Syriza-led government seems ready to negotiate new aid package but says it will not succumb to ‘blackmail’
Greece was showing signs of buckling under pressure from its Eurozone partners on Tuesday night as it prepared to seek an extension of a loan agreement for up to six months. Faced with a Friday deadline for agreeing to an aid package drawn up by its 18 partners in the single currency, Athens made the first concessions in the game of brinkmanship by indicating that it would have to continue accepting financial support when the current bailout expires at the end of the month.
Sources close to the Greek government sought to soften the blow of its apparent U-turn by saying it was seeking to sign up to a temporary loan agreement rather than a continuation of the existing bailout, which forced Athens to adopt harsh austerity measures and a series of unpopular structural reforms to its economy, including wage cuts, reduced pensions and sweeping privatisations.
Greece has voiced strong opposition to the conditions imposed in a memorandum of understanding signed when the country received bailouts totalling €240bn (£178bn), and still insists that it be offered softer terms. The ruling Syriza party will now have to find a way of reaching an agreement with its Eurozone partners that is politically palatable to the voters who propelled it into power last month.
Prime ministerial aides were quoted in the Greek media as saying: “We are considering requesting a six-month extension of the loan agreement [but on the basis that] it is clearly distinguished from the programme [of conditions] set out in the memorandum of understanding. We are not going to ask for an extension of the programme or memorandum. The Greek government won’t accept ultimatums.”
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Earlier, a finance ministry source told the Guardian it was “highly probable” that Greece would request the extension on Wednesday. “The most likely scenario is that the request will be made tomorrow, but negotiations are ongoing.”
Greek journalists briefed in Brussels by the country’s finance ministry officials reported that the extension request would be accompanied by terms and conditions proposed by the Greek side, including commitments to refrain from taking unilateral actions and to collaborate on policies that include clamping down on tax evasion.
The apparent shift in the negotiations came on the eve of a decision by the European Central Bank on whether to continue the emergency funding of the Greek banking system. While there appeared no immediate threat of the ECB cutting off aid, a failure to reach an agreement or continue talks by Friday’s deadline would have increased that possibility.
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However, the Greek prime minister, Alexis Tsipras, took a hard stance on the negotiations on Tuesday when he vowed that the country would not succumb to blackmail. Tsipras told the national parliament in Athens that his country would escape the “debt trap” created by its austerity programme and announced that he would press on with the reversal of reforms agreed under the country’s bailout package. Tsipras’s public stance runs counter to the likely concessions that Eurozone politicians will demand in exchange for a loan extension – indicating that both sides might struggle to break the deadlock in time.
Speaking at a meeting of EU finance ministers on Tuesday, Luxembourg’s finance minister, Pierre Gramegna, said both sides would have to make concessions. “We can’t remain in a blockade, so everyone has to move a bit, water down demands so we can find a compromise.”