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 After euro zone finance ministers failed to agree on a joint
statement on the way forward on Greece's debt crisis, the ECB's
Governing Council held a short-notice teleconference to discuss how
long it could continue to keep Greek banks afloat.
The ECB declined comment, but two sources familiar with the matter
said it concerned the provision of Emergency Liquidity Assistance (ELA)
by the Greek central bank, which the ECB authorized as a temporary
expedient when it stopped accepting Greek government bonds in return
for funding last week.
Arriving for his first European Union summit, Tsipras told
reporters: "I'm very confident that together we can find a mutually
viable solution in order to heal the wounds of austerity, to tackle
the humanitarian crisis across the EU and bring Europe back to the
road of growth and social cohesion."
Chancellor Angela Merkel, vilified by the Greek left as Europe's
"austerity queen", said Germany was prepared for a compromise and
finance ministers had a few more days to consider Greece's
proposals.
"Europe always aims to find a compromise, and that is the success of
Europe," she said on arrival in Brussels. "Germany is ready for
that. However, it must also be said that Europe's credibility
naturally depends on us respecting rules and being reliable with
each other."
Merkel was due to meet Tsipras privately on the sidelines of the
one-day informal EU summit.
Other leaders said it was up to Greece to respect budget discipline
and economic reform commitments made by previous governments if it
wanted continued aid.
ECB executive board member Peter Praet said the ECB would apply its
existing ELA rules to Greece. "It is key that the banks benefiting
from emergency liquidity assistance remain solvent," he told the
Financial Times.
His comments appeared to signal that the central bank could cut the
cash lifeline if Greece failed to reach a deal with its creditors
before the 240 billion euro bailout expires at the end of this
month, exposing Greek banks to a risk of capital flight and
collapse.
Analysts say that in turn could trigger a Greek exit from the euro
zone, potentially causing wider financial turmoil.
Highlighting the precariousness of Greece's position, tax revenues
fell about 1 billion euros short of the budget target in January as
Greeks held off payments before the Jan. 25 election, anticipating
that the new leftist government would scrap an unpopular property
levy.
SHORT SHRIFT
Euro zone finance ministers in the Eurogroup will try again on
Monday to bridge their differences, but at Greek insistence, there
will be no preparatory talks between officials from Athens and the
European Commission, the IMF and the ECB. Tsipras has vowed no
longer to cooperate with the "troika" of lenders.
A Greek official said the hard left Syriza party leader, elected on
a tide of public anger against austerity last month, was determined
to put the Greek crisis at the center of the Brussels summit.
However other EU officials said it would be largely devoted to the
conflict between Ukraine and Russia.
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Merkel and French President Francois Hollande flew in from Minsk
after brokering an uncertain ceasefire in Ukraine in overnight talks
with Russian President Vladimir Putin and his Ukrainian counterpart,
Petro Poroshenko.
Greek Finance Minister Yanis Varoufakis refused to sign up to a
joint statement at Wednesday's Eurogroup meeting because it referred
to the bailout and its continuation, he said.
"HUNG UP ON WORDING"
The Greek official accompanying Tsipras sought to depict the
difference as largely semantic, saying: "We will try to reach an
agreement and explain that we shouldn't get hung up on wording."
Playing down the threat to the banking system if creditors cut off
funding after Feb. 28, the official said: "If we have a conclusion
that says there is a program in place, or if we are close to an
agreement, no liquidity problems will exist."
The euro zone, led by Germany, but also the ECB and IMF, are
insisting on firm conditions for any "bridge" financing. Other
governments, including Ireland, Portugal and Spain, which have had
to seek help under tough conditions, are also keen their own voters
do not see Tsipras winning a better deal than they did.
EU officials play down the risk of Greece being forced out of the
euro zone, something Tsipras and most Greeks do not want and which
could send destabilizing ripples across the bloc as it faces a
confrontation with Russia over Ukraine.
However, the politics of the Greek debate are difficult.
"The real risk in Athens seems to be that Tsipras has raised
expectations to such an extent that he could find it extremely
difficult to back down from his rhetoric and strike a deal which the
rest of the Eurozone could accept," Berenberg Bank economists wrote
in a note on Thursday.
(Additional reporting by Jan Strupczewski, Alastair Macdonald, Foo
Yun Chee, Robin Emmott, Tom Koerkemeier, Ingrid Melander, Barbara
Lewis, Adrian Croft, Philip Blenkinsop and Julien Ponthus in
Brussels, Jeremy Gaunt, Lefteris Papadimas and Angeliki Koutantou
and Deepa Babington in Athens; Writing by Alastair Macdonald and
Paul Taylor; editing by David Stamp)
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