Greece talks turn to idea of a Plan B

Frustrated finance ministers for the first time broke the taboo of talking about a “Plan B” for Greece at a fraught meeting in Riga.

Several ministers of eurozone countries attacked their Greek colleague, Yanis Varoufakis, telling him his country was very close to self destructing.

Michael Noonan, Finance Minister, said governments should introduce reforms as soon as possible after being elected, which avoids further debate on them and leaves time for their positive effects to be felt.

Discussions to agree a set of conditions for the handing over of €7.2bn, the final amount in the country’s second bail-out, have been dragging on for more than two months.

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But except in the past few days, no progress has been made with technical experts holding discussions in Athens but not having a mandate to agree to anything.

In the meantime the country is running out of money, the IMF is talking about the need for debt relief from the EU, and ECB president Mario Draghi sounding a warning about their emergency funding of Greek banks.

But the most dramatic moment came during the two hour long discussion behind closed doors when Mr Varoufakis asked that funds be released when some of the conditions are agreed, with the rest to be agreed later.

He was met with a very determined ‘no’, despite his warning that in a few weeks there would be a very serious risk of an accident. “That would be a real shame”, he was quoted as saying.

The Slovenian minister, Peter Ka?imír,told his colleagues that his country was the most exposed to Greece if there was an ‘accident’, and he was quoted as saying, “We need to talk about a Plan B at this point”.

Nobody appears to have disputed this, although it drew a swift response from Mr Varoufakis, saying he rejected such an idea and that Greece would do all it could to stay in the eurozone. He called the suggestion “profoundly un-European”.

Later European Commission vice-president Valdis Dombrovskis insisted, “We are concentrating on this plan and not on any other”.

The Lithuanian Minister, Rimantas Šad?ius, said it was time that the eurozone changed it attitude towards Greece and saying he has had to refuse the traditional 13th month pension to his citizens while Greece plans to increase the minimum wage, despite high unemployment.

Reported to be visibly upset, he said Lithuanians compared their situation to the Greeks and he described the situation as ‘disgusting’.

Several ministers said the framework for an agreement had broken down and they needed to admit this and stop fooling themselves. Italy’s minister Pier Carlo Padoen said they did not have time for niceties and should stop fooling themselves.

Wolfgang Schäuble, the German minister who has been at loggerheads with the new Greek government since it was elected in January, told the meeting that the whole process was moving in the wrong direction, and he did not know how the matter could be resolved.

The French minister, Michel Sapin, agreed a lot of time had been wasted and the process needed to be accelerated now and quickly.

Several times during the meeting the eurozone president Jeroen Dijsselbloem reiterated that the current format for discussions - insisted on by the Greek government to replace the Troika - was not working and needed to be reviewed.

But Mr Varoufakis remarked on the hostile tone of many of the comments but insisted the old days of the Troika were gone and mentioned that they could push through four or five reforms in Parliament and discuss the rest them.

However reports said that he was interrupted by Mr Dijsselbloem saying that nothing other than a comprehensive agreement would be accepted. They need to agree the reform plan before the end of June or the money will no longer be available as the programme is due to end.

Mr Draghi, asked how long the ECB can continue funding Greek banks, said that as long as the Greek banks were solvent and had adequate collateral.

“Given the fragility of the current situation, the continuing deposit outflows, the ongoing policy dialogue, the recently increased yields on sovereign bonds, the highest since 2012, it should be remembered that the higher the yields, the bigger the volatility and the more collateral gets destroyed”.

The current situation was not the same as when the haircut was decided, he said and added that they may have to revisit the conditions to see if they warranted a change in the schedule. “So time is running out and speed is of the essence”, he added.

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