France hints euro zone should ease stance

for Greek deal

A
carnival-goer dressed as a banker with a Euro sign on his hat takes part in an anti-austerity pro-government demonstration in front of
the parliament in Athens February 15, 2015.

BY YANN LE GUERNIGOU AND RENEE MALTEZOUMon Feb 16, 2015

(Reuters) - Debt-laden Greece and EU paymaster Germany struck hardline postures
ahead of a crucial meeting of euro zone finance ministers on Monday on the future of
an unpopular international bailout for Athens, but France called for a compromise.
With officials involved in preparatory talks offering conflicting assessments of whether
there had been progress on an interim compromise, German Finance Minister
Wolfgang Schaeuble maintained a typically tough line, saying 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.

"What I have heard so far has not strengthened my optimism. It seems like we have no
results so far," he said as he arrived for talks starting at 3 p.m. (1400 GMT) in Brussels.
"I'm quite sceptical. The Greek government has not moved, apparently."
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. On arrival in Brussels, he urged the Greeks to
extend their current deal to allow time for talks.
EU Economics Commissioner Pierre Moscovici, a former French finance minister,
declined to discuss what might happen if they failed to reach a deal. The "only aim", he
told reporters on arrival for the meeting, was to keep Greece in the euro zone, fully
respecting its commitments to creditors while "taking into account the programme
that the Greek voters chose".
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 240 billion euros ($270 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.
Greek Finance Minister Yanis Varoufakis said his country would no longer be treated
as a "debt colony" subjected to "the greatest austerity for the most depressed
economy".
"The lines that we have presented as red will not be crossed," he said in a New York
Times article.
"Our government is not asking our partners for a way out of repaying our debts. We
are asking for a few months of financial stability that will allow us to embark upon the
task of reforms that the broad Greek population can own and support, so we can bring
back growth and end our inability to pay our dues."

Tsipras had a late telephone call with European Commission President Jean-Claude
Juncker on Sunday, whose office said the EU's 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 there was "fortunately" some chance of a
deal. He appeared to be positioning France as a compromise broker.
Germany had a point in insisting that Greece stick to commitments made to its
creditors, Sapin said, 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.
The Greek government was behaving "quite irresponsibly", he said On
Deutschlandfunk radio.
FINANCE AND POLITICS
Deposit outflows in Greece have picked up as initial talks have shown little result. The
ECB has allowed emergency funding for banks by the Greek central bank so far, but a
failure of the debt 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 programme 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.
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.
Tsipras has requested a bridge programme 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 programme 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 climb-down so soon.
Even a cosmetic change could have practical consequences. An "extension" may not
prompt many euro zone national ratifications unless it involves additional funds from
euro zone governments.
Any new financing programme, on the other hand, might require parliamentary
approval in several countries 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 EU veteran as among hard core of opponents
to Greece's plan.
($1 = 0.8785 euros)
(Additional reporting by Michael Nienaber, Andrew Callus and Francesca Landini;
Writing by Jeremy Gaunt; Editing by Paul Taylor and Giles Elgood)
Posted by Thavam