Greek debt talks collapse after draft deal is dismissed as “absurd”
Greek government brands proposed eurozone debt deal as “unacceptable”, ending crunch talks with its creditors in dramatic events in Brussels 
Could it be the end of €1 souvenirs in Greece? The country’s future in the single currency could be decided today
• Eurogroup meeting abandoned after three hours
• Greek government dismisses plans to continue accepting austerity in return for its bailout as “absurd”
• Yanis Varoufakis: “We are asking for a few months of financial stability”
• Prospect of further meeting to agree deal later this week emerges
• Grexit is ‘inevitable’, former Chancellor Ken Clarke warns
18.43
I’ve been told #Eurogroup broke up even before finance ministers got a chance to discuss draft #Greece statement
— Peter Spiegel (@SpiegelPeter) February 16, 2015
18.42 Ms Lagarde of the IMF is up next. More linguistic turns: “An extension continues an existing programme, and a bridge is with a view to what is next,” she says.
18.40 EU semantics in full flow
So the fight continues over “extension” (euro) versus “bridging solution” (Greek). “They’re different words but same solution”.
— Emily Purser (@EmilyPurserSky) February 16, 2015
Eurogroup Greek presser turning into a discussion of linguistics: “there are words and there are things”. Now defining which is which.
— James Mackintosh (@jmackin2) February 16, 2015
18.38 Mr Dijsselbloem:
The best way forward is for an extension of the current programme.
We need a commitment that the Greeks are serious about this.”
18.37 The eurogroup are now waiting for a request to ask for an extension of their current deal. It is only then that the creditors will start to think about providing the government with some flexibility, says Mr Moscovici. “Then we can work with substance.”
“We must be logical; not ideological.”
18.35 Only the Troika can decide whether there can be a relexation of fiscal rules for Greece, says Mr Dijsselbloem
18.34 Mr Dijsselbloem is standing his ground on demands for a Greek surplus and austerity measures:
There has to be a commitment for the Greek government to accept the main features of the programme, and the budgetary targets cannot derail.
These are the commitments we need to keep us broadly on track.
18.32 Q&A time with Mr Dijsselbloem…
18.26 Pierre Moscovici of the Commission has now taken the stage. He’s urging cooperation from the Greeks.
French Socialist @pierremoscovici position on Greece, rules are rules, programme is programme, we’ll be interlocutors but only on that basis
— Bruno Waterfield (@BrunoBrussels) February 16, 2015
. @pierremoscovici : to use flexibility its important to avoid unilateral action and act on basis of cooperation
— Open Europe (@OpenEurope) February 16, 2015
. @pierremoscovici : will continue to engage in dialogue with all our partners that will respect the vote
— Open Europe (@OpenEurope) February 16, 2015
18.24 Mr Dijsselbloem adds this week is the final week left to decide whether Greece remains in its bailout programme. Another meeting could be convened for Friday, he adds.
18.23 Mr Dijsselbloem:
“There should be an unequivocal agreement by Greece to honour its obligations”.
There should also be the commitment by the Greeks to successfully conclude the programme. We should have the assurance that this is their intention.”
“On this basis we stand ready to continue our negotiations. The next step must come from the Greek authorities; they have to make up their mind if they want an extension of the current programme.”
18.21 Mr Dijsselbloem:
The best way forward is for the Greeks to seek an extension of the programme.
The main reason is that in ongoing discussions, we simply need more time. and the best way to do that is to extend the current programme and this would allow us to work on future arrangements.
Such an extension would allow for the Greeks to use the “normal flexibility” of the programme.
18.20 The outcome of the last agremeent, was that we did “not finalise an agreement”.
In general “there is a slight sense of disappointment” at the outcome of the talks between Greece and Troika. There is still “no firm common ground” on how much of the existing bailout will be conformed to by Greece says Mr Dijsselbloem
18.17 The press statement from the head of the Eurogroup Jeroen Dijsselbloem has begun. Mr Dijsselbloem begins by praising Portugal’s economy…
18.13 Game Theory anyone?
So it looks like operation ‘talk all night + achieve nothing’ is being replaced by operation ‘let them sweat’ #Greece
— Jonathan Ferro (@FerroTV) February 16, 2015
18.10 Here’s what’s happened to the euro against the dollar after that news.
18.02
Nobody behaving maturely: Eurogroup putting forward silly statement, Greek government for leaking it provocatively.
