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 German Finance Minister Wolfgang Schaeuble maintained a typically
tough line, telling German radio Greece had lived beyond its means
for a long time and there was no appetite in Europe for giving it
any more money without guarantees.
French Finance Minister Michel Sapin hinted at a slight easing of
euro zone opposition to Greek requests for an end to austerity and a
new debt deal, saying Europe must respect the political change in
Athens.
Radical leftist Greek Prime Minister Alexis Tsipras's government was
elected last month on a pledge to scrap the bailout, reverse
austerity measures and get rid of supervision by the hated "troika"
of the European Commission, the European Central Bank and the IMF.
Greece's euro zone partners to date have shown little desire to cut
Athens any slack on the austerity demanded in return for some 240
billion euros ($274 billion) in financial assistance.
If Monday's meeting ends in a breakdown, Greece could be headed for
a credit crunch that could force it out of the euro zone. Progress,
however, could mean further negotiations, perhaps later in the week.
Government spokesman Gabriel Sakellaridis showed no sign that Athens
was backing off from its core demands. "The Greek government is
determined to stick to its commitment towards the public ... and not
continue a program that has the characteristics of the previous
bailout agreement," he said.
Tsipras had a late telephone call with European Commission President
Jean-Claude Juncker on Sunday, whose office said the EU chief
executive was "making a last effort in an extremely difficult
situation".
Speaking on France 2 television, Sapin took a much softer line than
has been heard from the euro zone in recent weeks, saying that there
was "fortunately" some chance of a deal. He appeared to be
positioning France to try to broker a compromise.
Sapin said Germany had a point in insisting that Greece stick to
commitments made to its creditors, but Athens was justified in
saying the Greek people had mandated the new government to pursue a
different policy.
"Greece must respect European rules... be we must respect the Greek
people's vote. There is a new policy and we must help Greece put
this policy in place," he said.
There was no such flexibility from Schaeuble.
On Deutschlandfunk radio, he said he was skeptical there would be a
deal on Monday and that the Greek government was behaving "quite
irresponsibly".
FINANCE AND POLITICS
Bank deposit outflows in Greece have picked up as negotiations have
shown little result. The ECB has authorized emergency funding for
banks by the Greek central bank so far, but a failure in the talks
could mean the imposition of capital controls.
Euro zone member Cyprus was forced to close its banks for two weeks
and introduce capital controls during a 2013 crisis. Such controls
would need to be imposed when banks are closed. Greek banks are
closed next Monday for a three-day weekend marking the start of
Orthodox Lent.
The ECB will review its policy on Wednesday in the light of the
Brussels talks, but an ECB source said it was unlikely to pull the
plug on Greek banks as long as the terms of a future program were
still under discussion.
Greek bond yields inched up on Monday but investors remained
cautiously optimistic that Athens would reach a new debt deal with
its European partners later in the day.
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The chief executive of Morgan Stanley bank, James Gorman, said he
believed the likelihood of Greece negotiating a debt restructuring
were greater than the country being forced out of the euro. He also
doubted that the monetary union was in danger.
"I believe a euro zone break-up is highly unlikely, for reasons that
go beyond the economy... but if a country leaves the euro, this will
not mean the end of the monetary union," he told Italian daily la
Repubblica.
Tsipras has requested a bridge program to be put in place for a few
months while a new debt relief deal is agreed to replace the
existing bailout, which has already forced drastic cutbacks onto
ordinary Greeks.
The current program expires at the end of the month. A Eurogroup
meeting last week ended without progress, although technical talks
were later agreed and took place over the weekend to identify the
gaps between the bailout scheme and the new government's plans.
Some of the problems facing the Eurogroup are semantic. The Greeks,
for example, will not countenance anything that smacks of an
"extension" to the old bailout or a continued role for the "troika".
Tsipras, who rode to power on a wave of anti-austerity and
anti-bailout anger, would have a hard time explaining a climbdown so
soon.
But even a cosmetic change could have practical consequences. An
"extension" may not prompt many euro zone national ratifications
unless it involves additional financial commitments from euro zone
governments.
Any new financing program, on the other hand, might require several
national parliamentary ratifications and could also bring Germany's
Constitutional Court into play.
Among those requiring a parliamentary vote on a new bailout are
Germany, Slovakia, Estonia and Finland, all identified by one
veteran of EU meetings as part of a hard core of opponents to
Greece's plan.
The Eurogroup's main debate will revolve around how to fund Greece
until any new debt deal. Athens wants to reduce the primary budget
surplus before debt service it is required to run, scrap
privatizations, raise the minimum wage and spending on the poor, and
reverse some labor reforms.
Greece said on Saturday that it was reviewing a 1.2 billion- euro
deal for Germany's Fraport to run 14 regional airports, one of the
biggest privatization deals since Greece's debt crisis began in
2009. It has also pulled the plug on the privatization of the ports
of Piraeus and Thessaloniki.
($1 = 0.8785 euros)
(Additional reporting by Michael Nienaber, Andrew Callus and
Francesca Landini; Writing by Jeremy Gaunt; Editing by Paul Taylor)
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