Tsipras to Meet Hollande, Merkel as Varoufakis Seeks Debt Relief

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Yanis Varoufakis
Greece's Finance Minister Yanis Varoufakis speaks in Athens on May 14. Photographer: Kostas Tsironis/Bloomberg

Greek Prime Minister Alexis Tsipras plans to meet German Chancellor Angela Merkel and French President Francois Hollande again to discuss a financial lifeline as his finance minister joined him in rejecting a new creditor offer.

Tsipras spoke with his counterparts on Saturday night and they agreed to converge in Brussels on June 10 on the sidelines of a summit, said a Greek government official, who asked not to be named in line with policy. The call took place hours after Finance Minister Yanis Varoufakis said the most recent offer would exacerbate Greece’s economic plight and urged creditors to consider debt relief instead.

“As finance minister, I’ll refuse to put my signature on a deal” such as the one that’s being proposed, Varoufakis told Proto Thema newspaper. “We will not sign a deal that extends this self-feeding crisis of the last five years.”

His comments come a day after Tsipras decried the “clearly unrealistic” demands being made, even as he said the two sides were closer to a deal. A Greek plan, submitted about the same time, is still on the table and awaiting feedback, a Greek government official said by e-mail on Saturday, asking not to be identified in line with policy.

As the two sides dig in and extend a four-month standoff, the country is hurtling toward a default. The government needs to seal an agreement or get another extension before the euro area’s bailout of the Mediterranean nation expires June 30 to be able to meet payment on its about 313 billion euros ($348 billion) of debt.

Same Tsipras?

Varoufakis said what was needed was “a debt restructuring that will make Greek debt sustainable, without a cost for the creditors.” He said cutting pensions was “not a reform” and what is instead needed is an investment plan.

Frustration is growing. After listening to Tsipras address lawmakers on Friday night, Slovak Finance Minister Peter Kazimir said he wondered “whether this is the same Tsipras who was in Brussels and Berlin this week.”

Kazimir, who commented on his social media account, said “debt restructuring is not on the table.”

Tsipras asked for a call with European Commission President Jean-Claude Juncker on Saturday, according to a commission spokeswoman, who asked not to be named in line with policy. Juncker and Tsipras will stay in contact in coming days, she said, declining to comment on whether a call had been turned down.

Deferred Payment

In a sign of how little maneuvering room there is, Greece on Thursday notified the International Monetary Fund that a 300 million-euro payment due Friday would be deferred and bundled with three more payments at the end of June.

The move was a 180-degree turn by the government and caught many by surprise. While bundling the transfers is permitted under IMF rules, the deviation from standard practice adds to signs that Greece may be readying for a potential breakdown of talks after a prolonged impasse.

“Tsipras has his back against the wall,” said Miranda Xafa, a former Greek representative to the IMF who runs a consultancy in Athens. “If a deal is not reached next week, in time for parliamentary approval of the deal, we are staring at disorderly default, deposit withdrawals, capital controls, and social unrest. I think a deal is in the making.”

Tsipras on Friday said voters are urging the government not to “succumb to the irrational, blackmailing demands of our creditors.”

Close Deal?

Even with those comments, he said Greece is “closer to a deal than ever before.”

“I’m sure that in the coming days our realistic and consistent position will be vindicated,” he said.

While a Greek official had said earlier this week that the euro region was pressing for an agreement to be wrapped up by June 14, Tsipras said Friday that date isn’t a deadline.

“There’s no limit to the time for negotiations,” he said.

The benchmark Athens Stock Exchange plummeted 5 percent before Tsipras spoke on Friday, the most since January. The yield on Greek 10-year bonds added 31 basis points to 11.22 percent, the biggest increase since May 26. The 10-year yield is still down from this year’s high of 13.93 percent and a record 44.21 percent in 2012. The two-year yield rose 198 basis points to 25.22 percent.

“There must be a very clear commitment about very specific measures so we will get the chance to also raise very clearly the issue of Greece returning to markets, with a proper debt restructuring, within months,” Varoufakis said.

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