Tsipras seeks help from Juncker over ECB debt snub | Business| Economy and finance news from a German perspective | DW | 06.03.2015
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Tsipras seeks help from Juncker over ECB debt snub

Greece's prime minister wants to meet with the head of the European Commission in an attempt to break the deadlock over debt repayment. But both the EU and the ECB are taking a hard line, saying Greece must do more.

Greek Prime Minister Alexis Tsipras has called European Commission President Jean-Claude Juncker to request an emergency meeting next week, a government source said Friday.

The move comes a day after the European Central Bank (ECB) refused to offer Greece more leeway on financing as it scrambles to find money to pay 6 billion euros in debts that will come due this month.

ECB chief Mario Draghi said the bank was willing to restart lending to the Greek economy only after it came to an agreement with its partners in the eurozone. The bank recently cut off a key channel of financing for Greek banks, saying it would no longer accept Greek sovereign bonds as collateral for loans.

"If certain conditions are in place as far as economic policy is concerned, that would make the governing council think that in some time from now bonds would again be eligible," he said.

The bank kept up its hard line on Greece even as it announced a plan to buy one trillion euros' worth of government bonds would go ahead next week in an attempt to stimulate economies like Greece's that have been hard hit by the economic crisis and high unemployment.

T-bills are Greece's only short-term financing channel

Greece has identified short-term Treasury bills with three month maturities as the source of liquidity Greece needs to access in order to be able to keep up with its debt payments in the next few months.

The problem is that the ECB had previously set a limit of 15 billion euros for the amount of such bills that can be outstanding. Greece has already hit that limit, and ECB President Mario Draghi has refused to consider raising the ceiling, indicating doing so would be a political decision that must be taken by Eurogroup finance ministers.

If the ECB continues to refuse to allow Greece to issue additional short-term Treasury bills, it will be taking a very large responsibility on itself, Greek Prime Minister Alexis Tsipras warned in an interview with Spiegel Online.

"Then the thriller will return that we saw before February 20."

But that would be a political decision that "should not be taken by technocrats," he said, adding: "The ECB is still holding the rope that's around our neck."

The next meeting of the Eurogroup finance ministers takes place on Monday, when it will consider several economic reform proposals being put forward by Tsipras' government.

European leaders are playing hardball with Tsipras

Earlier on Friday, Germany's "Süddeutsche Zeitung" reported that Tsipras's first request to meet Juncker at short notice had been rejected. It cited a European Commission spokeswoman as saying the two were in "permanent telephone contact."

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The paper said Juncker had told the Greek leader to wait until after Monday's meeting of the eurozone's finance ministers. The Greek finance ministry has said it will present the ministers with an initial batch of concrete proposals in a bid to break the deadlock over access to continued funding.

Juncker had warned Greek voters against choosing Tsipras' far-left Syriza coalition in January's election, but gave the newly elected prime minister an ostentatiously warm welcome to Brussels in early February.

But Juncker's attitude to the new Greek leadership appeared to have hardened once again. On Wednesday, he said in an interview with the Spanish newspaper "El Pais" that Tsipras "still has to tell the Greeks that he is going to have to break certain promises."

sgb/uhe (AFP, SZ, El Pais)

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