A new Greek drama is unfolding in Europe as Greece moves one step closer to defaulting on their bailout loans and exiting the 19 member euro currency area after Greek government officials refused to ask for a bailout extension from their international creditors before Monday’s deadline and as talks between Athens and Brussels abruptly fell apart with both sides digging in their heels and failing to reach an agreement over Greece’s €240 billion ($272 billion) bailout package.
The Eurogroup meeting of Euro area finance ministers lasted for only 2 hours on Monday.
According to sources, the Eurogroup handed Greek Finance Minister Yanis Varoufakis a draft statement at the beginning of the meeting that called for Athens to ask for a bailout extension which sparked fury in the Greek delegation and resulted in the Greeks immediately leaking the draft statement to the media, calling it “unacceptable” and “unreasonable” before reporters while insisting that no deal would be worked out under those terms.
In a bizarre twist, the Greeks were commenting and simultaneously reporting to the press in real time about the impossible terms that were being imposed on them by their international creditors while negotiations were still underway, resulting in frustration from the euro area members attending the meeting which was suspended and later canceled after the Greek delegation refused to offer a counter proposal.
One section of the draft statement in particular mentions that Greek authorities will continue along the path of austerity and fiscal reforms through the “built in flexibility in the current program.”
“The Greek authorities intend to make the best use of existing built in flexibility in the current programme as work commences on the new arrangement. They will work closely with their European and international partners to secure agreed parameters for structural reforms” the statement reads.
During the press conference, Eurogroup president Jeroen Dijsselbloem told reporters that there was a strong feeling amongst the members that Greece should ask to extend its current bailout which expires on February 28th.
Only after that step is first taken by Greece could the two sides then discuss how Athens could take advantage of the “flexibility” in the bailout program.
Dijsselbloem admitted that an extension of the bailout could look similar to a “bridge program” proposed by Athens but he was clear that it would have to include most of the existing program.
Christine Lagarde from the IMF emphasized that Greece’s next bailout payment can’t be disbursed until Athens is meeting the terms of its current bailout program.
Dijsselbloem told reporters that another Eurogroup meeting can be held on Friday but only if Greece asks for an extension of their bailout.