— Stanley Pignal (@spignal) February 16, 2015
The sticking point in Greek negotiations is the insistence by euro-zone ministers that Greece extend the current bail-out deal.
— Gavin Hewitt (@BBCGavinHewitt) February 16, 2015
18.00 After this sudden collapse in communication, the eurogroup’s chief Jeroem Dijsselbloem will be delivering a press conference imminently.
You can watch live here.
17.53 In a dramatic turn of events, talks have collapsed today. That statement has put the kybosh on any further talks between Greece and its creditors for today at least.
It’s over – amazing provocation from eurogroup with that draft statement
— Bruno Waterfield (@BrunoBrussels) February 16, 2015
17.48 It’s pretty clear which parts of the draft Eurogroup statement are “absurd” to the Greeks.
The crossed out elements below come directly from the pen of Yanis Varoufakis, reports Sky’s Ed Conway. It seems the Greek finance minister took umbrage to the notion that Greece will complete its current bailout programme.
“We discussed the policy priorities of the new government on the basis of work undertaken by the institutions and the Greek authorities.
The Greek authorities have indicated that they intend to successfully conclude the programme, taking into account the new government’s plans.
We intend to make the best use of the existing built-in flexibility in the current programme. The Greek authorities gave their firm commitment to refrain from unilateral action and will work in close agreement with its European and international partners, expecially in the field of tax policy, privatisation, labour market reforms, financial sector and pensions.”
17.40 Reports that the Eurogroup meeting has now been “put on hold.” That rejected statement seems to have thrown some sand in the wheels.
#awk … EU Official Says Eurogroup Meeting Put on Hold
— Joseph Weisenthal (@TheStalwart) February 16, 2015
17.37 Bruno Waterfield’s got hold of the text of that draft statement.
The second eurogroup statement rejected by Greece
— Bruno Waterfield (@BrunoBrussels) February 16, 2015
17.35 The sticking point in that draft statement seems to be the implementation of the ‘Memorandum of Understanding’ and its attached austerity measures for the new Greek government.
A statement from the Greeks reads:
“Some people’s insistence on the Greek government implementing the bailout is unreasonable and cannot be accepted.
“Those who keep returning to this issue are wasting their time. Under such circumstances, there cannot be a deal today.”
17.20 If Greece and its creditors don’t come up with some acceptable agreement to extend the country’s existing agreement, or more ambitiously, come up with a new one, then it could put the European Central Bank in a bit of a bind.
The ECB will meet on Wednesday to decide whether or not to continue providing emergency liquidity to Greek banks. The ECB has allowed emergency funding for Greek banks worth €65bn. If Greece is not longer part of any bailout agreement, this assistance could be withdrawn all-together, effectively dumping the country out of the euro.
17.15 Some unpromising news emerging from today’s meeting. A draft statement proposed by the Eurogroup has been dismissed as “absurd” and “unacceptable” according to Greek government sources quoted by Reuters.
There’ll be no deal so no all-nighter here at eurogroup. Midnight. Still leaves tricky issue of a statement after the debacle last Weds
— Bruno Waterfield (@BrunoBrussels) February 16, 2015
16.50 Coffee time, folks
Apparently Varoufakis has been saying he is determined to negotiate through the night if necessarily. Other finmins say midnight at latest
— Ed Conway (@EdConwaySky) February 16, 2015
16.30 If you had hopes of a quick resolution to events today, throw them out of the window.
Finance ministers are are done with the preamble and are now beginning to get to the meaty stuff. More than two hours after we kicked off.
Eurogroup ministers have now dispensed with the other bits of the agenda: discussions on #Greece are underway.
— Jennifer Rankin (@JenniferMerode) February 16, 2015
16.00 The parallels between today’s monetary union and the Gold Standard of the inter-war period are often noted.
Much like the malfunctioning fixed exchange rate system that forced deflationary policies on Europe’s economies after the war, today’s eurozone has also forced the highest cost of adjustment on the weakest nations.
