Tuesday, May 5, 2015

Greece blames EU, IMF for impasse in debt talks

 Greece and its creditors on Tuesday (May 5) ruled out any bailout deal to avoid bankruptcy at a crunch meeting next week, with Athens blaming divisions between the EU and IMF for blocking an agreement.

Finance Minister Yanis Varoufakis led a troupe of Greek officials on a tour of European capitals in the hope of winning financial breathing space and avoiding a possible exit from the euro.

Eurozone ministers meet on Monday in Brussels and there had been high hopes to end the three-month standoff over the new leftist government's refusal to implement reforms and unlock €7.2 billion (US$8.1 billion) in bailout cash.

But with huge payments to the International Monetary Fund looming over the next few days, Greece furiously blamed conflicts among its creditors for a hold-up that daily increases the risk of Athens leaving the euro.

"Serious divergences and contradictions between the creditors, the European Union and International Monetary Fund, are hindering the negotiations" with Greece, the Greek government said in a statement.

Athens said this was "the exclusive responsibility" of the EU and IMF, which have together supplied the two bailouts that debt-hit Greece has had since 2010.

Reports said that at the heart of the row are IMF rules that say the fund can only support countries whose debt is judged as sustainable, and that doubts over Greece were growing. Eurozone stocks slumped on the Greek worries and the euro weakened against the dollar.

'DIFFICULT' EUROZONE TALKS

Varoufakis - who has denied recent reports that he has been sidelined because of his confrontational stance - visited Paris and Brussels on Tuesday to drum up support for Athens but emerged saying that he too expected no deal.

"We are certainly going to have a fruitful discussion that will confirm the great progress achieved and will be yet another step in the direction of final agreement," he said after talks with EU Economic Affairs Commissioner Pierre Moscovici.

The outspoken university professor, who has been increasingly scorned by his counterparts in the Eurogroup of eurozone finance ministers, said communications with the other ministers had been "difficult".

"There are many of us and we can't discuss amongst one another," he said after meeting French Finance Minister Michel Sapin. Varoufakis heads to Rome and Madrid later this week for further talks

Germany's powerful Finance Minister Wolfgang Schaeuble - one of the harshest critics of Greek Prime Minister Alexis Tsipras's radical government - had already led a wave of scepticism that a deal could be found. "I'm somewhat sceptical whether that'll be possible by Monday. But I'm not ruling it out," said Schaeuble.

He also insisted that the issue of whether Germany should pay reparations to Greece for the Nazi occupation during World War II was "settled", playing down comments by Germany's president Joachim Gluck at the weekend who said they were a possibility.

For his part, France's Sapin said the Greek debt talks were at a "crucial moment" but added that a "good compromise" was possible.

Greek deputy prime minister Ioannis Dragasakis, a close Tsipras ally, was separately meeting with European Central Bank head Mario Draghi in Frankfurt later Tuesday in a bid to increase liquidity for Greece's stretched banks.

HEAVY PRICE

Greece faces about €1 billion (US$1.12 billion) in payment to the IMF over the next week, with even bigger amounts following swiftly after. The government of Tsipras, which came to power in January, is resisting intense pressure from Greece's EU-IMF creditors to pursue radical reforms such as cuts to pensions and wages.

In turn, the creditors are refusing to release the last tranche of aid funds from Greece's current bailout, forcing the leftist-led state to expropriate funds from local governments and agencies.

The price that Greece has paid for failing to win a deal was laid bare on Tuesday. Brussels sharply slashed its growth outlook for Greece for 2015 to 0.5 per cent, a huge slump from its earlier prediction of 2.5 per cent.

Moscovici blamed the "persistent uncertainty" caused by the Greek debt crisis. "Even this meagre growth rate is on the condition that an agreement is reached between Greece and the EU/IMF by June," added the EU's Commissioner for the euro, Valdis Dombrovskis.

Greece's debt, already the highest in the eurozone, would meanwhile soar to 180.2 per cent of annual economic output this year while Greek unemployment is set to remain sky-high at about 25 per cent.
- AFP/de

channelnewsasia.com
5/5/15
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