ECB Dominates Greece Saga as Dijsselbloem Rejects Tsipras Charge

Jeroen Dijsselbloem, Dutch Finance Minister and President of the Eurogroup.

Jasper Juinen/Bloomberg

The Greek-rescue drama descended into verbal volleys as Prime Minister Alexis Tsipras’s government awaited the latest critical liquidity review of the country’s lenders by the European Central Bank.

Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of his euro-area counterparts, on Tuesday rebuffed Tsipras’s accusation that he had reneged on his pledge to Greece of access to ECB financing in return for an extension of the country’s bailout agreement.

“The Greek government made the bet on the fact that if they would negotiate with us, the ECB would soften its windows and rules,” Dijsselbloem said in on RTL Television.

The comments came on the eve of the ECB’s review of Greek banks aimed at setting the level of emergency funding they can access, faced with deposit withdrawals. Having lost access to capital markets and being ineligible for the ECB’s regular financing operations while the bailout review remains stalled, Greece’s lenders are hanging by an ECB-approved Bank of Greece Emergency Liquidity Assistance thread to stay afloat.

Months of talks have made little progress in breaking the deadlock between Greece and its institutional creditors on the conditions that are required to be met to unlock bailout funds, raising the specter of a debt default and the country’s possible exit from the euro.

“There won’t be easy access to the ECB window without a solid agreement with the Eurogroup,” Dijsselbloem said.

In a televised interview on Monday night that lasted well over 2 ½ hours, Tsipras lashed out at Dijsselbloem and the ECB, accusing them of treating Greece unfairly and breaking promises.

“On February 18, the ECB took a decision which was politically and ethically unorthodox,” Tsipras said.

‘Let it Go’

He said the ceiling on the amount of t-bills Greece’s systemic banks could hold was capped at 9 billion euros ($9.9 billion) instead of the “normal” 15 billion euros, leaving the lenders unable to refinance an additional 6 billion euros in short-term government debt.

Tsipras said Dijsselbloem had offered reassurances that as soon as the country extended its bailout agreement beyond February -- which it did -- this ceiling would be eliminated.

Finance Minister Yanis Varoufakis received similar promises from his colleagues in the Eurogroup, Tsipras said. Those pledges were then not honored, he said.

“Our mistake was that we left these at oral promises and didn’t ask for a written commitment,” the premier said.

Commenting on Tsipras’s allegations, Dijsselbloem said: “No, it definitely doesn’t help. It all seems not right to me, but OK, let it go.”

The ECB’s Governing Council will hold its weekly review of the liquidity position of Greek banks on Wednesday, while the Bank of Greece will release end-March data on household and corporate deposits. The numbers are set to show that the bleeding continued for a sixth consecutive month, as questions over Greece’s position in the euro area has alarmed savers.

Greek Reshuffle

The anti-austerity government in Athens has repeatedly expressed confidence a deal with European partners was imminent, only to be rebuffed by euro-area officials seeking concrete steps.

After a Eurogroup meeting in Riga on Friday ended in acrimony and name-calling, talks between Greece and its creditors have picked up pace.

Negotiations have “allowed work to further progress,” European Commission spokeswoman Annika Breidthardt told reporters in Brussels Tuesday. “We had a common understanding on Friday and Saturday that rapid progress needs to be made and it seems as though the contacts have intensified since then,” she said.

In a move to appease creditors and investors, Greece’s government reorganized its bailout negotiating team, limiting the role of Varoufakis, who has drawn criticism from euro-area partners for his handling of the talks so far.

Greek stocks rose 1.4 percent in Athens, after rallying 4.4 percent Monday on the reshuffle. Greek government bonds also rose, pushing prices on two-year notes to the highest in more than a month. The gains pushed down yields on the notes due in 2017 toward the lowest in a month.

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