The new Greek government is finding little understanding after Monday’s arm wrestling with its creditors. Today, at the meeting of all 28 finance ministers, the chairman of the Council, the Latvian Janis Reirs, enjoined Greece to continue the reforms, which, he said, “were starting to bear fruit last year”, and to find a political solution “within the existing format”, that is following the very bailout plan and its austerity measures that the new Greek government rejects.
Despite all the tough talk of ultimatums and games of poker, Greece and its creditors in the 19-country eurozone are still expected to cobble together some sort of deal that will allow the country to remain a member of the euro currency. Investors and European policymakers are not panicking despite a breakdown in talks between the two sides over the new Greek government's attempt to renegotiate its financial bailout.
Both sides want to avoid the worst-case scenario in which Greece is cut off from aid and has to leave the euro. That would devastate Greece's economy and rock global financial markets.
Earlier on Tuesday, Greek Finance Minister Yanis Varoufakis dismissed the argument that the only option is to ask to extend a bailout rejected by Greek voters.
"The next step is a responsible step," he said, offering no detail on what Athens was willing to propose. "We will continue to deliberate, in order to enhance the chances and actually achieve a very good outcome for the average European."
Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurogroup of 19 countries using the common currency, stuck to his guns, however, saying Athens must seek an extension: "It's really up to the Greeks. We cannot make them or ask them. We stand ready to work with them, also (over) the next couple of days."
Formally, Tuesday's meeting of ministers from all 28 EU states concerned other matters. But time is short and investors marked down the euro and European shares after Monday's debacle, some saying the risk of Greece exiting the euro had risen.
"The Greek government must shift its position," Austrian Finance Minister Hans Joerg Schelling said. "Time is pressing."
Dijsselbloem repeated that Friday is a deadline for a deal that would give time for some national parliaments to ratify it before the expiry on Feb. 28 of the 240 billion euro credit package that rescued Greece from bankruptcy three years ago.
Until now, Greece has found some solace only with the Socialists & Democrats in the European Parliament. The S&D group “ urged the Eurozone's finance ministers to agree to revise the current bailout programme for Greece as soon as possible”.
"It is no surprise that the draft statement tabled for the Eurogroup meeting was unacceptable to the Greek side. Greece cannot become a highly competitive country if 20% of its population suffers from severe material deprivation and nearly 40% of children are at risk of poverty or exclusion. It needs to reform in a smart and socially sensible way. The Eurogroup should learn from its past mistakes instead of repeating them. It is not enough to hint at possible adaptations to the current programme during a press conference; these changes should have actually been discussed in the meeting.
Greece must be allowed to reduce its primary surplus, so that it can reform, invest and help the poor. The lenders would be wise to stretch the repayment schedule for Greek debt, instead of insisting on austerity for decades to come”, the Socialists & Democrats said in a communique.
A deal could depend on something as simple as what the two sides agree to call the extension.
The Greeks do not want an extension of the current program, but a bridging loan. Whatever it's named, both sides want the country to get a few months' worth of loans to buy time for more thorough talks.
If they can agree on a word that saves face for both sides, a deal would be a lot closer.