BRUSSELS/FRANKFURT: The European Central Bank raised the pressure on Greece to extend an international bailout deal yesterday, as new leftist Prime Minister Alexis Tsipras told EU leaders austerity was killing his economy and an alternative had to be found.
After eurozone finance ministers failed to agree a joint statement about a way forward on Greece’s debt crisis, the ECB’s Governing Council held a short-notice teleconference to discuss how long it could continue to keep Greek banks afloat.
Arriving for his first European Union summit, Tsipras told reporters: “I’m very confident that together we can find a mutually viable solution in order to heal the wounds of austerity, to tackle the humanitarian crisis across the EU and bring Europe back to the road of growth and social cohesion.”
Chancellor Angela Merkel, vilified by the Greek left as Europe’s “austerity queen”, said Germany was prepared for a compromise and finance ministers had a few more days to consider Greece’s proposals before they meet next Monday. “Europe always aims to find a compromise, and that is the success of Europe,” she said on arrival in Brussels. “Germany is ready for that. However, it must also be said that Europe’s credibility naturally depends on us respecting rules and being reliable with each other.”
The two leaders came face-to-face for the first time in the EU Council chamber. According to Greek aides, a smiling Merkel congratulated Tsipras on his election and said: “I hope we will have good cooperation despite the difficulties.” Tsipras smiled back and replied: “I hope so.”
Greek officials said no private meeting was planned between the two during the one-day EU summit. EU diplomats said the leaders would receive a briefing from the chairman of eurozone finance ministers, Jeroen Dijssebloem, on Wednesday’s inconclusive talks and Tsipras would have a chance to address them over dinner but there would be no extended discussion on Greece.
Other leaders said it was up to Greece to respect budget discipline and economic reform commitments made by previous governments if it wanted continued aid.
ECB executive board member Peter Praet said the ECB would apply its existing ELA rules to Greece. “It is key that the banks benefiting from emergency liquidity assistance remain solvent,” he told the Financial Times. His comments appeared to signal that the central bank could cut the cash lifeline if Greece failed to reach a deal with its creditors before the €240bn bailout expires at the end of this month. That would expose Greek banks to a risk of capital flight and collapse, which analysts say could in turn trigger a Greek exit from the eurozone, sparking wider financial turmoil.
Highlighting the precariousness of Greece’s position, tax revenues fell about €1bn short of the budget target in January as Greeks held off payments before the January 25 election, anticipating that the new leftist government would scrap an unpopular property levy.
Eurozone finance ministers in the Eurogroup will try again on Monday to bridge their differences, but at Greek insistence, there will be no preparatory talks between officials from Athens and the European Commission, the IMF and the ECB. Tsipras has vowed no longer to cooperate with the “troika” of lenders.
A Greek official said the hard left Syriza party leader, elected on a tide of public anger against austerity last month, was determined to put the Greek crisis at the center of the Brussels summit.
Reuters