Abandoning gold led to the likes of the UK and the Nordic countries to emerge fastest from the depths of the Great Depression.
Doing the same may be more difficult for today’s struggling eurozone economies.
Just been listening to Barry Eichengreen on EMU. Much easier to leave 1930s Gold than €. Break-up risks off broader trade/market collapse
— A Evans-Pritchard (@AmbroseEP) February 16, 2015
15.30 So with finance ministers settling round the table, what’s on the agenda?
Last week’s meeting between Greece and its creditors ended as somthing of a damp squib. But some semblance of a potential Greek deal did emerge.
• Prime Minister Alexis Tsipras has said he is willing to accept about two-thirds of the austerity plans laid out by its creditors, and renegotiate on the remaining third.
• Greece would also like all talk of the Troika to be banned, referring to the ECB, IMF, and EU instead as “institutions”
• More crucially, the new government is demanding a “bridging agreement” to help keep the country afloat while it continues talks.
This would likely involve the raising of cash through the issuance of short-term T-bills. So far, Greece has reached its limit on T-bill issuance and would need the ECB to budge on this, in return for some form of conditionality.
• Otherwise, a relaxation of Greece’s primary surplus targets from their current 4.5pc of GDP, to around 1.5pc has also been touted. This would allow the government to carry out some of its fiscal expansion plans such as raising the minimum wage and re-hiring private sector workers
• A debt-write off is all but an impossibility right now, but this does not preclude a significant debt forgiveness for Greece in the form of a bond swap with growth linked bonds, or the issuance of perpetual bonds which would extend out Greece’s maturity
15.10 Could it be a case of David v Goliath today? Well, sort of
This #Merkel vs #Tsipras float strides across streets of Cologne during today’s carnival. #Greece crisis everywhere.
— Maxime Sbaihi (@MxSba) February 16, 2015
15.05 Panic over everyone. Yanis is in the building.
Ok. Sounds like @yanisvaroufakis has just arrived at #Eurogroup meeting. We can commence our waiting.
— Peter Spiegel (@SpiegelPeter) February 16, 2015
15.00 Hmmm…the eurogroup meeting seems to have kicked off without the main attraction – Yanis Varoufakis.
Not exactly sure where is he right now, but rumours he could be meeting separately with the Commssion’s economics tsar and the eurozone’s Jerome Dijsselbloem
Other sources: Varoufakis meeting separately with Dijsselbloem, Moscovici
— Demetris Nellas (@dn1164) February 16, 2015
Varoufakis yet to appear at eurogroup meeting http://t.co/tlR3XJnTZ3
— Forex News™ (@WorldForexNews) February 16, 2015
14.35 Writing in the New York Times today , Greece’s finance minister said his country would not cross the “red lines” it has presented to its creditors.
Well, Mr de Guindos of Spain, says his country also has a red line: the repayment of all of Greece’s loans in full. Zing.
14.25 Contender for the soundtrack for today’s meeting, courtesy of the Rolling Stones and Immanuel Kant
Today’s Varoufakis oped made me think of the great line from Hedwig: “You, Kant, always get what you want.”
— Joseph Weisenthal (@TheStalwart) February 16, 2015
14.14 Could it be a case of the northen creditor bloc v the rest today? Germany, Austria, and now the Fins have all come out singing from the same hymn sheet today.
Finland, who are due to hold a general election next month, have been ardent opponents of any Greek debt relief. And not much seems to have changed today.
Finnish FinMin Rinne: Finland isn’t ready to discuss a new programme. Current programme is the basis for negotiations. #Eurogroup
— Jarno Hartikainen (@JarnoHa) February 16, 2015
There are softer tones emerging from the rest however. Spain’s finance minister has now joined the calls from his French and Irish counterparts about finding a compromise:
Spanish FinMin Luis de Guindos: We’ll be looking for solution that is “most beneficial for everyone”, but “rules must be respected”. #Greece
— Open Europe (@OpenEurope) February 16, 2015
14.12 Lithuania, the newest members of the euro, are at the party
MT @gksteinhauser : “We all have to pour some water into the wine” in #Greece talks, says Luxembourg Fin Min.
