Germany Rejects Greek Loan Agreement Extension Request

The German government has rejected the Greek loan agreement extension request, submitted earlier today. According to the German reasoning, Greece’s proposal does not meet the Eurozone’s conditions for continuing the aid program.

Greece’s request to the Eurozone aims at a six-month extension of the loan agreement, preventing the country’s current deal with its loan partners from expiring at the end of February and giving it time to negotiate a new bailout. This development has caused Germany’s — and its Finance Minister Wolfgang Schaeuble’s — firm reaction, as according to Berlin officials such a deal is already on offer but Athens must also stick to the terms of the Memorandum in order to achieve a loan extension. On the other hand, the newly elected Greek leftist government has promised the country’s departure from the bailout program that imposed a number of unpopular austerity measures.

Today, after receiving the Greek request, German Finance Ministry spokesperson Martin Jaeger repeated Berlin’s position in an e-mailed statement, underlining that the Greek government is trying to achieve a bridge financing agreement without meeting the necessary conditions of its existing bailout package. On the European Commission’s behalf, Commission representative Margaritis Schinas had said the Greek letter could be the basis of a “reasonable compromise,” in what is seen as an attempt to bridge the gap between Athens and hardline Berlin.

As the German government stressed, the Greek plan failed to meet Eurozone Finance Ministers’ demands, as agreed on Monday’s Eurogroup meeting in Brussels that abruptly concluded without an agreement. The main demand was Greece’s fulfillment of the current bailout conditions in order to secure the loan agreement’s extension. “The letter from Athens is not a proposal that leads to a substantial solution,” Jaeger said in a statement, explaining that “in truth, it goes in the direction of bridge financing, without fulfilling the demands of the program. The letter does not meet the criteria agreed by the Eurogroup on Monday.”

In a letter to Eurogroup President Jeroen Dijsselbloem, obtained by Reuters, Greek Finance Minister Yanis Varoufakis conceded that the Greek government is willing to “refrain from unilateral action that would undermine the fiscal targets, economic recovery and financial stability.” Most importantly, though — both on a practical and symbolical level — Varoufakis said that Greece would remain under the supervision of the EC/ECB/IMF Troika that the SYRIZA-led government had insisted it would abolish.

The 19 Euro area Finance Ministers will have a detailed assessment of the Greek request and formulate a response, Schinas said at a press conference in Brussels today. Finally, as he explained, the Eurozone Finance Ministers are due to meet yet again tomorrow in an attempt to strike a deal with Greece. This will be the third Eurogroup meeting in a period of just 10 days in order to avoid the prospect of a Grexit.

Amid the latest developments on the Greek issue, the common European currency dropped 0.3% in comparison to the US dollar, to 1.358.