EU running out of patience with Greece

March 19, 2015 09:42 AM

EU chief executive Juncker has been trying to build bridges between Tsipras and Greece's creditors. His tone of exasperation suggested even Athens' friends are angry at his government's mixture of belligerent rhetoric and procrastination.

Another sympathizer, the German Social Democrat speaker of the European Parliament Martin Schulz, warned: "We need to keep our cool. The government in Athens must understand that it is pointless to have an ideological debate."

Two EU/International Monetary Fund bailouts totaling €240 billion have kept Greece from bankruptcy since 2010 but its economy has shrunk by 25%, partly due to austerity measures imposed by the lenders. It risks running out of cash without more aid or permission to issue more short-term debt.

EU sources said Greece had refused to provide any update on public finances or reform plans in a conference call of senior Eurozone officials on Tuesday and had denied EU, IMF and European Central Bank experts access to government buildings in Athens, insisting all meetings take place in a hotel.

The discussions had not gone beyond procedural issues of who would be allowed to talk to whom, the sources said.

Asked whether the experts had been kicked out, an EU official said: "The talks in Athens were paused yesterday. This is normal procedure and can be helpful to take stock. There is willingness to talk but the Greeks must deliver."

"LIQUIDITY PROBLEM"

Deputy Prime Minister Yannis Dragasakis, in a television talk show early on Thursday, accused the creditors' team of exceeding their authority.

"The technical teams came to collect facts, but they then requested things which went beyond their jurisdiction. For example, they wanted to review the government as a whole, every ministry's program and the reforms," he told Alpha TV.

Dragasakis acknowledged Greece faced a liquidity problem and needed the cooperation of its European lenders to keep paying salaries, pensions and debt repayments: "We haven't received any (bailout) tranches since August 2014 but we have been meeting all of our obligations," he said. "This has its limits."

The ECB agreed late on Wednesday to raise the limit on emergency lending to Greek banks by €400 million to €69.8 billion, banking sources said. Bankers said savers withdrew about €300 million in deposits on Wednesday.

"The uncertainty over the lack of progress in negotiations and the negative news flow has affected sentiment," one banker told Reuters. "It's not a huge amount. But the worry is whether this is the start of a trend that could get worse."

European Parliament President Schulz said Greece's financial situation was "dangerous" and it needed 2-3 billion euros in the short term to avoid bankruptcy. "Time is short," he told German radio. "So it would be good if Greece fulfils the obligations that it has agreed to -- then further money will flow."

Greece has asked to receive some €1.9 billion in ECB profits on Greek bond holdings, which finance ministers have linked to progress in implementing the program. It also wants ECB permission to issue more short-term treasury bills, which only Greek banks are willing to buy.

Tsipras' Syriza party won a general election in January on a platform of scrapping the bailouts, ending austerity and refusing to cooperate with the "troika" of institutions -- EU, ECB and IMF -- supervising its rescue program.

The prime minister lambasted EU "technocrats" on Wednesday for demanding prior consultations on the cost of a "humanitarian bill" adopted by parliament to provide food stamps and free electricity to the poorest Greeks worst hit by austerity.

Athens has made no move in the month since the Brussels agreement to bring forward legislation to meet its commitments under the bailout agreement.

The chairman of the Eurogroup of finance ministers, Jeroen Dijsselbloem of the Netherlands, hinted this week that Greece might have to introduce capital controls restricting cash withdrawals, as Cyprus had done, if financial stress got worse.

German Finance Minister Wolfgang Schaeuble has warned that the risk of an accidental Greek exit from the euro zone is rising, while insisting that Berlin wants to avoid that.

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