— Berlaymonster (@Berlaymonster) February 16, 2015
14.10 Our man at the Eurogroup Bruno Waterfield thinks Michael Noonan, Ireland’s finance minister is a pretty good gauge of where things stands between Europe’s leaders.
Mr Noonan told reporters earlier today he thinks there will be a move to give Greece more time to negotiate a new debt deal and the “the ball is back in the Greek court to explain to the rest of us what exactly are looking for.”
Quotes from Bruno Waterfield:
The programme runs out for Greece at the end of February and I don’t know what their specific requests are.
So I would like it if the Greek finance ministers were to put specific requests to the meeting today. Obviously many of the European countries are amenable to making progress today. We would certainly accede to a Greek request for an extension of the programme.
If that were to happen some of the roadblocks would fall away then and it would be possible to get down to specifics. Nothing happened over the weekend that could be described as a breakthrough.
“The second alternative would be the negotiation of a new programme but with the programme ending so soon, if it goes to a new programme, time begins to run out.
“In my view extension of the programme is the most immediate way of making progress but I would rule out both; an extension of the current programme and the negotiation of a new programme somewhere around mid-summer.
14.00 The clamour for *another* Eurogroup meeting grows
Slovak fin min Kazimir suggests he expects to come back for another meeting later this week #Eurogroup #Greece
— Open Europe (@OpenEurope) February 16, 2015
13.58 Former Tory chancellor Norman Lamont has told Sky News Greece needs an outright debt-write off should it stay in the euro.
The prospects of that happening however are almost nil, and no longer form part of the demands being made by Syriza from their creditors. A prolongation of Greece’s debt profile, and a bond swap are more likely outcomes.
Here’s Mr Lamont in full:
I think the next best thing would be if a large part of Greece’s debts were just simply written off, rather than extending, cutting the interest rate, which is actually wiping off part of their debt but pretending you haven’t done so.
Frankly, I think the austerity which has been inflicted on Greece – and I’m a supporter of balanced budgets, I’m a supporter of austerity in many countries – but I think what was imposed on Greece was just not practical, and I think it has been completely counterproductive.”
13.52 Should no deal be concluded today, there may well be another interminable session of the Eurogroup scheduled later this week, with Thursday or Friday touted as potential dates.
Ireland’s Michael Noonan is hinting the end of the week could be when we get to do this all over again. Joy.
Irish FinMin Noonan: There is a remote possibility for a new Eurogroup mtng on Friday if talks today fail. #Greece
— Yannis Koutsomitis (@YanniKouts) February 16, 2015
13.50 A more concilliatory tone is being struck by France’s finance minister, who is concurring with Greece’s claims that it needs more time to be able to negotiate a new bail-out arrangement.
French FinMin Sapin: Good solution on #Greece is extension of current programme to allow time for talks ~RTRS /via @FGoria
— Yannis Koutsomitis (@YanniKouts) February 16, 2015
The Irish also seem to be on board. From their finance minister Michael Noonan
Noonan: would certainly accept a Greek request for the extension of the programme, but nothing happened in terms of breakthrough over wknd
— Open Europe (@OpenEurope) February 16, 2015
13.40 The great and good of Europe’s policymakers are making their way to the Eurogroup meeting.
Speaking to reporters, Germany’s Wolfgang Schauble has repeated he is sceptical about the chances of any deal being struck and reiterated that Greece needs to agree to extend its current programme which expires at the end of the month.
His Austrian counterpart has also pitched in:
Austria FinMin Schelling: Greece cannot have new terms on its current programme
— Live Squawk (@livesquawk) February 16, 2015
Περιμένοντας τους υπουργούς οικονομικών. W. Schauble- μόνη προταση στο τραπέζι η επέκταση του προγράμματος.
— Eleni Varvitsiotis (@Elbarbie) February 16, 2015
13.25 Worried about a Grexit? Well investment bank Morgan Stanley are giving their investors tips on how best to hedge against the risk that could emerge from the country’s ejection from the monetary bloc.
MS think there is a 23pc chance Greece will be forced to leave, and are recommending investors sell the euro and buy stocks in the interim.
13.10
Unfortunate placement of an ad on a Greek new site:
— Grant Williams (@ttmygh) February 16, 2015
13.00 Greek bond yields are up and stocks down today as hope of a successful end to the Greek drama evaporates.
Greece’s three-year paper has jumped 1.19pc, while the Athens benchmark index is down 4pc.
