Greece fumes over delay

EU impasse on bailout funds draws warning

Alexis Tsipras, head of Greece’s main opposition party, said Wednesday in Athens that bailouts are a “dead end” and “catastrophic” for Europe.
Alexis Tsipras, head of Greece’s main opposition party, said Wednesday in Athens that bailouts are a “dead end” and “catastrophic” for Europe.

— Greece reacted with dismay Wednesday after European finance ministers failed to agree to release vital rescue loans, with the prime minister warning that the stakes are higher than just his debtridden country’s future.

After almost 12 hours of debate, finance ministers from the 17 European Union countries that use the euro, together with the International Monetary Fund and European Central Bank, had no deal on Greece’s financing.

The impasse follows another fruitless meeting last week and highlights the depth of divisions over how to handle Greece’s huge debt problem without reaching deeper into the pockets of EU countries’ taxpayers.

“Greece has done what it had to and what it had committed to doing,” Prime Minister Antonis Samaras said. “Our partners, along with the IMF, also must do what they have undertaken.”

The ministers are to convene again Monday.

Greece already is living on borrowed time. Faced with $6.4 billion in maturing treasury bills that it couldn’t pay last week, Greece issued more short-term debt to cover the gap and tide it over until it can receive its bailout funds. But most of that was in the form of four-week treasury bills, meaning the country will face the same situation next month — when it has more than $9 billion in redemptions — unless the loans come through.

“It is not just the future of our country, but the stability of the entire eurozone that depends on the successful completion of this effort in the coming days,” Samaras said.

There are no excuses for a delay, he said.

Greece’s fortunes are tied to the rest of the eurozone. Without the bailout funds that have been keeping it afloat since May 2010, the country would default and could end up having to leave the eurozone. This could have a domino effect on other financially troubled eurozone nations, with investors pulling their money out of those countries too, or demanding higher returns to keep it there.

“Europe finds itself before the dead end that its political choices have created,” said Alexis Tsipras, head of the main opposition Radical Left, or Syriza, party. “Day by day it is confirmed that the path of [the bailouts] is catastrophic for the European structure and painful for the people of Europe.”

German Chancellor Angela Merkel, whose country is the single largest contributor to Greece’s bailout, indicated that a solution was not assured even on Monday.

“I think there are chances — one does not know, but there are chances — of having a solution on Monday,” she told lawmakers in Berlin during a speech to Parliament on her country’s budget.

In return for bailout funding, Greece has had to submit its economy to scrutiny from the International Monetary Fund, European Central Bank and European Commission. It has also had to impose several rounds of austerity measures, included repeated salary and pension cuts and increased taxes.

The belt-tightening has left Greece mired in a deep recession expected to head into a sixth year. One in four Greek workers is now unemployed, and tens of thousands of small businesses have shut down.

The country’s uneasy three-party coalition government recently passed another round of spending cuts through Parliament, a requirement for it to be given the long-delayed next installment of its rescue loans, a $41 billion batch.

But there has been disagreement among the eurozone’s ministers and the IMF on how to make Athens’ debt manageable.

The eurozone ministers are in favor of giving Greece an extra two years, to 2022, to reduce its debt to 120 percent of gross domestic product from the 176 percent forecast for this year. The IMF has resisted such an extension.

More than 11 hours of talks ended without a deal early Wednesday as a bloc of toprated creditors led by Germany refused to write off a portion of Greek aid loans.

“We have a series of options on the table on how to close the financing gap,” German Finance Minister Wolfgang Schaeuble told reporters.

“We discussed the issue very intensively, but since the questions are so complicated we didn’t come to a final agreement.”

Schaeuble told German lawmakers that the issue of the Greek funding gap was solvable and possible solutions include reducing interest payments on its bailout loans, suspending payouts through 2020 on its second rescue package, or having the European Central Bank buy $11.5 billion of the country’s treasury bills, according to four people who attended the briefing.

Information for this article was contributed by Elena Becatoros and Geir Moulson of The Associated Press and by Ben Sills and James G. Neuger of Bloomberg News.

Front Section, Pages 1 on 11/22/2012

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