Europe

Greece's Varoufakis: 'No debt talks with EU-IMF troika'

  • 30 January 2015
  • From the section Europe
Media captionThe BBC's Mark Lowen says there was "icy body language" after the talks

Greece's new left-wing finance minister says his government will not negotiate over the Greek bailout conditions with the "troika" team from the EU and IMF.

Yanis Varoufakis said he was rather seeking direct talks with eurozone leaders, to try to cancel more than half the money Greece owes.

He was speaking after meeting Jeroen Dijsselbloem, head of the eurozone group of finance ministers, in Athens.

Mr Dijsselbloem said Greece should stick to its reform commitments.

He said Greece and the Eurogroup had a "mutual interest in the further recovery of the Greek economy inside the eurozone" and warned against Athens acting unilaterally in its efforts to renegotiate its bailout.

Greece has endured tough budget cuts in return for its €240bn (£179bn; $270bn) bailout, agreed in 2010 with the "troika" - the European Commission, International Monetary Fund (IMF) and European Central Bank (ECB).

In Berlin, German Finance Minister Wolfgang Schaeuble said the Greeks should abide by their commitments, adding: "There's no arguing with us about this and, what's more, we are difficult to blackmail."


The BBC's Mark Lowen in Athens writes:

The defiance from Athens was clear: no co-operation with the troika overseeing the bailout. The troika creditors are supposed to wrap up their latest review of Greek finances at the end of February, based on which they would dish out another €7bn of bailout money.

Athens needs the tranche to meet debt commitments later this year. But Mr Varoufakis says his government does not want the money and will not honour commitments made under a previous "toxic" programme.

If the cash is not released, Greece could in theory default on its debt within weeks. Emergency funding would then be cut off to Athens, potentially forcing it to print its own currency. But that doomsday scenario is still highly unlikely.

So much time and money has been invested in "saving" Greece over the past five years, and so much would be lost by a eurozone exit, that a compromise of sorts will probably be reached. But tough negotiations lie ahead - and it may come down to which side blinks first.


New agreement?

There was little warmth between the two men at the news conference, with Mr Dijsselbloem making a brusque exit.

Breaking with tradition, Mr Varoufakis wore an open-neck shirt - hanging loose at his belt. Mr Dijsselbloem was dressed conventionally.

On the troika, Mr Varoufakis said "we have no intention of co-operating with a three-member committee whose goal is to implement a programme whose logic we consider anti-European".

Mr Dijsselbloem, who is also Dutch finance minister, said the two sides would decide what would happen next before the bailout programme ends - that is, by 28 February.

He also met Greek Prime Minister Alexis Tsipras in Athens, who led the Syriza radical left-wing coalition to victory in elections on Sunday.

Image caption Mr Tsipras says Greece will negotiate with its creditors but will not default on its debts

Mr Varoufakis, meanwhile, said Greece was not asking for an extension of the existing bailout, but seeking a "new agreement that will emerge following talks between all Europeans".

He said he would seek "maximum co-operation" with Greece's international creditors, but that he would not work through the troika, which he called "a committee built on rotten foundations".

Mr Dijsselbloem rejected Mr Tsipras's idea of convening a European conference on debt. "This conference already exists and it's called the Eurogroup," he told the news conference.

Tensions over debt

Syriza won on an anti-austerity platform, promising to have half of Greece's debt written off, and to roll back on deep cuts to jobs, pay and pensions.

The country's economy has shrunk drastically since the 2008 global financial crisis, and high unemployment has thrown many Greeks into poverty.

The new government has already pressed ahead with cancelling major privatisation projects, including of the two main ports of Piraeus and Thessaloniki.

But EU officials have warned there is little appetite among eurozone countries for cutting the debt.

Greece has about €20bn (£15bn; $22.5bn) to repay this year, according to the Greek finance ministry.

Economists estimate that Greece needs to raise about €4.3bn in the first quarter.

Raoul Ruparel, head of economic research at Open Europe think-tank, told the BBC that maturing bonds worth about €6.5bn would have to be paid off to the ECB in July and August.

Less worrying for the new government are the €4bn in T-bills - short-term debt that can usually be rolled over. About €9bn in loans also has to be repaid - spread quite evenly through the year.

Greek economy in numbers

  • Average wage is €600 (£450: $690) a month
  • Unemployment is at 25%, with youth unemployment almost 50%
  • Economy has shrunk by 25% since the start of the eurozone crisis
  • Country's debt is 175% of GDP
  • Borrowed €240bn (£188bn) from the EU, the ECB and the IMF