Eurozone ministers delay decision on aid for Greece

German Finance Minister Wolfgang Schaeuble talks with other ministers at the start of a special Eurogroup Finance Ministers Meeting on the Greek crisis. Source: EPA

Skeptical euro zone finance ministers have demanded that Greece go beyond painful austerity measures accepted by Prime Minister Alexis Tsipras if he wants them to open negotiations on a third bailout for his bankrupt country to keep it in the euro.

The ministers postponed until Sunday a decision on whether to recommend starting talks on a new loan for Athens and sought further commitments first on product market liberalization, labor laws, privatization, state reform and more defense cuts, plus a promise to pass key laws next week, officials said.

The Eurogroup session will resume on Sunday, hours before heads of state and government of the 19-nation currency area are due to meet to decide on Greece's fate in the euro area.

Eurogroup chairman Jeroen Dijsselbloem told reporters after the nine-hour session adjourned at midnight that the talks were very difficult and would resume at 0900 GMT on Sunday.

Highlighting the depth of reluctance to grant another rescue to Greece after two bailouts since 2010 worth 240 billion euros, Germany's finance ministry put forward a paper demanding stronger Greek measures or a five-year "time-out" from the euro zone that looked like a disguised expulsion.

Ministers lined up to vent their anger at Tsipras on arrival at their umpteenth emergency meeting on Greece's debt crisis, with Athens staring into an economic abyss unless it wins a pledge of fresh aid before financial markets reopen on Monday.

EU officials forecast a deal would be reached by the end of the weekend to keep Greece afloat, but there was consensus among the other 18 ministers that the leftist government in Athens must take further steps to convince them it would honor any new promises and repay its debts.

Tsipras won parliamentary backing early on Saturday for a tough reform package that largely mirrored measures previously demanded by its international creditors but rejected by Greek voters at his behest in a referendum last Sunday.

Wolfgang Schaeuble, finance minister of its biggest creditor Germany and a stickler for the EU's fiscal rules, said negotiations would be "exceptionally difficult".

Emerging optimism about Greece had been "destroyed in an incredible way in the last few months" since Tsipras won power, he said.

Trust fund or timeout? 

Some ministers were pressing Athens to legislate as early as Monday, notably to raise value-added tax.

The German paper, which Schaeuble presented in the meeting, demanded that Athens transfer state assets worth 50 billion euros into a trust fund to pay down debt, or take a five-year "time-out" from the euro zone during which some of its debt would be written off.

The document, seen by Reuters and first reported by the Frankfurter Allgemeine Sonntagszeitung, said the Greek proposals still lacked "paramount important reform areas" and wrote: "We need a better sustainable solution."

Several officials said no one explicitly raised the possibility of a Greek euro exit in the meeting.

Other ministers spoke of a fundamental lack of trust after years of broken Greek promises and six months of erratic and provocative behavior by the radical leftist Tsipras government.

"We are still far away," Dijsselbloem, the Dutch finance minister, said before the meeting. "On both content and the more complicated question of trust, even if it's all good on paper the question is whether it will get off the ground and will it happen ... We are facing a difficult negotiation."

A preparatory session of deputy finance ministers and senior officials endorsed with reservations a recommendation by EU institutions and the International Monetary Fund that Tsipras's proposals were a basis to launch negotiations, sources familiar with the meeting said.

Finland's state broadcaster YLE reported that the Finnish government had told parliament's influential Grand Committee on Saturday it did not consider the Greek proposal sufficient to start negotiations on a new loan. The government declined to comment. Helsinki's stance has hardened since the populist Finns Party joined a right-wing coalition that took office in May.

Source Reuters

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