Greek PM wrote to Merkel warning of 'impossible' debt obligation

[March 23, 2015]  By Karolina Tagaris and Angeliki Koutantou
 
 ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras wrote to German Chancellor Angela Merkel last week warning that it would be "impossible" for Greece to make debt payments over the next few weeks without more financial help, his government confirmed on Monday.

In a March 15 letter he warned Merkel that Greece would be forced to choose between paying off loans, owed primarily to the International Monetary Fund, or keeping up social spending, the Financial Times reported on Sunday. (http://on.ft.com/1G0EkJy)

Greece's government spokesman said Tsipras's trip on Monday to Berlin, his first official visit, would not be based on those issues since the letter was sent last Sunday and had already prompted a meeting between Tsipras and EU leaders last week.

"It was a letter which said more or less what we have been saying since last week - that there is a liquidity problem and that what is needed is political initiatives," Gabriel Sakellaridis told Greece's Mega TV.

Asked whether it was a threat to say Athens will choose paying wages and salaries over repaying debt, Sakellaridis said: "It's not a threat, it's reality."

In the letter, Tsipras blamed European Central Bank limits on Greece's ability to issue short-term debt as well as euro zone bailout authorities' refusal to disburse any cash before Athens adopts a new round of reforms, the FT newspaper said.

"It ought to be clear that the ECB's special restrictions when combined with disbursement delays would make it impossible for any government to service its debt," Tsipras wrote.

Representatives at Merkel's office were not immediately available to comment.

The Greek PM said his country was committed to fulfilling its obligations in good faith and to close co-operation with its partners. But he also warned Merkel that failure to find short-term funding could lead to much bigger problems, the FT said.

Tsipras said servicing the debts would lead to a sharp deterioration in Greece's already depressed social economy, "a prospect that I will not countenance".

Mistrust and scepticism among Merkel's allies have spawned portrayals of a Wild West-style showdown with German media casting Tsipras as the outlaw and the German Chancellor as a sheriff fighting to keep the euro zone together.

Although Merkel acknowledged last week that she and Tsipras would talk "and perhaps also argue", she said it would not be a defining moment in the standoff between Athens and its euro zone creditors over the terms of its 240 billion euro ($260 billion) bailout.

(Additional reporting by Shivam Srivastava in Bengaluru; Editing by Louise Ireland)

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