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Greece faces crucial round of finance talks

February 20, 2015

Athens is heading towards a key round of talks to resolve its bailout settlement with European Union leaders. But the Mediterranean country needs to convince Germany, which insists on cost-cutting measures.

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Image: Reuters/Y. Herman

Eurozone finance ministers were scheduled to meet on Friday to resolve the standoff with Greece which intensified after Germany strongly criticized Greek Finance Minister Yanis Varoufakis' proposal to extend the economic bailout by six months.

In telephone conversations with German Chancellor Angela Merkel and French President Francois Hollande late on Thursday, Greece's Prime Minister Alexis Tsipras complained about Germany's hard stance in the discussions.

Tsipras was referring to a comment by a German official who described Athens' proposal as a "Trojan horse," which made it seem that Greece only wanted bridge financing without intending to fulfill the requirements. Tsipras clarified his position with the German chancellor, saying such a choice of words would "not be of any help in real discussions."

Germany's Social Democrat Vice-Chancellor Sigmar Gabriel however, struck a more conciliatory note, lauding Athens' attempts as a "first step" towards a deal.

Greek Finance Minister Yanis Varoufakis had earlier submitted a proposal to Eurogroup chief Jeroen Dijsselbloem, asking for a six-month extension for his crisis-ravaged country. The proposal, in which the Greek government accepted some reforms, gave consent to control by the European Union, the European Central Bank and the International Monetary Fund (IMF).

Greece's Finance Minister Varoufakis and his German counterpart Wolfgang Schäuble speak at a press conference in Berlin
Wolfgang Schäuble and Yaris Varoufakis: not seeing eye to eyeImage: picture-alliance/dpa/M. Kappeler

Athens' document met with strong opposition from Germany. "The letter from Athens is not a substantial proposal for a solution," Martin Jäger, spokesman for German Finance Minister Wolfgang Schäuble told German press agency dpa. According to Berlin, Varoufakis' letter contained neither concrete measures nor any alternatives to social and labor market reforms that the former government had implemented.

But Tsipras would find that difficult, considering his party won the elections on the promise that it would provide free food and electricity for those who had suffered from the previous government's austerity program.

Greece received 240 billion euros ($275 billion) in 2010 as part of its economic assistance package from the EU and the IMF. It was entitled to another 7.2 billion euros, but Tsipras insisted that the bailout package took a heavy toll on the country's economy.

mg/rc (AP, AFP, dpa)