Friday, February 6, 2015

Greece pleads with Berlin for time and money to re-write debt deal

By Mehreen Khan 05 February 2015

Finance Minister Yanis Varoufakis evokes fears of Nazism in Greece in a bid to end his country's "ritual humiliation" at the hands of its creditors

"Europe has an opportunity with our government to ends its business as usual philosophy" said Mr Varoufakis in Berlin Photo: Bloomberg

Greece’s finance minister pleaded for his country to be given time and money to negotiate a new debt deal with its creditors, after the European Central Bank sought to pull the carpet from under the feet of the country’s stricken banks.

Following an uneasy two-hour showdown with his German counterpart in Berlin, Yanis Varoufakis admitted he had failed to “agree to disagree” with Wolfgang Schauble over his government’s demands to re-write its €240bn bailout agreement.

The meeting was the last leg of Syriza’s tour of Europe’s capitals, where Prime Minister Alexis Tsipras and his number two hoped to drum up support for an alleviation of the bailout terms imposed by the Troika.

Yanis Varoufakis sought to appeal to the hearts of ordinary Germans, even evoking the spectre of Nazism in his country in a bid to end the “gross indignity” Greece has suffered since the financial crisis.

“The German nation is the one nation that can understand us best" said Mr Varoufakis, comparing Greece’s “ritual humiliation” with the debt deflationary policies that helped bring Hitler to power in the 1930s.

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“When I return home tonight I shall find myself in a parliament in which the third-largest party is not a neo-Nazi party, it is a Nazi party. We need the people of Germany on our side."

Mr Varoufakis repeated his demand for Greece to be awarded an emergency bridging loan to help keep the country afloat as it seeks to negotiate with the Troika. Athens current bailout deal is due to expire on February 28.

In a tense exchange, Mr Schauble said Europe’s creditors had gone to the limit of what was “possible and reasonable” on Greece’s debt arrangements.

“Yes we must respect Greek voters, but we must also respect the voters of other European countries,” said Mr Schauble.

In an ominous prelude to the showdown between Europe's largest creditor and its most indebted government, it was revealed that Mr Schauble refused a request from George Osborne to give Mr Varoufakis the German minister's personal mobile phone number. Mr Varoufakis was in London for talks with the Chancellor earlier this week.

The meeting between the two came hours after the European Central Bank suspended the waiver allowing it to accept the country’s junk-rated bonds as collateral for loans.

The move means Greek banks sole source of funding will come through the ECB’s emergency liquidity programme (ELA). The central bank moved to raise the ELA limit for Greece to €60bn according to reports in Germany’s Die Welt. Greek lenders borrowed €56bn in December, according to the Bank of Greece.

However, ELA liquidity carries a more burdensome interest rate compared to regular bank financing for Europe's bank, and could well be removed all-together should the ECB decide Greece’s new government is not abiding by its bailout pledges.

Shares in Greece’s biggest banks plummeted 10pc in Thursday's trading on the news.

Returning to Athens last night, Prime Minister Alexis Tsipras struck a defiant tone in front of his parliament, insisting his nascent government could not be “blackmailed.”

“Greece won’t take orders any more, especially orders through emails" said Mr Tsipras.

“Greece is no longer the miserable partner who listens to lectures to do its homework. Greece has its own voice. Greece cannot blackmailed because democracy in Europe cannot be blackmailed.”

Greece pleads with Berlin for time and money to re-write debt deal - Telegraph

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