(Bloomberg) — The first direct talks between Greece and Germany since a new anti-bailout government took power in Athens last week yielded no agreement on how to narrow their differences.
German Finance Minister Wolfgang Schaeuble said he and his Greek counterpart, Yanis Varoufakis, “agreed to disagree” in their Berlin meeting. That prompted Varoufakis to respond: “We didn’t even agree to disagree from where I’m standing.”
Their encounter came hours after Greece lost a critical funding artery when the European Central Bank restricted loans to its financial system, raising pressure on the 10-day-old government to yield to German-led austerity demands to stay in the euro area.
The next move is up to Prime Minister Alexis Tsipras, who swept to power promising to reverse five years of spending cuts that accompanied 240 billion euros ($272 billion) of bailout loans. While he’s retreated from demands for a debt writedown, he’s so far sticking to promises to increase pensions and wages that breach the conditions for financial aid. Varoufakis said the endless belt-tightening has had unwanted consequences.
“Germany must and can be proud that Nazism has been eradicated here, but it’s one of history’s most cruel ironies that Nazism is rearing its ugly head in Greece, a country which put up such fine struggle against it,” Varoufakis said. Europe must never again “allow a 1930s-like depression to divide proud European nations.”
ECB Limits
The ECB set a limit of 60 billion euros on the funds that Greece’s central bank can provide under the emergency lending program, Die Welt reported today. Greek banks borrowed about 56 billion euros in December, the newspaper said. Two euro-zone central bank officials said that the report was broadly correct. They asked not to be named because the discussions were private. An ECB spokesman declined to comment.
“I told my colleague Varoufakis that we respect the Greek electorate’s will of course, but that in every European Union member country, the electoral will of voters in all other countries also has to be respected,” Schaueble said. “The reasons for the difficult path that Greece must follow — and we didn’t disagree on that — lie in Greece, not in Europe.”
Tsipras vowed this afternoon during a speech to parliament in Athens to bring an end to what he called the Greek humanitarian crisis and the intervention of the troika made up of the ECB, International Monetary Fund and European Commission. The three keep tabs on how the country is proceeding in meeting the obligations of its aid program.
Financial Lifeline
Varoufakis said Greece is looking for a financial lifeline to keep the country afloat for four months while it negotiates a “new contract” with the rest of the euro region.
“We set the scene for deliberations that would lead to an approach to put an end to this seemingly never-ending crisis that began in Greece and then unfortunately spread out to the rest of the euro zone,” he said.
Schaeuble bristled at the Greek finance chief’s announcement last week that he was abandoning the country’s existing bailout deal and poured cold water on Greece’s calls for a debt restructuring and its plans to reverse austerity.
“I couldn’t hide my skepticism in the conversation that some measures announced by the new government — but my colleague told me that they haven’t been decided yet — don’t necessarily go in the right direction in our opinion,” the German finance chief said.
Read more: Schaeuble ‘Agrees to Disagree’ With Greece’s Varoufakis