12.30 Europe’s commissioner for economic affairs Pierre Moscovici, is trying to revive hopes of a successful outcome from today’s talks.
Mr Moscovici, a former French finance minister, told the press there is political will to reach a “positive conclusion”.
Déclaration à mon arrivée à un #Eurogroupe important sur la #Grèce : solidarité et responsabilité/ #Eurogroup doorstep http://t.co/nGXgsUGlHQ
— Pierre Moscovici (@pierremoscovici) February 16, 2015
#Greece Varoufakis – Dijsselbloem meeting concluded in Brussels #eurogroup
— Keep Talking Greece (@keeptalkingGR) February 16, 2015
12.20
Greece made to feel welcome MT @EdConwaySky : Computers here at EC broken. “It’ll work in five minutes,” says EC man. “Five Greek minutes”
— Peter Spence (@Pete_Spence) February 16, 2015
12.15 Greece’s finance minister has penned an op-ed in the New York Times today.
Mr Varoufakis, famously a Game Theory academic in his previous life, argues he is not engaging in “bluffs, stratagems and outside options, struggling to improve upon a weak hand” in Greece’s debt negotiations.
Instead, the “rock-star” finance minister sees himself more as a follower of German Immanuel Kant, evoking the philosopher’s famous “categorial imperative” which “taught us that the rational and the free escape the empire of expediency by doing what is right.”
An excerpt:
The trouble with game theory, as I used to tell my students, is that it takes for granted the players’ motives. In poker or blackjack this assumption is unproblematic. But in the current deliberations between our European partners and Greece’s new government, the whole point is to forge new motives. To fashion a fresh mind-set that transcends national divides, dissolves the creditor-debtor distinction in favor of a pan-European perspective, and places the common European good above petty politics, dogma that proves toxic if universalized, and an us-versus-them mind-set.
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? 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.
Game theorist in see-through game-theory play: *VAROUFAKIS SAYS GREECE NOT BLUFFING IN TALKS WITH CREDITORS
— Jeff Black (@Jeffrey_Black) February 16, 2015
12.00
How encouraging that preparation for today’s #Eurogroup has begun with name calling. Wedgies to follow doorsteps this afternoon? #Greece
— Nick Malkoutzis (@NickMalkoutzis) February 16, 2015
11.55 In other finance minister chit chat, France’s Michel Sapin has hinted at the potential division between Germany and the rest of the eurozone over how to best handle Greece’s demands.
Speaking to France 2 television, Mr Sapin said Europe’s leaders have to “find a way of functioning together”, and the new Greek government is “right” not to cede to an extension of existing bail-out conditions.
His quotes in full:
The Germans are right from a certain point of view. Greece, not the government of today, the country, signed a number of agreements.
They must respect those agreements independently of the change of government. But the Greeks say, and they are right, I support them, ‘we have just changed government, so we are not going to do everything as before.”
11.40 Not promising. Germany’s finance minister Wolfgang Schaeuble has told a radio station today he is “very sceptical” any satisfactory solution can be thrashed out today meeting and called the new Greek government “irresponsible.”
Mr Schaeuble told Deutschlandfunk: “Greece must see that you can’t keep living above your means and then keep making proposals for how others should pay even more.”
“I feel sorry for the Greeks. They’ve elected a government that’s behaving pretty irresponsibly at the moment.”
11.35 In addition to today’s meeting between Greece and its creditors, Wednesday will see the ECB meet in Frankfurt. The central bank is likely to make some decision on the provision of emergency liquidity (ELA) to Greek banks.
This source of financing is contingent on Greece remaining in some semblance of bail-out programme. By removing it, the ECB would effectively be dumping Greece out of the euro, leading to potential capital controls and the reintroduction of the drachma.
Any vote on withdrawing ELA would however require a two-thirds majority from the governing council.
The chief economist of the ECB, Peter Praet, has hinted to a Spanish newspaper that ELA may well continue whatever the outcome of today’s meeting.
ECB’s Praet to Jornal de Negócios on Greek ELAs: “When you have systemic crisis, may need flexibility in terms of duration”. No cut-off yet?
