Eurozone finance ministers have rejected Greece's bid to get back badly-needed cash, driving Athens closer to the brink of a potential bankruptcy next month. But relief could be on the horizon.
The Eurogroup on Wednesday dashed Greece's hopes of a 1.2-billion euro ($1.3 billion) band-aid to slow the bleeding of the country's state coffers.
The setback comes after the Greek government appealed for the European Financial Stability Facility (EFSF) to return the money, which Athens said it had overpaid earlier this month when it transferred 10.9 billions of untapped euros back to the Luxembourg-based rescue fund, intended for the recapitalization of Greek banks.
Greece's leftist leaders, which came to power in January, claimed they had found out too late that their predecessors had taken the 1.2 billion euros out of the country's own Hellenic stability fund, and not the EFSF.
However, Prime Minister Alexis Tsipras' plea fell on deaf ears. In a telephone conference on Wednesday, EU finance ministers agreed that Greece was not legally entitled to the money. Paymaster Germany was among the countries opposing the reimbursement.
"We see no reason to release it," German Finance Ministry spokesman Martin Jäger told a news conference on Wednesday. However, he added that the fund would still be available to Greece, should it need to recapitalize its banks in future.
Running out of money
The decision follows reports that Athens will run out of money on April 20 without a fresh cash injection, Reuters said on Tuesday, quoting a source familiar with the nation's finances. With 15.5 billion euros in debts coming due through August, a Greek exit from the eurozone - the so-called 'Grexit' - is looming larger than ever.
Still, Greece's international creditors are refusing to release the remaining seven billion euros of the 240-billion-euro bailout until Athens presents a credible list of reforms.
On Wednesday, European Commission President Jean-Claude Juncker said that the Greek Prime Minister had committed to send Brussels a blueprint no later than early next week.
"I have to recognize that I was very pessimistic during the last weeks, because there was no progress whatsoever. But now we are back in a normal process," a cautiously optimistic Juncker said during a session at the European Parliament.
"I do think that we will come to a conclusion, which would be both in favor of Greece, my beloved Greece, and of the European Union."
Kiss and make up
The last months' impasse has been overshadowed by bitter acrimony between Greece and Europe's economic powerhouse and key bailout-contributor Germany, which has demanded strict fiscal discipline in return for financial aid.
Greek voters' anger at such austerity measures is what helped carry Tsipras' Syriza party into office. But it's been a rude awakening for the relatively inexperienced Prime Minister, who has had to bite the bullet and strike a more compromising tone in an effort to win over German Chancellor Angela Merkel and her hawkish Finance Minister Wolfgang Schäuble, who hold the key to keeping Greece in the eurozone.
To this end, Tsipras on Monday visited Merkel on her home turf in Berlin. The meeting ended with both calling for a détente.
Relief after all?
In a first sign that relief could be on the horizon for Athens, the European Central Bank (ECB) on Wednesday moved to loosen the leash on Greek banks, a source told Reuters, increasing the size of the emergency fund they can tap from the Greek central bank from 69.8 billion euros to above 71 billion.
But as a reminder of how uncertain the future remains, the eurozone's banking watchdog ordered the banks to stop purchasing any more short-term government debt, saying this would jeopardize their financial health.
pad/hg (AFP, Reuters)