EU Puts Off Greek Rescue Battle After Brussels Talks Stall

A Greek Orthodox priest joins protesters gathering outside the Greek parliament building as they take part in a solidarity rally with the Greek government for their negotiations with international country's lenders, in Athens on Feb. 11, 2015.

Photograph: Anadolu Agency via Getty Images

Euro-area governments left tough decisions on the future of Greece’s bailout for next week, after talks failed to bridge differences over the aid program that the Greek government blames for economic hardship.

With Greece’s current bailout expiring at the end of February, finance ministers met for six hours in Brussels without signing off on any conclusions on the way forward for the region’s most-indebted nation. That leaves open how Greece can avoid running out of cash and avert a possible exit from the 19-nation currency union.

Attention now shifts to a summit of European Union leaders on Thursday in Brussels, a day after German Chancellor Angela Merkel and French President Francois Hollande traveled to meet Russian President Vladimir Putin to negotiate a cease-fire in Ukraine. Merkel had left bargaining with Greece to the finance ministers.

“We understand each other much, much better now than we did this morning,” Greek Finance Minister Yanis Varoufakis told reporters after the finance chiefs broke up without a deal early Thursday in Brussels. “Europe manages to find agreements even if it’s at the last moment.”

Greece needs its next bailout installment of about 7 billion euros ($7.9 billion) or some other financing to keep from defaulting on its international debt payments. The new, anti-austerity government of Prime Minister Alexis Tsipras has said it no longer wants to abide by the terms of the bailout program, asking instead for bridge funding while negotiating a new deal.

Greek bonds slid, with the yield on three-year notes rising 66 basis points to 21.41 percent. The benchmark Athens Stock Exchange General Index rose as much as 4.1 percent, and was 3.2 percent higher at 818.66 as of 11:05 a.m. in Athens.

Ground Covered

The euro fell as much as 0.3 percent to $1.1303 after Jeroen Dijsselbloem, the Dutch finance minister who chairs the euro group’s talks, said ministers couldn’t agree on a common approach. The euro briefly spiked to as high as 1.1352 earlier, when officials suggested an accord on steps forward was within reach. It traded at $1.1326 as of 9:07 a.m. in London.

“We covered a lot of ground but didn’t actually reach a joint conclusion on how to take the next steps,” Dijsselbloem said at a press conference. “There has to be a political agreement on the way forward.”

Tsipras will have his first encounter with Merkel in Brussels today, although no meeting is scheduled between the two leaders. Finance chiefs will return to Brussels on Feb. 16 to try to break the deadlock after Greek negotiators were said to have wavered on a commitment to extending the country’s existing bailout from the European Commission, the European Central Bank and the International Monetary Fund.

Syriza’s Mandate

Greece is “very optimistic” that an accord will be reached on a new aid package, a government official said. The main disagreement was over whether the basis for talks is the existing rescue than expires at the end of the month or a revamped program sought by the Greek government, the official told reporters in Brussels.

Tsipras’s campaign pledge to end the bailout -- and its austerity mandates -- has hung over the talks. Agreed language on a bailout extension was within reach, only to be rejected later by Greek negotiators who said they had to consult with superiors in Athens, German Finance Ministry spokesman Martin Jaeger said.

Varoufakis didn’t comment to reporters on the snag.

Varoufakis said Greece is seeking to balance its existing bailout deal and its responsibility to voters after the anti-austerity Syriza alliance won elections in January. He said Wednesday’s meeting wasn’t designed to reach a final agreement and leaves room for more negotiations.

In Athens, thousands rallied in front of the Greek parliament Wednesday in support of the government’s anti-austerity stance. Tsipras posted a photo of the rally on his Twitter account, saying popular protests “across Greece and Europe” are “the source of our strength.”

German Finance Minister Wolfgang Schaeuble, whose country is the biggest contributor to Greece’s bailout, said he had no “red lines” on how an agreement could take shape, as long as Greece met sufficient conditions to receive more aid.

Ministers had damped expectations heading into the meeting and said the talks left room for progress.

“We had a very fruitful and at times frank discussion,” Italian Finance Minister Pier Carlo Padoan said. “I am optimistic as there is a will to go ahead.”

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