Greece Remains Defiant as Creditors Up Pressure for a Deal

Mario Draghi, president of the European Central Bank (ECB), speaks during news conference at the International Monetary Fund (IMF) and World Bank Group Spring Meetings in Washington, D.C., U.S., on Saturday, April 18, 2015.

Photographer: Andrew Harrer/Bloomberg

Greece said it won’t renege on election pledges to end austerity measures, even as creditors pressed for a compromise to free financing and avert a worsening crisis.

U.S. President Barack Obama and European Central Bank President Mario Draghi both called on the Greek government to do more to resolve the standoff amid depleting cash reserves. Greek officials, including Deputy Prime Minister Yannis Dragasakis, stood their ground.

“We want a viable solution within the euro,” Dragasakis said in an interview published Sunday in Athens-based To Vima newspaper. Still, “we don’t budge from our red lines.”

Snap elections or a referendum are possible should negotiations with creditors stall, Dragasakis said.

European peers want Greece to do more to revamp its debt-burdened economy before they release another tranche of the 240-billion-euro ($259 billion) bailout program. At stake is Greece’s ability to avoid a default and stay in the 19-nation euro area.

The showdown will figure heavily at a meeting of euro-area finance ministers in Latvia on April 24. In the shadow of the brinkmanship, Greek government bonds last week suffered their worst week since Alexis Tsipras was elected as prime minister in January on a platform promising to undo the tough bailout terms.

Greece’s so-called red lines are a refusal to cut wages and pensions, introduce new taxes or sell state assets, Alternate Health and Social Security Minister Dimitris Stratoulis said in an interview Saturday with Athens-based Skai TV.

No Privatization

Energy Minister Panagiotis Lafazanis was also defiant, saying the country won’t agree to any privatizations, according to an interview published Sunday in Athens-based Real News newspaper.

While “so-called” partners, including unidentified International Monetary Fund officials, want to “blackmail” the Greece into adopting measures that would hurt the working class, “we won’t betray the people’s mandate,” he said.

‘Realistic Reform Plan’

Draghi said it was “urgent” that Greece do “much more work” to show it can satisfy the terms of the bailout. “We all want Greece to succeed,” Draghi said Saturday in Washington. “The answer is in the hands of the Greek government.”

His comments were echoed by Deputy Managing Director David Lipton, who said the IMF wants to intensify dialog with Greece on the basis of more specific proposals, according to an interview published Sunday in Italy’s Il Sole 24 Ore newspaper.

The government is taking action and will continue to respect the will of the electorate, a party spokeswoman said on Sunday.

“The Greek government has presented a realistic reform plan that doesn’t contain recessionary measures or burden the weaker layers of society, yet gives the economy breathing space,” Syriza party spokeswoman Rania Svigou said, according to an e-mailed transcript of her comments. “The government will exhaust all possibilities for a solution that respects the mandate of the Greek people.”

Draghi said Greek banks continue to meet the requirements for Emergency Liquidity Assistance, a financial lifeline the ECB decides on each week. The funding has so far helped to avoid a meltdown as the wrangling over aid has gone on.

The emergency aid “will continue to be given to the banks if they’re judged to be solvent and if they have adequate collateral, which is the case now,” Draghi said.

Greece needs to repay April 20 about 80 million euros in interest on bonds held by the ECB.

Swift Resolution

U.S. officials also urged a speedy resolution to Greece’s talks with its creditors. Obama said April 17 that the Greek government needs to show its creditors that “you’re trying to help yourself,” he said.

A deal between Greece and its creditors won’t be ready by the euro-zone finance ministers’ meeting, Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem said on Saturday. The French and German finance ministers agreed.

German Finance Minister Wolfgang Schaeuble declined to comment in Washington on Friday when asked whether European partners were preparing a safety net to prevent a euro exit in case of a Greek default.

“The Syriza-led government will carry out the reforms the Greek people need, not ones requested by our creditors,” Alternate Health Minister Stratoulis told Skai TV. The country won’t be pressured “by euro-exit threats.”

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