Tags: greek | euro | bailout

Eurozone: Greece Running Out of Time, Money and Friends

Wednesday, 11 March 2015 08:25 AM

Ask Greek Finance Minister Yanis Varoufakis about his country’s predicament, and you’re likely to get a very different response from the one echoing around the euro region.

The Athens University professor said on Monday he’s convinced the six-week-old government is doing what’s needed to secure more funding and avoid bankruptcy. His counterparts, during a euro-area finance ministers’ meeting, spoke of mixed messages, dawdling and a lack of detail over Greece’s deteriorating financial situation.

Impressions aside, Greece is running out of time, money and friends. France’s Michel Sapin, whose government had made the most conciliatory noises toward Greek calls for less austerity, expressed frustration with Varoufakis. Spain’s finance minister, concerned about an anti-austerity insurrection at home, also hardened the rhetoric.

“The time comes when what’s needed is not declarations of intentions or slogans, but figures and verifiable data,” Sapin said in Brussels.

Greece is seeking the disbursement of an aid payment totaling about 7 billion euros ($7.5 billion) amid speculation its coffers could be empty by the end of the month.

Representatives of the European Commission, European Central Bank and International Monetary Fund are meeting with Greek officials on Wednesday in Brussels to assess the nation’s needs before technicians from the institutions arrive in coming days to start talks in Athens.

‘How Serious?’

Ministers around the euro region have complained about the lack of progress. Much of the negotiations of the past few weeks have been a “complete waste of time,” according to Dutch Finance Minister Jeroen Dijsselbloem.

“Not so much has happened,” in Greece since the euro area in February allowed the government’s loan agreement to be extended by four months,’’ he told reporters after the meeting. “So the question arises: how serious are they?”

For Varoufakis, 53, an economist whose expertise is game theory, all is working well and the government is on course to meet all its debt obligations.

“I believe that we are doing our job properly,” Varoufakis said at the conclusion of Monday’s talks. “Our job is to start the process which is necessary for the European Central Bank to have confidence.”

‘Car Crash’

After promising the electorate it would break free from the conditions tied to the country’s bailout, the government committed to coming up with a package of economic reforms in exchange for the aid. It now has to give more details of how it will implement them.

“If it carries on like this, it’s a road to a car crash,” Andrew Lynch, a money manager at Schroder Investment Management Ltd. in London, told Bloomberg Television. “Both sides need to stop the posturing and get a deal done as quickly as possible because otherwise you just get to a stage where accidents can happen, and accidents at this stage could be very serious.”

Varoufakis had already angered his fellow ministers when he arrived 35 minutes late at one of last month’s meetings, said two European officials, who spoke on condition of anonymity because the discussions were private.

He entered with a camera, which isn’t allowed because the talks are supposed to be behind closed doors, the officials said. When those talks broke down, Varoufakis termed the euro area’s proposal to extend existing bailout commitments “absurd” and “unacceptable.”

Irritated Officials

Euro-area finance ministers have told Varoufakis to make his language less divisive, a separate European official said on Tuesday. Ministers are irritated with the way he was communicating, the official said.

Varoufakis annoyed the Italian government when he said on Feb. 8 that Italian officials had told him their country was at risk of bankruptcy. Finance Minister Pier Carlo Padoan said Varoufakis’s comments were “out of place.”

While the north-south divide would once have given Greece some natural allies against German-led austerity, there are also political reasons for shunning Varoufakis.

In Spain, the anti-austerity Podemos party is leading most opinion polls before an election due by the end of the year. Portugal is due to vote in September or October, with Prime Minister Pedro Passos Coelho’s Social Democrats trailing in recent surveys.

Backing Germany

The Greek government “was attempting to build alliances with the southern periphery and also with Italy and France -- other countries that have also been opposed to austerity,” said Mujtaba Rahman, a former European Union official who is now director of European analysis at the Eurasia Group in London. “For very different reasons, each of these individual states has come out essentially in alliance with Germany.”

That leaves Europe’s most indebted nation “up against an axis, with Spain and Portugal at the vanguard,” Greek Prime Minister Alexis Tsipras said last month. The remarks drew a hostile response from Spanish Economy Minister Luis de Guindos, who also expressed unhappiness after Monday’s talks.

Sometimes, Greek ministers’ “messages aren’t very aligned,” de Guindos said after the discussions. “The Greek government is aware of that.”


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Ask Greek Finance Minister Yanis Varoufakis about his country's predicament, and you're likely to get a very different response from the one echoing around the euro region. The Athens University professor said on Monday he's convinced the six-week-old government is doing...
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