Greece defies creditors over pension ‘red line’

Alexis Tsipras with Jean-Claude Juncker

Greece defied its international creditors yesterday by sticking to “red lines” on pension and labour market reforms and urging lenders to give ground, dimming prospects of progress next week towards securing desperately needed financial aid.

Despite efforts by European Commission president Jean-Claude Juncker to coax leftist prime minister Alexis Tsipras into moving on two key conditions for releasing EU/IMF bailout funds, the Greek government spokesman said lenders could not expect Athens to make all the concessions for a deal.

“There should not be an expectation on the part of institutions… that the government will back down on everything,” Gabriel Sakellaridis told a news conference. “When you negotiate, there should be mutual concessions. We won’t go beyond the limits of our red lines. It’s clear that we cannot cut pensions.”

Athens is running out of cash but has yet to reach a deal on reforms with its lenders, who have ruled out an agreement by next Monday’s meeting of eurozone finance ministers.

Mr Sakellaridis spelled out Greek hopes the Eurogroup ministers will recognise progress towards an agreement in a joint statement, giving the ECB leeway to let Athens sell more short-term debt to Greek banks.

That would ease the immediate funding crunch, helping the government make a €750m payment to the International Monetary Fund on Tuesday and pay wages and pensions later.

However, sources said the ECB was highly unlikely to make such a move unless the eurozone ministers set out a very strong prospect of releasing the frozen bailout funds.

The Central Bank on Wednesday raised the amount of emergency liquidity assistance Greek banks can tap to counter deposit outflows and held off from tightening conditions for collateral they must present. But without a political deal, the ECB could toughen its stance in the next two weeks, the sources said.

Eurogroup chairman Jeroen Dijsselbloem held talks in Berlin to prepare for Monday’s key session. In an interview with the French daily Le Monde, he said while the final deadline for a deal was the end of June, “there could also be a deadline if liquidity problems become too important for Athens”.

He ruled out any discussion of debt relief for Greece until the current bailout programme was successfully completed. Athens has received €240bn in two bailouts since 2010.



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