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 The move, confirmed by an official spokesman, is an attempt by the
new leftist-led government of Prime Minister Alexis Tsipras to keep
a financial lifeline for an interim period while sidestepping tough
austerity conditions in the EU/IMF program.
An EU source said whether finance ministers of the 19-nation
currency bloc, who rejected such ideas at a meeting on Monday,
accepted the request as a basis to resume negotiations would depend
on how it was formulated. A spokesman for the Eurogroup said no
request had been received so far.
Hardline German Finance Minister Wolfgang Schaeuble poured scorn on
the Greek gambit, telling broadcaster ZDF on Tuesday evening: "It's
not about extending a credit program but about whether this bailout
program will be fulfilled, yes or no."
However, German Economy Minister Sigmar Gabriel, leader of the
Social Democratic junior partners in conservative Chancellor Angela
Merkel's coalition, welcomed what he called the signal from the
Greek government that it was ready to negotiate.
With Greece's agreement with the euro zone due to expire on Feb. 28,
Tsipras said talks were at a crucial stage and his demands for an
end to austerity were winning wide support.
"There were protests across Europe supporting the moves made by
Greece and we have managed for the first time through contacts with
foreign leaders to create a positive stance on our requests," he
said at a televised meeting with President Karolos Papoulias.
EU officials said intensive formal and informal consultations were
under way between Athens, the Eurogroup and the European Commission,
with Italy and France also involved in the search for a compromise.
Germany and other euro zone countries were standing firm on their
insistence that there can be no roll-back of reforms already
implemented under the bailout and that Greece will have to repay all
it has borrowed, they said.
Greek bond yields fell sharply and shares rallied after government
spokesman Gabriel Sakellaridis confirmed Athens would send a formal
application on Wednesday.
"Let's wait today for the request for an extension of the loan
agreement to be submitted by Finance Minister (Yanis) Varoufakis,"
he told Antenna TV, adding: "We will not back down on certain points
that we consider red lines. The (bailout) memorandum died on Jan.
25."
That was the day Greek voters elected a government led by Tsipras's
hard left Syriza party, which had promised to scrap the 240 billion
euro bailout, reverse austerity measures and end cooperation with
the hated "troika" of inspectors from the Commission, the European
Central Bank and the IMF.
Commission President Jean-Claude Juncker was quoted by a German
magazine as saying he was collaborating with the head of the
Eurogroup to find a solution.
"I am working together with Eurogroup President Jeroen Dijsselbloem
to achieve an extension of the existing program, in order to bridge
the time until summer," he told WirtschaftsWoche in an interview
published on Wednesday.
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ECB REVIEWS LENDING
The ECB's governing council will meet later on Wednesday (10:00 a.m.
EST) in Frankfurt to decide whether to continue and possibly
increase emergency lending assistance to Greece's banks, plagued by
deposit withdrawals.
The ECB is not expected to pull the plug this week but Germany's
Bundesbank is leading opposition to any increase in the funding by
the Greek central bank, people familiar with the situation told
Reuters.
Without added liquidity, the banks face a tightening squeeze as
savers withdraw money that could force Greece to introduce capital
controls if there is no deal.
A source close to the Greek government said the loan request would
be based on a text drawn up earlier this week by EU Economics
Commissioner Pierre Moscovici, which was discarded by euro zone
finance ministers when they met on Monday.
The Moscovici draft would also have committed Greece not to take
unilateral steps to reverse measures implemented under the bailout,
but Tsipras told Syriza lawmakers on Tuesday he would hasten
legislation to scrap labor market deregulation.
With several euro zone countries needing parliamentary ratification
of any change or extension, time is running short.
Dijsselbloem has said Greece must request an extension of the
existing bailout by the weekend or the program will expire at the
end of this month. Greece could then run out of money within weeks
since it has to make hefty repayments to the IMF in March.
As the deadline approaches, several European leaders called Tsipras
to seek a solution, including Italian Prime Minister Matteo Renzi,
French President Francois Hollande and Cypriot President Nicos
Anastasiades, as well as Juncker.
(Additional reporting by Renee Maltezou and Deepa Babington in
Athens, Jan Strupczewski in Brussels, Caroline Copley in Berlin and
Paul Carrel in Frankfurt; Writing by Paul Taylor and David Stamp;
Editing by Sonya Hepinstall and Paul Taylor)
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