Angela Merkel, Alexis Tsipras Seek Greek Bailout Compromise

Fears of a Greek euro exit rose after eurozone finance ministers refused at a tense meeting on Wednesday to agree a new deal for Athens before its current EU-IMF rescue package expires at the end of February.

 

But Merkel, the leader of Europe's most powerful economy, suggested a "compromise" was possible as she arrived at a summit of the 28 European Union leaders in Brussels on Thursday and then shook hands cordially with Tsipras.

 

Greece also agreed to begin technical talks with its eurozone partners ahead of a make-or-break meeting on Monday, in a bid to find common ground on its plans to ditch the country's 240-billion-euro ($270-billion) debt bailout.

 

The more positive mood saw Greek shares surge over 6.0 per cent while European stock markets rose and the euro was firmer against the dollar.

 

Tsipras said he would use the summit to show his sceptical European counterparts how the new debt plans might work.

 

"I am very confident that all together we can find a mutually viable solution, in order to heal the wounds of austerity and to tackle the humanitarian crisis across the European Union," Tsipras said.

 

 

Germany has been the toughest opponent of the plans unveiled by Tsipras after his hard-left Syriza party won elections in January on the back of widespread anger at the austerity measures demanded by Berlin in exchange for bailouts since 2010.

 

"Europe is always geared to compromise... and Germany is ready for that," Merkel told reporters as she arrived in Brussels from Minsk, where she helped negotiate a peace deal for the conflict in Ukraine during talks overnight.

 

"Nevertheless one has to say that Europe's credibility is based on sticking to the rules and that we are reliable," she said.

 

The talks on Wednesday night broke down acrimoniously after nearly six hours, with Greek Finance Minister Yanis Varoufakis and his 18 eurozone partners failing even to agree on the wording of a joint statement.

 

More than 15,000 people turned out on the streets of Athens on Wednesday in a show of support for the government.

 

But on Thursday, Tsipras and Eurogroup head Jeroen Dijsselbloem agreed to renew efforts to "start work on a technical assessment of the common ground between the current programme and the Greek government's plans," Dijsselbloem, who is also Dutch finance minister, said in a tweet.

 

This work will be carried out before Monday's meeting in Brussels.

 

Greece, creditors trade blame 

 

The Tsipras plan firstly involves ditching the hated troika of creditors -- the EU, IMF and European Central Bank -- which oversees the bailout programme and carries out inspections to see that Greece is living up to its reform commitments.

 

Under the Greek proposals, Athens would stick to 70 per cent of the programme but it would overhaul the remaining 30 per cent which it sees as damaging to growth and toxic on issues including the new government's plans to raise the minimum wage.

 

Athens also wants a bridging loan until September to buy time to hammer out a new reform and bailout package, and to offer debt swaps based on economic performance as the Greek economy moves out of recession.

 

But Greece's creditors, tired of the debt crises spawned by Athens for the past five years, want it to stay in the bailout programme and to meet its commitments.

 

Greek and European sources traded blame for the breakdown of Wednesday's talks, with European sources telling AFP there had originally been an agreement on a joint statement with the other ministers, but that it was torpedoed by Tsipras after his finance minister spent 30 minutes on the phone with him to confirm.

 

German Finance Minister Wolfgang Schaeuble had already left on the understanding the statement had been approved, they said.

 

Greek sources denied this account and said Germany had tried to insert new wording.

 

If the EU is unwilling to help, Greece has suggested that it could look to Russia or China.