Eurozone gives Greece five days to come up with debt plan

[ATHENS] Greece's eurozone partners on Friday gave the new Athens government five days to come up with a plan to renegotiate its foreign loans, after a week of intense EU meetings failed to secure a breakthrough.

Ministers from the 19 nations that use the single currency will hold an extraordinary meeting on Wednesday in Brussels to discuss the stand-off between Greece's anti-austerity government and its international creditors.

"Before then, we expect the Greek government will make a proposal on how things should move forward," German foreign ministry spokesman Martin Jaeger told reporters in Berlin.

The EU portion of Greece's 240-billion-euro (US$275-billion) EU-IMF bailout is due to expire February 28, leaving just weeks for Athens and Brussels to reach a compromise or risk a default that could send Greece crashing out of the euro.

No major decision is expected at the Eurogroup meeting but it might ease the pressure on a summit of European Union leaders the following day, where Greece is likely to feature heavily, a European source said.

Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis visited Paris, London, Rome, Frankfurt, Brussels and Berlin this week to try to win over EU leaders to their plan to ease the crushing burden of Greece's debts.

The tour began well but ended with a meeting between Varoufakis and German Finance Minister Wolfgang Schaeuble who restated his country's opposition to debt relief and expressed deep scepticism over Athens' plans.

"We even didn't agree to disagree," a downbeat Mr Varoufakis told reporters after the talks on Thursday.

Italian Finance Minister Pier Carlo Padoan stressed on Friday that the goal next week was not to set up a confrontation with Greece but to "look for shared solutions".

"We need to find a solution that puts Greece back on a path to sustainable economic growth and is compatible with its financial commitments," he said, according to Italian news agencies.

A Greek government source said the Eurogroup meeting was no surprise and was a "welcome" chance to discuss its plans.

Spokesman Gabriel Sakellaridis told Vima Radio that it was in no sense an ultimatum, adding: "The sooner a solution is found, the better for the government and for the EU."

Addressing the first meeting of his Syriza party lawmakers in parliament Thursday, Tsipras insisted his government would keep its campaign promises to end austerity.

"We are a sovereign country, we have democracy, we have a contract with our people, we will honour this agreement," he said.

In a remarkable show of support for the government, thousands of people gathered outside parliament that evening, standing silently in Syntagma Square.

"We have nothing to lose," said Stavroula Drakopoulou, a 55-year-old teacher who joined the crowd on a square that has in previous years been the scene of violent protests.

In a sign of the pressure Athens is under to reconcile its campaign promises and its financial commitments, the government put back the date of the unveiling of its legislative agenda from Saturday to Sunday evening.

The Greek government spooked the markets in its first week in office by halting key privatisation projects and announcing it would no longer cooperate with the hated "troika" of auditors from the EU, European Central Bank and the International Monetary Fund who are charged with enforcing the terms of Greece's bailout.

Mr Tsipras and Mr Varoufakis later softened their tone but Germany, viewed by many Greeks as the main obstacle on any easing of austerity, remained opposed.

A debt write-down was not up for discussion, Mr Schaeuble said, adding: "I was unable to hide my scepticism... that some of the measures do not go in the right direction".

Varoufakis was likely hoping for a more sympathetic ear when he met with US Treasury deputy assistant secretary Daleep Singh in Athens earlier Friday.

US President Barack Obama gave Athens a boost last week when he warned against "squeezing" debt-ravaged countries such as Greece, whose economy has shrunk by one quarter since 2008.

US ambassador David Pearce also met with members of the new government and called on Greece Friday to "work cooperatively" with its EU colleagues and the IMF.

The Greek stock market closed 1.97 per cent down at 803 points, after a volatile day Thursday sparked by the ECB's shock move to cut off a source of funds for Greek banks.

AFP