Greece Rejects Extension of Current Terms of Bailout
Policy + Politics

Greece Rejects Extension of Current Terms of Bailout

Europe’s Finance Ministers met with their Greek counterpart, Yanis Varoufakis today in an effort to resolve his country’s troubled fiscal condition, but in an early evening press conference in Brussels, there seemed little evidence that they had actually heard what he had to say.

It was not possible Monday afternoon to know exactly what Varoufakis said in the closed-door meeting today, but he gave a very clear and unambiguous presentation of his views in an op-ed published in The New York Times this morning.

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Varoufakis is the finance minister for a new Greek government led by the Syriza party, which came to power on promises to do away with much of the austerity imposed on Greece as part of two deals to bail the country out in the aftermath of the financial crisis. The current agreement, under which the Greek government has received tens of billions of Euros in bailout money, is set to expire at the end of the month.

The Eurogroup members have made it clear that they want Greece to request a renewal of the program, something Varoufakis and Greek Prime Minister Alexis Tsipras, have both said is not acceptable.

There has been much speculation that Athens’ refusal to consider an extension of the program is a bluff, or a bargaining position. The fact that Varoufakis is an economist who specialized in the study of game theory only enhanced the idea. (“He’s executing the madman strategy,” some claimed.

But in his op-ed Wednesday, Varoufakis was adamant: the Greeks are not bluffing.

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“I am often asked: What if the only way you can secure funding is to cross your red lines and accept measures that you consider to be part of the problem, rather than of its solution?” he wrote. “Faithful to the principle that I have no right to bluff, my answer is: The lines that we have presented as red will not be crossed. Otherwise, they would not be truly red, but merely a bluff.”

He continued, “We shall desist, whatever the consequences, from deals that are wrong for Greece and wrong for Europe. The ‘extend and pretend’ game that began after Greece’s public debt became unserviceable in 2010 will end. No more loans — not until we have a credible plan for growing the economy in order to repay those loans, help the middle class get back on its feet and address the hideous humanitarian crisis. No more ‘reform’ programs that target poor pensioners and family-owned pharmacies while leaving large-scale corruption untouched.”

It’s hard to read statements that lines “will not be crossed” and that there will be “no more loans” as anything except definitive. Varoufakis would lose all credibility in future negotiations, not to mention with the Greek people, if he tried to walk back a statement like that.

So there was a sense of disconnection when the leaders of the Eurogroup and the International Monetary Fund held a press conference Monday, announcing that the talks with Greece had broken down.

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“Having listened to our Greek colleague, who talks about a bridging arrangement, it may be words, but it sounds to me like an extension of the program,” said Jeroen Dijsselbloem, the Finance Minister of the Netherlands and the current president of the Eurogroup.

Of course, an extension of the program is precisely what Varoufakis took off the table in his public comments. However, Dijsselbloem insisted that there is no other way, adding that Athens has until the end of the week to make the request if it wants to avoid an interruption in payments.

“That’s my way forward,” he said. “I’m not going to speculate about any other way forward. Having listened to the Greek minister, I still think that is also possible from their perspective when they talk about a bridging solution for an intermediate period.”

For his part, Varoufakis didn’t seem to want to hear what Dijsselbloem and his colleagues were saying either – particularly with regard to deadlines and ultimatums.

In the history of the European Union, Varoufakis said, according to multiple press accounts, “nothing good has come from ultimata.” He added, “I have no doubt [the] ultimatum will be withdrawn” in the coming days.”

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