.

"Any notion of an ultimatum is going to be withdrawn," Varoufakis said. "Our government respects that there's a current program and that we have a commitment to it because the state has to have continuity. Democracy changes the facts on the ground and we are a government that is critical of the program."

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Varoufakis also has Sunday's anti-austerity protests lingering in the back of his mind. Demonstrators took to the streets in more than a dozen Greek cities to show their support for the new government during the negotiations.

But the German government and many conservative parties that govern Europe have been pushing for austerity policies in their own countries. They aren't happy with the newcomers.

"I feel sorry for the Greeks at the moment," German Finance Minister Wolfgang Schäuble said. "They've elected a government which is currently acting irresponsibly."

During press conference Monday night, Varoufakis appeared annoyed, saying the only way of reforming Greece was to treat it as a partner and not as a debt colony. He said he is ready to sign an agreement — but only if the terms are favorable. Otherwise, he said, Greece will let the current bailout program expire, a move that could potentially cause the value of the euro to plummet.

"It's not a bluff," Varoufakis said. "It's the only option we have. There's a plan A. There's no plan B. Therefore, no games."

Follow Nikolia Apostolou on Twitter: @NikoliaA