— A Evans-Pritchard (@AmbroseEP) February 16, 2015
11.30
Nothing ever what it seems in EU-Land. Have distinct feeling ECB helping Greeks far more than letting on, trying to outmanouvre North
— A Evans-Pritchard (@AmbroseEP) February 16, 2015
11.10 An interesting political development could be weighing on Germany’s leaders in the run up to today’s showdown.
The eurosceptic Alternative for Germany (AfD) has delivered an embarrassing blow to the German Chancellor Angela Merkel by defeating her Christian Democrats in regional elections in Hamburg.
The CDU saw their vote share fall by 5.9pc in one of their worst recorded outings in recent history.
In an ominous sign of the state of public sentiment in Germany, the AfD- which is not opposed to the EU – wants an end to the single currency, starting with the expulsion of poorly performing economies like Greece.
11.00 Three hours before we kick off in Brussels and Greek daily Ekathimerini is reporting a Syriza spokesman who has dubbed Germany’s behaviour in the eurozone as “irresponsible.”
“Who is irresponsible and who is responsible is subjective” Gavriil Sakellaridis told Parapolitika. “I could also say that Germany’s behavior is irresponsible. But I don’t want to trade in smear words.”
10.30 In other eurozone news, the monetary bloc’s trade surplus has grew to a record in December. At €23.3bn, the euroarea’s trade surplus is bigger than that boasted by China in the last decade.
Net trade also contributed 0.3pc to quarter-on-quarter GDP growth in fourth quarter of 2014.
The eurozone’s trade surplus with the rest of the world just hit a record – €195bn in 2014, €24.3bn in December alone
— Gareth Gore (@gareth_gore) February 16, 2015
9.15 Stocks have taken a tumble ahead of the Eurogroup meeting.
The impression is that Greece’s left wing government won’t be able to make a deal with its creditors today.
Jeremy Cook, chief economist at currency firm World First, said: “If we get some form of compromise today, that will obviously give EU parliaments a fortnight to vote upon it.”
“I am certainly cancelling any plans that I had on February 27, to make sure that I am here to cover what is likely to be a 13th hour meeting, to make sure that Greece is not without a bailout come March 1,” he continued.
And they’re down again. Greek stocks -4%. Banks worst performers on Stoxx Europe 600 ahead of Eurogroup meeting
— Deirdre Bosa (@dee_bosa) February 16, 2015
9.00 Here’s our best impression of what’s coming up, and when (all times GMT).
• 9.30 Technical briefing ahead of main Eurogroup meeting ( EC website )
• 12.30 Finance minister arrive – expect brief comments as they do ( EC audiovisual )
• 14.00 Meeting begins ( EC website )
We’re not sure when this will all wrap up, but remember that Wednesday’s meeting finished after 11pm, with a presser after midnight.
Greek Finance Minister Yanis Varoufakis, fourth right Photo: AP
8.30 Greece’s finances are now in a precarious state.
At the start of the month Bloomberg was told the country could face a “cash crunch” as early as March.
Investment bank JP Morgan has said that Greek bank deposits are now falling at a rate of €2bn a week (£1.48bn).
It warned that at such a pace the country’s banks will run out of collateral in 14 weeks .
Total outflows have hit roughly €21bn this year, with €4bn of that in February, the bank said.
This implies that bank borrowing from the European Central Bank and the Bank of Greece has reached nearly €80bn in the year to date.
8.15 All eyes on Greece today, as Yanis Varoufakis , the country’s finance minister, presses for a compromise with his European peers.
He wants the burden of Greece’s debts reduced, but has so far been unsuccessful. Wednesday’s Eurogroup meeting ended in deadlock .
Comments from Wolfgang Schaeuble , the German finance minister, on Monday morning also lacked promise.
Speaking in a radio interview with Deutschlandfunk, the minister said that he was “very sceptical” that a Greek solution will be reached today.
French finance minister Michel Sapin said that any Greek debt writedown would be the “worst message”, as fears grow that any deal would spread contagion into other states.
If a deal is not struck, then Greece will toe further towards the expiry of an assistance programme provided by the Troika – composed of the EU, European Central Bank, and International Monetary Fund.