GREECE IS struggling to gain the confidence of its European sponsors as time runs out for a second bailout deal to avert a crippling debt default next month.
Although euro zone finance ministers heralded progress last night in contentious negotiations of a new rescue pact, tension flared as the Greek president declared his country would not be subjected to taunts from Germany.
The leaders of the dominant centre-right and socialist parties in Greece signed pledges yesterday to implement a new austerity programme and the government agreed a further €325 million in cost-saving measures with the EU-IMF troika.
These developments, together with the Greek parliament’s endorsement of the austerity plan, went a long way towards meeting the conditions imposed on the country last week. However, official and diplomatic sources said much remained in the balance as the authorities sought tough new bailout procedures to ensure Greek leaders fulfilled their promises.
“A done deal is not there yet, certainly,” said a European official after the ministers discussed Greece for more than two hours in a teleconference last night. In question now is whether European inspectors are deployed full-time in Athens to monitor the bailout and whether rescue funds are placed in an escrow account reserved for debt repayments.
The ministers’ talks came after a day of heightened rhetoric and rumour in which Greek finance minister Evangelos Venizelos accused some unnamed euro countries of trying to push Greece out of the single currency.
“In the euro area, there are plenty who don’t want us anymore. There are some playing with fire, domestically and abroad,” Mr Venizelos said.
Germany and its fellow triple-A powers, Finland and the Netherlands, have been for weeks the vanguard of the countries pursuing a tough line with Greek leaders.
Reflecting the doubts that hang over the new rescue, German finance minister Wolfgang Schäuble expressed concern in a radio interview that Greece could become a “bottomless pit” for Europe. He questioned whether Greek leaders would stick to the plan after an election expected in April.
“I am also not yet sure that all political parties in Greece are aware of their responsibility for the difficult situation their country is in,” Mr Schäuble said.
His remarks drew a biting response from Greek president Karolos Papoulias, who was a resistance fighter against the Nazi occupation of his country during the second World War. “I do not accept having my country taunted by Mr Schäuble, as a Greek I do not accept it,” he said.
“Who is Mr Schäuble to taunt Greece? Who are the Dutch? Who are the Finns?”
The teleconference last night came after Jean-Claude Juncker of Luxembourg, president of the group of euro zone countries, scrapped plans for a meeting in Brussels. “Substantial further progress has been made since yesterday,” he said.
“Further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of programme implementation and to ensure that priority is given to debt servicing.” Finance ministry officials from euro zone countries will be recalled to Brussels on Sunday in advance of a scheduled meeting between the ministers on Monday.
Senior euro zone sources said this meeting may be the final opportunity to agree a debt restructuring deal with Greece’s private creditors in time for a bond redemption on March 20th. “We are running out of time,” said the spokesman for EU economics commissioner Olli Rehn.
Some countries want to delay the full bailout until after the Greek election but two European officials questioned whether that was at all practicable.