Eurozone to discuss vital Greece bailout proposal

Greece has asked its European creditors to extend its bailout loan for six months while it negotiates a new deal.

But Germany has rejected the request and tense last-minute negotiations will resume on Friday morning.

Greece has dropped key demands for the bailout settlement, but still faces stiff opposition from lead lender Germany, which criticised its latest proposals as a “Trojan horse” designed to dodge its commitments.

Eurozone finance ministers agreed to hold their third meeting on the Greek debt crisis in just over a week after Greece formally requested a six-month extension of loan agreements with rescue creditors that expire this month.

The ministers were scheduled to meet at 14:00 GMT in Brussels.

Going back on recent election campaign pledges, Alexis Tsipras’ new left-wing government said it would honour debt obligations and agree to continued supervision from bailout lenders and the European Central Bank.

Bridge financing

Late Thursday, the Greek prime minister held telephone conversations with French President Francois Hollande and German Chancellor Angela Merkel after Germany sharply criticised the Greek offer during preparatory talks in Brussels.

Greek media, including state television, widely quoted a German representative at the talks as saying the Greek offer “rather represents a Trojan horse, intending to get bridge financing and in substance putting an end to the current programme”.

The comments were confirmed by a senior official in the Greek Finance Ministry who could not be identified because the talks in Brussels were not public.

In Berlin, government officials did not comment publicly on the remarks, but told the Associated Press they accurately reflected the German government position.

Germany argues that Greece has failed to provide detailed alternatives to cost-cutting measures imposed by the previous government that helped the country balance its budget after decades of excessive borrowing.

Greek and European markets were largely unaffected by the German response. Europe’s Stoxx 50 index rising 0.64 percent, but Athens is under increasing pressure to break the impasse with lenders.

Unemployment surge

Although Greece emerged from the recession with a primary budget surplus last year, it faces a surge in debt repayment in 2015, with hopes of a full return to markets hit by renewed uncertainty and a resulting surge borrowing rates.

Tsipras defeated traditionally dominant political parties in January 25 elections, promising to scrap bailout agreements and supervision, and demand a massive write down of Greece’s 240bn euro bailout debt so that his government could tackle a drastic surge in unemployment.

In its latest proposals on Thursday – carefully worded to avoid reference to the bailout agreement or “memorandum” – the Tsipras government scaled back those aims to seek more modest primary budget surpluses, budget-neutral growth measures, and calls for a deal later this year to improve bailout loan repayment terms.

Greek officials appeared visibly irritated by the latest German objections.

“All the conditions are there for a transition agreement to be achieved,” Giannis Dragasakis, deputy prime minister, said.

“At this moment it appears that there are powers that would like Greece on its knees, exactly so they can impose their will.”