ISTANBUL (Reuters) - Greece must respect European Union rules as it seeks an alternative to an extension of an EU/IMF bailout and Europe must recognise Greek voters’ ardent hopes for a change from austerity policies, French Finance Minister Michel Sapin said on Monday.
“We have to respect the vote of the Greek people and we have to respect European rules. I think everybody can understand the other side,” Sapin told Reuters, Bloomberg and the Wall Street Journal in an interview on the sidelines of a meeting of G20 finance ministers and central bankers in Istanbul.
After his Syriza party won January’s election on promises of delivering a debt write-off and an end to painful spending cuts, new Prime Minister Alexis Tsipras wants to stop the country’s international lenders from making quarterly checks on its reform progress, and has rejected an extension of the current programme under which Athens received 240 billion euros (178 billion pounds) in exchange for reforms.
Instead he wants the euro zone to give Greece ‘fiscal space’ so that it can discuss a restructuring of its debt and a new agreement with its official creditors.
This would entail an agreement by the euro zone for Greece to issue more government debt that would be bought by Greek banks and switched for cash in emergency liquidity assistance operations with the Greek central bank.
That’s something the euro zone doesn’t want to happen without a commitment from Athens to further fiscal reforms.
Meanwhile, Greece is calling this a “bridging agreement”, until a new deal is hammered out with creditors. The euro zone’s talk of extending the bailout is political anathema to the new Greek government.
“Everybody can use their words, but later we have to find common words,” Sapin said. “I think there is a will on both sides to find a solution.”
Euro zone countries have refused to consider any possibility of a debt write-off and the European Central Bank has said it will no longer take Greek government bonds as loan collateral - meaning Tsipras’s government will struggle to finance itself or its banks if it does not reconsider an extension of the bailout.
Sapin suggested that Greece began to accept such “realities” last week when Tsipras and the new Greek finance minister toured Europe for support.
Euro zone finance ministers will meet on Wednesday to listen to Greek proposals on the way forward to prepare ground for possible further discussions on the subject by EU leaders on Thursday.
Reporting By Jan Strupczewski; Editing by Sophie Walker