Greek Finance Minister Yanis Varoufakis began tense talks with eurozone finance ministers yesterday after his new leftist-led government won a parliamentary confidence vote for its refusal to extend an international bailout.
The former academic said before leaving Athens he was ready for a clash with eurozone paymaster Germany and its allies over Greece’s decision to scrap austerity measures, end cooperation with the “troika” of EU/ECB/IMF officials overseeing its bailout programme and demand a “haircut” reducing its debt burden.
“If a debt can no longer be paid off then that leads to a haircut,” Varoufakis told German magazine Stern in an interview released yesterday. “What is critical is that Greece’s debt cannot be paid off in the near future.”
German Finance Minister Wolfgang Schaeuble has said that if Greece is not willing to request an extension of its 240 billion euro bailout – the biggest in financial history – “then that’s it”, ruling out further assistance or debt forgiveness.
Eurozone ministers said they wanted to hear Greece’s ideas at a meeting in Brussels, at which Varoufakis was accompanied by Deputy Prime Minister Yanis Dragasakis. Athens’s partners warned that time was short since the bailout programme expires at the end of this month with no solution in sight so far.
Spanish Finance Minister Luis de Guindos, whose country avoided a sovereign bailout but had to take EU aid to rescue its banks, spelt out the hard line. “Rules must be respected by all. They apply to all,” he told reporters on arrival. Varoufakis had a prior meeting with International Monetary Fund chief Christine Lagarde, which both said was constructive. Lagarde flew to Brussels to join the Euro Group meeting in a sign of the importance the IMF attaches to the Greek crisis.
“They are competent, intelligent, they’ve thought about their issues. We have to listen to them, we are starting to work together and it is a process that is starting and is going to last a certain time,” she said.
In Athens, a Greek official said Varoufakis had discussed with Lagarde and the Euro Group’s Dutch head Jeroen Dijsselbloem some form of “bridge agreement” for funding the state once the current bailout deal expires at the end of the month. Greek bond yields rose and shares fell before the meeting, with investors concerned that failure to reach a deal in the next couple of weeks could lead to a possible Greek default and exit from the euro currency. Asked whether a so-called “Grexit” was on the cards, Varoufakis told reporters on arrival: “Absolutely not.”
Meeting his counterparts collectively for the first time, he worked the room before talks started, shaking hands first with Schaeuble, then others. Varoufakis looking relaxed in a designer-label checked scarf and his trademark open-neck shirt.
EU sources said some ministers were surprised that the informal tone extended to him not offering a written document outlining proposals. Varoufakis simply made oral statements.