Greece has made a pitch to convince its European creditors to accept its request for a six-month loan extension, which would allow Athens to pay its bills and avoid a potential exit from the euro.
The Greek government, effectively just a week away from having to fend for itself, is trying to convince its creditors in the 19-country eurozone that its request for an extension is sincere and not just a ruse – a Trojan Horse, according to one official in Germany – to buy time.
Its proposals have met with an array of responses. While some countries have indicated the proposal is a helpful step in the right direction, others have been more negative.
In a major rebuff, Germany, perhaps the most influential creditor, said the proposals, which included commitments to meet debt obligations and sustain a degree of budgetary discipline, failed to go far enough.
Notably, it said they did not meet the commitments that previous Greek governments have undertaken. The Greek government, according to Berlin, must conclude the reforms, spending cuts and tax increases demanded in exchange for the loans.
Today, German Chancellor Angela Merkel called for a “significant improvement in the substance” of Greece’s request for an extension to its loan arrangements.
The emergency eurogroup meeting, which will also include International Monetary Fund managing director Christine Lagarde and European Central Bank president Mario Draghi, is the third in just over a week.
Financial markets have been gripped by the to-ing and fro-ing, and today it seemed investors did not know which way to turn, with stock markets across Europe, including Athens, trading more or less flat.
“There is still reason for some optimism,” said Jeroen Dijsselbloem, the head of the eurogroup. “But it’s very difficult, as you well understand.”
Time is pressing as Greece’s European bailout programme is due to expire after February 28. Greece still needs help after that date to meet its financial obligations over the coming months. Without any further support, it faces defaulting on its debts and an exit from the euro, a scenario that would likely devastate the Greek economy at least in the short-term and generate renewed uncertainty for the global economy.
Today’s meeting was called to respond to the left-wing Greek government’s demand for more time to finalise its current bailout programme and negotiate new arrangements with its partners that will be less onerous on Greek citizens.
Arriving at the talks, Greek finance minister Yanis Varoufakis expressed hope for an agreement and urged eurozone members to do their part. “The Greek government has gone the extra mile, the extra 10 miles, and now we are expecting our partners to meet us,” he told reporters.
Greek prime minister Alexis Tsipras swept to power last month on a pledge to ease the budget belt-tightening and reorganize the 240 billion euro (£155 billion) bailout debt.
So far, the government has sometimes sent out mixed messages which did not go down well with the other eurozone nations and European Union institutions.
“Communications from the Greek government are confusing and incoherent,” said Belgian finance minister Johan Van Overtveldt.
The Greek government has faced the unpalatable prospect of reneging on its election promises to ease the austerity measures weighing so heavily on Greek citizens, or possibly leaving the group of countries using the euro single currency.
German finance minister Wolfgang Schaeuble said much more than the Greek economy is at stake.
“This is not only about one country, this is about Europe,” he said. “It’s about finding solutions that don’t destroy confidence in the progress and the reliability of this work of European unity.”
After talks in Paris with Ms Merkel, French President Francois Hollande insisted that Greece “must stay in the eurozone” and that he knows of no scenario for a Greek exit.