Greece to urge loan extension

Several weeks of bailout brinksmanship could be coming to an end in Brussels as Greece prepares to submit a request for a loan extension to its eurozone partners on Thursday morning.

Finance Minister Yanis Varoufakis said he would submit a deal proposal ahead of a conference of eurozone finance chiefs and that his plans would "satisfy the Greek side and the Eurogroup."

Varoufakis' intentions were also confirmed Wednesday by a Greek government official, who said the finance minister would formally send a letter to Eurogroup President Jeroen Dijsselbloem asking for a six-month extension of its loan agreement due to expire at the end of the month.

The pan-European FTSEurofirst 300 stock index surged to a seven-year high in late-day trading, rising 0.7 percent to 1,514.62 points, following the news. Greek shares climbed 1 percent.

Looming deadline

This comes as Greece and its EU creditors are veering towards a Friday deadline set by Dijsselbloem after talks in Brussels ended in acrimony on Monday, prompting the Eurogroup chief to warn "we can use this week but that is about it."

An extended financial lifeline would allow Athens to stay afloat a little longer, while its new leftist-led government seeks to renegotiate the tough fiscal consolidation measures attached to its existing 240-billion-euro (nearly $273 billion) bailout program.

Greek Prime Minister Alexis Tsipras was elected in January on a popular mandate to end years of austerity, which many Greeks say have crippled the country's economy. On Tuesday, Tsipras bristled at its creditors' demands, saying "the Greek government will not accept ultimatums."

But without extra funding, Greece would not be able to meet its payment obligations beyond the end of March, a person familiar with the figures told Reuters news agency on Wednesday.

Greece extends olive branch

Wednesday's reports were seen as Greece extending an olive branch to Brussels, raising hopes that it is willing to deescalate a conflict that is threatening to force the country out of the euro currency area.

"Greece blinks first, sort of," Berenberg Bank analyst Holger Schmieding told AFP news agency.

However, a deal to keep the debt-ridden country solvent and within the euro family is far from certain. EU paymaster Germany balked at reports that Athens would ask for additional emergency funding without the austerity strings attached to its current rescue package.

"We believe the terms of the bailout cannot continue by any means," Greek government spokesman Gavriil Sakellaridis told private Antenna TV on Wednesday.

"No fast way out"

This prompted spokesman for German Finance Minister Wolfgang Schäuble to insist that any extension would be "inextricably" linked to economic reforms agreed by Athens.

"It can't and won't be the case that you go for an extension without the agreed reforms," he said.

A day earlier, Schäuble had scoffed at the notion of a strings-free loan, telling German broadcaster ZDF "of course Greece would like to continue receiving credit," adding "this is not about the extension of loan agreements. Instead, it is about whether this bailout program is completed, yes or no."

The hawkish finance minister has repeatedly accused Athens of wanting something for nothing and has urged Tsipras to "tell the Greeks the truth: there is no fast way out."

US intervenes

Worries that the entrenchment could jeopardize a resolution has now also prompted the US to intervene. In a phone call between US Treasury Secretary Jack Lew and Greek Finance Minister Yanis Varoufakis, Lew warned warn that Greece would face "immediate hardship" without an agreement, "that the uncertainty is not good for Europe," and " urged Greece to find a constructive path forward in partnership with Europe and the IMF," a Treasury official said.

pad/uhe (AFP, dpa, Reuters)