Greek leaders ask EU, ECB for help to ‘keep afloat’

GREEK leaders pressed their case for debt relief Wednesday in Brussels and Frankfurt, saying they were optimistic about a deal but needed urgent help from the European Central Bank to “stay afloat”.

Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis have been touring Europe to push their plan to renegotiate Athens’ 240 billion euro ($270 billion) international bailout, an issue that has sparked panic on financial markets and revived fears of a Greek exit from the euro.

Elected on a pledge to end the austerity policies imposed on Greece as part of its bailout, Tsipras faces the delicate task of convincing his European partners to reverse course on a restrictive fiscal policy while getting aid needed to avoid a default.

Tsipras struck an upbeat note after talks with European Commission chief Jean-Claude Juncker, EU president Donald Tusk and European Parliament head Martin Schulz, saying he was optimistic for a “viable and mutually acceptable solution”.

A Greek government source later said he and Juncker had discussed plans to “jointly” create a four-year reform plan for Greece.

They had discussed a “bridge agreement” that would give Athens time to formulate “a radical plan of reforms in key areas such as corruption, tax evasion and strengthening public adminstration”, the source said.

The Greek premier — whose anti-austerity Syriza party stormed to victory in elections on January 25 — earlier tried to reassure his European partners that he was not trying to break the 28-nation bloc’s budget rules.

“We want to re-correct this framework, not to smash this framework,” he said. “And we believe in this framework we could find a common viable solution for our peoples.”

Schulz said the talks were “fruitful” but warned of a “difficult time ahead”.

The EU’s Tusk meanwhile acknowledged that resolving the showdown over Greece’s debt was likely to be “difficult” and would need “cooperation and dialogue as well as determined efforts by Greece.”

Greece’s newly-minted finance minister also struck an upbeat note after meeting with ECB chief Mario Draghi.

“We had a very fruitful discussion and exchange,” Varoufakis said after the hour-long talks, “which gives me a great deal of encouragement for the future”.

Earlier a Financial Times report had suggested that Draghi would take a tough line and might even block a key element of Athens’ plan.

According to the FT, which cited officials involved in the deliberations, the ECB is refusing to raise an agreed cap on the amount of short-term treasury bills that Athens can issue from 15 billion euros to 25 billion euros.

The central bank’s policy-setting governing council was meeting later Wednesday to decide whether to keep open a financial lifeline for Greek banks known as emergency liquidity assistance, or ELA.

Varoufakis earlier told the German weekly Die Zeit that the ECB “should support our banks so that we can stay afloat”, acknowledging that Greece was “a bankrupt country”.

Berenberg Bank economist Christian Schulz said the ECB might extend the ELAs to the end of the month, “but not beyond unless the bailout is formally extended by the eurozone finance ministers … and ratified by eurozone government and/or parliaments”.

The International Monetary Fund said meanwhile it was not in debt talks with the Greek government.

The new Greek government has blamed its fiscal problems mainly on the austerity shackles fixed by Berlin.

It argues these restrictions have choked off growth in an economy that has shrunk by a quarter and have failed to bring down unemployment that stands at over 25 percent.

Tsipras’ administration also believes that without growth, Greece will find it impossible over the long term to service a mountain of debt worth 1.75 times its annual economic output.

Striking a more conciliatory tone, Varoufakis said he was “extremely eager” to meet on Thursday with German Finance Minister Wolfgang Schaeuble, whom he described as “an intellectual force behind the project of the EU”.

Chancellor Angela Merkel reiterated that Berlin was taking a wait-and-see attitude until Athens outlines its fiscal plans.

“The time has come for Greece to say what exactly its expectations are,” she said.

Varoufakis has been pushing the idea of debt swaps that would extend the maturity of the debt and avoid the need for its European partners to accept politically-difficult cuts in the face value of sums owed.

This could ease Athens’ current financing burden and free up funds for social spending.