Greece blows hot and cold in race to avert cash crunch

Thursday, 7 May 2015 00:00 - - {{hitsCtrl.values.hits}}

Greek Finance Minister Yanis Varoufakis Greece blew hot and cold with its euro zone partners on Tuesday as it struggled to avert a potentially catastrophic funding crunch this month, when it must make a big debt repayment to the IMF as cash reserves dry up. Finance Minister Yanis Varoufakis said after talks in Paris and Brussels that he expected euro zone finance ministers to acknowledge next Monday progress towards a cash-for-reform deal, opening the way to easing Athens’ liquidity crisis. “We are certainly going to have a fruitful discussion on May 11 that will confirm the great progress that has been achieved and will be yet another move, yet another step, in the direction of a final agreement,” he told reporters after meeting European Economics Commissioner Pierre Moscovici. Earlier, Moscovici had warned the euro zone would not even begin to discuss longer-term funding and ways to reduce Greece’s debt until Athens had agreed a “consistent, detailed, complete” economic reform programme with its creditors. His comments appeared to slam the door on Greek hopes of bypassing an interim deal and moving directly to a comprehensive debt relief agreement by the end of June. As a goodwill gesture, a senior privatisation official said Athens was ready to finalise a 1.2 billion euro deal with German operator Fraport to run regional airports and to reopen bidding for a majority stake in the port of Piraeus. Tuesday’s diplomatic flurry came after leftist Prime Minister Alexis Tsipras spoke by telephone on Monday night to German Chancellor Angela Merkel, Europe’s pre-eminent leader and Greece’s chief creditor. Intensive talks also continued with the International Monetary Fund, European Commission and European Central Bank on an interim deal but there was no sign of a breakthrough on key differences over pensions, labour reform and the minimum wage. In a statement, a Greek government official said Athens had made “significant concessions” but that “serious disagreements between IMF and the EU” were blocking the negotiations and complained the two lenders had set contradictory “red lines”. “Against this background, there cannot be a compromise,” the official said. The statement appeared intended to shift the blame for slow progress in talks onto the lenders and show Greeks their government was taking steps to reach a deal. Recent polls have shown Greeks overwhelmingly want Tsipras to agree a compromise to avoid financial chaos.