(Reuters) – Greek Finance Minister Yanis Varoufakis began tense talks with euro zone finance ministers on Wednesday after his new leftist-led government won a parliamentary confidence vote for its refusal to extend an international bailout.
The former academic said before leaving Athens he was ready for a clash with euro zone paymaster Germany and its allies over Greece’s decision to scrap austerity measures, end cooperation with the “troika” of EU/ECB/IMF officials overseeing its bailout program and demand a “haircut” reducing its debt burden.
“If a debt can no longer be paid off then that leads to a haircut,” Varoufakis told German magazine Stern in an interview released on Wednesday. “What is critical is that Greece’s debt cannot be paid off in the near future.”
German Finance Minister Wolfgang Schaeuble has said that if Greece is not willing to request an extension of its 240 billion euro bailout — the biggest in financial history — “then that’s it”, ruling out further assistance or debt forgiveness.
Euro zone ministers said they wanted to hear Greece’s ideas at a meeting in Brussels, at which Varoufakis was accompanied by Deputy Prime Minister Yanis Dragasakis. Athens’s partners warned that time was short since the bailout program expires at the end of this month with no solution in sight so far.
Spanish Finance Minister Luis de Guindos, whose country avoided a sovereign bailout but had to take EU aid to rescue its banks, spelt out the hard line. “Rules must be respected by all. They apply to all,” he told reporters on arrival.
Varoufakis had a prior meeting with International Monetary Fund chief Christine Lagarde, which both said was constructive. Lagarde flew to Brussels to join the Euro Group meeting in a sign of the importance the IMF attaches to the Greek crisis.
“They are competent, intelligent, they’ve thought about their issues. We have to listen to them, we are starting to work together and it is a process that is starting and is going to last a certain time,” she told reporters.
In Athens, a Greek official said Varoufakis had discussed with Lagarde and the Euro Group’s Dutch head Jeroen Dijsselbloem some form of “bridge agreement” for funding the state once the current bailout deal expires at the end of the month.