Sunday, February 1, 2015

Greece wants time for new deal, 'cold turkey' on debt

Greece's new government has offered to produce proposals within a month for a revised debt agreement with its sceptical international partners, insisting it would not take on any more loan tranches in the meantime.

The proposal came after talks in Paris where French Finance Minister Michel Sapin offered his Greek counterpart Yanis Varoufakis backing to craft a deal possibly including some alleviation of its debt load but no outright cancellation.

Varoufakis, in Paris as part of a diplomatic offensive by Greece's leftist leaders to win changes to terms on debt as they roll back on austerity measures, said Athens had allowed itself to become addicted to debt, now at 175 percent of output.

"It isn't that we don't need the money, we are desperate," Varoufakis, standing next to Sapin, told reporters.

"For the last five years, Greece has been living for the next loan tranche. We have resembled drug addicts craving the next dose. What this government is all about is ending the addiction," he said, noting it was time to go "cold turkey".

Setting out a possible timetable to renegotiate its 240 billion euro ($270 billion) bailout, Varoufakis said that if Athens was given till the end of the month to prepare proposals, it could aim to hammer out a realistic agreement with partners six weeks later.

While it would not take on any new loans during that time, the Greek state would seek to agree liquidity with the European Central Bank during that time.

Insisting that there was no question of Greece exiting the euro zone, Sapin renewed Paris's offer to help broker a new deal between Athens and its European and other partners, but ruled out outright debt cancellation.

"Anything that can alleviate the Greek debt burden will be welcome ... but of course there is no question of cancelling the Greek debt," Sapin said, noting that that would simply shift the burden from the Greek taxpayer to other European taxpayers.

Greece's ruling Syriza party says cash reserves are enough to meet obligations of 3.5 billion euros over the February-March period, but a further total of 1.5 billion in principal and interest fall due in June with further payments of 4.7 billion in July and 3.6 billion in August.

Varoufakis met with US Treasury Secretary Jack Lew on Friday. He goes to London to see British Finance Minister George Osborne tomorrow and travels to Rome on Tuesday.

He said he was also looking forward to speaking to German Finance Minister Wolfgang Schaeuble, whose country has been among the most forthright in insisting that Athens must press on with reforms and debt repayment.