(Bloomberg) — Greek Finance Minister Yanis Varoufakis returns to Brussels for a third meeting in two weeks with his euro-area counterparts in an effort to strike a deal that will let Europe’s most-indebted country avoid default.
The talks, set to begin at 4:30 p.m., promise to be “difficult,” Malta Finance Minister Edward Scicluna said in an interview.
Characterizing the views of a hardline block led by Germany, the Maltese official said, “I think they’ve now reached a point where they will tell Greece ‘if you really want to leave, leave.’”
In a formal request on Thursday to extend Greece’s euro-area backed rescue beyond its end-of-February expiry for another six months, Varoufakis said he would accept the financial and procedural conditions of the existing deal while asking for negotiations on other elements.
German Finance Minister Wolfgang Schaeuble almost immediately rebuffed the latest Greek formula, saying the country needs to make a firmer commitment to austerity.
A “positive” conversation between Greek Prime Minister Alexis Tsipras and Chancellor Angela Merkel later on Thursday sparked investor optimism for a deal.
“We are perfectly prepared to refrain from any moves that would jeopardize financial stability or Greek competitiveness,” Varoufakis said in an interview Friday with the Telegraph. “But what we cannot accept is that the fiscal adjustment, agreed by the last government, be carried through just because the rules say so.”
Tsipras’s government is trying to balance the need to achieve an agreement to prevent a cash crunch and the pre-election pledge to end austerity. Completely bowing to German demands risks a domestic backlash and potentially alienating the Syriza party’s left flank and Tsipras’s junior coalition partner.