'Time is running out for Greece,' Euro officials warn as crucial talks stall

By Elizabeth Anderson, and Szu Ping Chan 24 April 2015

Eurozone officials criticise 'amateur' Greek finance minister Yanis Varoufakis, warning that time is running out to stop Greece going bankrupt

The Greek government is trying to unlock the €7.2bn remaining in its bail-out package Photo: AP

Time is running out for Greece, officials have warned at a crucial Eurozone meeting in which finance minister Yanis Varoufakis was heavily criticised for stalling over urgent measures needed to release vital financial aid.

Jeroen Dijsselbloem, president of the Euro group, said there were some "big, big problems to be solved" before Greece's creditors would release badly needed funds to the country.

The are "still wide differences to bridge on substance", he said on Friday, adding that there would be no partial disbursement of funds to help Greece avoid a euro exit.

"A comprehensive and detailed list of reforms is needed," he said. "A comprehensive deal is necessary before any disbursement can take place. We are all aware that time is running out."

Mr Dijsselbloem also admitted that talks in Riga, Lativa, had been tense and at times heated, following reports that some Eurozone finance chiefs had accused Mr Varoufakis of wasting time and gambling with Greece's future.

"I can't tell you how discussions took place, but I'll be frank, it was a very critical discussion," Mr Dijsselbloem told reporters. "We came to an agreement two months ago. Today we hoped to hear positive results and an agreement to which we could make a decision, and we are still far from that. So it was a very critical discussion, and it showed a sense of urgency around the room."

Yanis Varoufakis, Greece's finance minister, addresses reporters in Riga, Latvia, following a Euro group meeting (Photo: EPA)

Euro-area finance chiefs said that Mr Varoufakis’s handling of the talks was irresponsible and accused him of being a time-waster, a gambler and an amateur, Bloomberg reported.

Mr Varoufakis also described the talks as "intense", adding that discussions had stalled over demands for pension cuts as well as the size of surplus targets to unlock aid.

“These are differences and they are the reason we haven’t come to an agreement as yet, but we should not focus on the differences; we should also primarily focus on the process of convergence,” said Mr Varoufakis.

He added: “An agreement - as it has been proven already - will be difficult, but it will happen and it will happen quickly because this is the only option we have."

It came as Mario Draghi, the president of the European Central Bank, warned that soaring Greek government bond yields were eroding the value of the collateral that the banks trade for funds.

“The higher are the yields, the bigger is the volatility, the more collateral gets destroyed,” he said, adding that the ECB would “carefully monitor” the haircuts imposed on Greek banks’ collateral.

Luis de Guindos, Spain's economy minister, said the lack of substantial progress on a deal had been "a let down for everyone". He said: “It’s a message of urgency. The Greek government has to, in some ways, improve its relation with the institutions."

In a blog post published by Mr Varoufakis today, he said that "while the current disagreements with our partners are not unbridgeable", there are still fundamental differences over the level of wage and pension cuts that creditors want to enforce.

"Our task is to convince our partners that our undertakings are strategic, rather than tactical, and that our logic is sound. Their task is to let go of an approach that has failed," wrote Mr Varoufakis.

However, officials today said that negotiations needed to move more swiftly to reach a deal by June.

Greece's current €240bn programme expires at the end of June. Before then, the Greek government is trying to unlock the remaining €7.2bn to prevent the country from bankruptcy.

Watchers had long given up hope of a deal being struck at today's finance ministers' meeting in Riga.

Arriving at the meeting this morning, Valdis Dombrovskis had said that progress had "not been sufficient to reach any conclusion", as 19 finance ministers gathered in a meeting that was supposed to end months of deadlock over whether to unlock more cash for debt-addled Greece.

"Progress in technical negotiations has not been sufficient to reach any conclusion during this Euro group here in Riga," said Mr Dombrovskis, the EU Commissioner for the Euro.

Meeting on the sidelines of a European Council meeting in Brussels yesterday, Greece's defiant Prime Minister Alexis Tsipras reportedly told German Premier Angela Merkel that his nation has made enough sacrifices to satisfy its creditor's demands and that Europe needs to "now do its part."

Despite agreeing to hurry up the negotiations, Mr Tsipras and Ms Merkel are thought to have found no common ground over the implementation of labour market reforms, pension cuts and tax hikes from the Leftist government. Far left government Syriza, headed by Mr Tsipras, has so far refused to agree to the comprehensive list of reforms set out by Eurozone officials.

However, Greece has said it will aim to meet an ambitious budget surplus target of 1.5pc of GDP this year.

The country is widely expected to slip back into recession this year as economic confidence has been decimated by its prolonged bail-out stalemate.

Germany, the chief funder of Eurozone bailouts, has taken a hard-line approach to Greece's financial woes this year and officials have repeatedly expressed concern that Greece isn't doing enough to meet its bail-out requirements.

Greek markets recently tanked to their lowest level since the country underwent a private sector debt restructuring in 2012, as the beleaguered government resorted to increasingly desperate measures to raise funds in the absence of fresh bail-out cash from its international creditors.

On Monday, an emergency presidential decree forced up to 1,500 local government bodies to transfer their excess cash reserves to the Bank of Greece.

As the stalemate risks running into another month, the risk of a Greek default rises along with an exit from the single currency.

• Europe's debt mountain just got bigger

'Time is running out for Greece,' Euro officials warn as crucial talks stall - Telegraph