Germany to Greece: We agree to disagree

A tense meeting in Berlin between the Greek and German finance ministers ended on Thursday (5 February) with no prospects of a swift deal on Greece's debt repayments or an extension of the current bailout program.

"Greece belongs to the euro, but we don't really agree on what needs to be done next. We agree to disagree", German finance minister Wolfgang Schaeuble said at a joint press conference with his new Greek counterpart, Yanis Varoufakis.

He said he fully respects the result of the Greek elections which ushered in the far-left Syriza party.

"But I am somewhat sceptical about some of the measures announced," he said.

The German minister, renowned for his hawkish stance on all things bailout-related, said the idea of debt restructuring ("haircut") was not on the table. He also insisted that negotiations have to be carried out with representatives of the troika of international lenders - something Syriza sought to end.

He reminded Varoufakis that any changes to the current bailout program have to be agreed among the 19 eurozone governments and approved by their parliaments. Changing that procedure would entail a change of the EU treaties, he added - a near-impossible task.

Schaeuble also suggested that if the European project loses support among citizens, it is because leaders are not being convincing and not showing enough "reliability."

He went on to blame Greece itself for its problems: "The cause and solution to Greece's difficult path lies in Greece and not elsewhere, especially not in Germany."

"All programs were based on idea that we want to help people help themselves. Problems have to be solved at local level," Schauble added, noting that German local authorities stand ready to send 500 tax experts to help Greece set up an efficient tax collection system.

When Varoufakis praised the German culture, its authors and philosophers, Schaeuble said garbage men in his home town also often quote Goethe: "Everyone needs to sweep in front of his own door".

Varoufakis disagreed.

He said there are many cases, particularly of cross-border corruption, where Germany can help and where Greece alone has not the jurisdiction to pursue these criminals.

Varoufakis confirmed that they did not talk about a haircut or a debt repayment calendar. But he refused to accept Schaeuble's reading of their meeting: "We didn't agree to disagree, we agreed to enter into deliberations as European partners."

He said his government is seeking a "bridging programme" until May, to have enough time to negotiate with the European partners and international creditors.

But he rejected a further extension of the current programme, which ends on 28 February.

He said not all the measures attached to the current bailout program are wrong, noting that the Syriza government would take on about 60-70 percent of the reforms.

But the current programme was lacking measures especially on tax evasion, corruption and vested interests - something Syriza wants to change.

"We need to look in the eye of our citizens, be able to say 'there is no immunity from prosecution in Europe'," he said.

As for the European Central Bank's (ECB) decision on Wednesday evening to turn off one of the taps of cheap loans to Greek banks, Varoufakis said he would do everything to avoid the "d-word" - default.

After talking to ECB chief Mario Draghi on Wednesday, Varoufakis said the bank was "agnostic" about whether the bailout program is extended or if there is a bridging program Syriza is pushing for.

"This is up to eurozone countries to agree," the Greek minister said.

European Commission sources told this website the ECB move did not come as a surprise in Brussels and that the economics commissioner, Pierre Moscovici, knew it was going to happen.

Speaking in a press conference on Thursday, Moscovici said he "took note" of the ECB decision, but also of the fact that Greek banks can still tap ECB money via an "emergency liquidity assistance" scheme that was used at the height of the financial crisis.

Asked if the commission shared the analysis of the ECB - as they are both members of the troika of lenders - that the current Greek government is unlikely to get a green light from the troika on having met all requirements for a remaining bailout tranche, Moscovici said: "We are not yet discussing this with the Greek government."

Some commentators - Paul Krugman and Frances Coppola - have speculated that the ECB move may actually put more pressure on Germany than on Greece, given that it pushes Athens to the brink and shortens the time Greece and the eurozone have to agree on a new or an extension of the existing program.

But with no emergency Eurogroup scheduled next week, Germany and its allies seem to be in no hurry yet.

The ECB has said it will stop the cheap money line (with Greek bonds used as collateral) on 11 February.

EU leaders will meet on 12 February for an informal summit initially devoted to anti-terrorism, but also likely to touch on Greece and Ukraine.

The next regular Eurogroup is on the following Monday, 16 February.