ATHENS (Reuters) - Greece said on Sunday it was confident of reaching agreement in negotiations with its euro zone partners but reiterated it would not accept harsh austerity strings in any debt pact.
A day before a euro zone finance ministers’ meeting in Brussels to shore up Greece’s dwindling finances and help keep it in the euro zone, Prime Minister Alexis Tsipras told Germany’s Stern magazine that Athens needed time to implement its reforms and shake off the mismanagement of the past.
“I expect difficult negotiations; nevertheless I am full of confidence,” he said. “I promise you: Greece will then, in six months’ time, be a completely different country.”
The Eurogroup of finance ministers meets in Brussels on Monday to try to find common ground with Tsipras’ new government, elected on a pledge to scrap the austerity strictures of Greece’s international bailouts, on issues such as debt management, financing, privatization and labor reform.
European Commission President Jean-Claude Juncker held a phone conversation on Sunday with Tsipras at the Greek prime minister’s request, an EU official said, speaking on condition of anonymity and providing no details.
“President Juncker is making a last effort in an extremely difficult situation,” the official said, playing down hopes for an agreement at Monday’s meeting.
If the meeting produces no results, there is a concern that Greece will be headed for a credit crunch that would force it out of the euro zone. Progress, however, could mean further negotiations, perhaps later in the week.
“The irresistible force will be meeting the immovable object,” Vasileios Gkionakis, head of global FX strategy at UniCredit, wrote in a note.
European Central Bank President Mario Draghi refused to discuss the possibility of Greece leaving the euro zone if an agreement with European Union and International Monetary Fund lenders fell apart as a result of Greece’s demands to alleviate its debt burden. He simply reiterated the euro zone’s founding position that membership is “irreversible”.
In Germany, however, economist Hans-Werner Sinn, head of the influential Ifo economic research institute, told the mass-market newspaper Bild that leaving the euro zone “would be better for the Greek people”, although he expected Greece to stay.
Tsipras wants a bridge program to be put in place for a few months while a new deal is agreed to replace the bailout, which has already forced drastic cutbacks onto ordinary Greeks.
The rest of the euro zone, particularly Germany, says Greece must continue with those commitments as a quid pro quo for the 240 billion euros ($274 billion) it has received in bailouts.
Slovak Finance Minister Peter Kazmir, whose country is said to be taking a tough line, tweeted that he was skeptical whether all details could be agreed on Monday.
Greece’s current bailout expires at the end of the month. A Eurogroup meeting last week ended without apparent progress, although technical talks were later approved.
Greek government spokesman Gabriel Sakellaridis showed no sign that Greece was backing off on its core demand.
“The Greek government is determined to stick to its commitment towards the public ... and not continue a program that has the characteristics of the previous bailout agreement,” he told Greece’s Skai television.
He later said: “The Greek people have made it clear that their dignity is non-negotiable. We are continuing the negotiations with the popular mandate in our hearts and in our minds.”
Some of the problems facing the Eurogroup are semantic. The Greeks, for example, will not countenance anything that smacks of an “extension” to the old bailout, preferring something new called a “bridge” agreement.
This is political. Tsipras rode into power on a wave of anti-austerity and anti-bailout anger last month and would have a hard time explaining a row-back so soon. Thousands of Greeks massed outside parliament in Athens on Sunday to back his strategy.
But even a cosmetic change of labels could have practical consequences. An “extension” may not require many national ratifications unless it involves additional financial commitments from euro zone governments.
Any new bailout program, on the other hand, might require several national parliamentary ratifications and could also bring Germany’s Constitutional Court into play.
Among those requiring a parliamentary vote on a new bailout are Germany, Slovakia, Estonia and Finland, all identified by one veteran of EU meetings as part of a hard core of opponents to Greece’s plan.
The Eurogroup’s main debate with Greece’s “no austerity” stance will revolve around the funding of a bridge program, Greece’s request to reduce the ‘primary’ budget surpluses, excluding interest payments, that it is required to reach, and privatizations and labor reform.
Greece said on Saturday that it was reviewing a 1.2 billion- euro deal for Germany’s Fraport to run 14 regional airports, one of the biggest privatization deals since Greece’s debt crisis began in 2009. It has also pulled the plug on the privatization of the ports of Piraeus and Thessaloniki.
On the question of liberalizing labor markets, government spokesman Sakellaridis remained tough:
“We will discuss it with workers and with pensioners. Whatever we do, we will do through dialogue. We will not legislate at the sole behest of outside factors.”
($1 = 0.8785 euros)
Additional reporting by Costas Pitas in Athens, Paul Day in Madrid, Tom Koerkemeier in Brussels and Jan Lopatka in Prague; Editing by Kevin Liffey, Larry King and Eric Walsh