Greek leaders hold key Europe talks

Greece’s new government has taken its case to the leaders of the European Commission and European Central Bank (ECB) as it tries to renegotiate the terms of a €240bn (£182bn) bailout.

Prime Minister Alexis Tsipras was warmly welcomed by Commission head Jean-Claude Juncker in Brussels.

And Finance Minister Yanis Varoufakis said he had “fruitful” talks with ECB chief Mario Draghi in Frankfurt.

Greece’s radical left government was elected on a pledge to end austerity.

Mr Varoufakis is keen to convince the ECB that Greece’s debt payments could be linked to the performance of the economy – the more it grows the more interest Greece would pay – through the use of debt swaps.

However a report in the Financial Times newspaper quoted officials involved in the negotiations as saying that the ECB would oppose a crucial part of his plan – the sale of short-term treasury bills to raise €10bn.

‘Hear us out’

Mr Varoufakis told German newspaper Die Zeit (in German) that he was the finance minister of a bankrupt nation and tried to reassure Germany that Athens’ new policies did not mean it was turning its back on reform. “You should hear us out,” he said.

“We had a very fruitful discussion and exchange,” Mr Varoufakis told reporters after emerging from his meeting at the ECB’s headquarters in Frankfurt on Wednesday.

His visit to Germany, and the prime minister’s meeting in Brussels were the latest in a series of European trips to reassure leaders about the plans of a government elected on 25 January on a promise of writing off most of Greece’s spiralling debt.

Mr Tsipras’s Syriza party had also sparked alarm on the markets and among eurozone officials when it said it would refuse a new tranche of bailout funding, prompting questions about how it would finance itself.

Greece’s current programme of loans ends on 28 February. A final €7.2bn is still to be negotiated, but the new government has already begun to roll back austerity measures.

Mr Varoufakis is hoping to obtain quick cash for Greece while a new plan is agreed amongst the various eurozone members.

Eurozone finance ministers are due to meet on 11 February to discuss Greece’s debt proposals.

‘There are rules’

The Greek prime minister first met Mr Juncker and then European Council President Donald Tusk on Wednesday, as part of the new government’s diplomatic offensive.

Mr Juncker was expected to press Mr Tsipras for a “technical” extension of Greece’s current deal.

The Greek leader will then travel to Paris to meet President Francois Hollande later.

On Thursday Mr Varoufakis is expected to meet Wolfgang Schaeuble, the German finance minister. Mr Schaeuble has emerged as the one of the toughest critics of the new Greek government, previously saying: “Elections change nothing. There are rules.”

German Chancellor Angela Merkel has ruled out debt cancellation, saying creditors had already made concessions.

Greece still has a debt of €315bn – about 175% of GDP – despite some creditors writing down debts in a renegotiation in 2012.

The country’s previous government secured the €240bn bailout with the European Commission, the IMF and the European Central Bank – the so-called “troika”.

Mr Varoufakis told Italian newspaper La Repubblica on Wednesday that the new government had started negotiations with the IMF over its plan to swap existing government debt for growth-linked bonds.

“I’m optimistic that the problem will be resolved,” he was quoted as saying.

Mr Varoufakis previously said Greece would negotiate separately with the European Commission, the IMF and the European Central Bank but not with officials representing the troika, which he described as a “committee of technocrats”.

This week he said that he wanted a new plan for fiscal stimulus in place by the end of May.

Source: BBC

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