Greeks, allies plan technical talks in search of deal on debt

In negotiations, semantics matter. So when Yanis Varoufakis, the feisty finance minister of Greece, was handed a text that said Athens would agree to “extend” its current economic bailout program, he balked. He insisted, rather, that the word “amend” be used.

His German counterpart, Wolfgang Schaeuble, stormed out of the conference room in anger.

“From there on,” said an official with knowledge of Wednesday’s talks, “it was all downhill.”

Locked in a dispute that could leave Europe’s most indebted nation short of money by month’s end, Greek Prime Minister Alexis Tsipras met Thursday with fellow European Union leaders in Brussels to explain why he is resisting any extension of the country’s bailout package, potentially leaving Greece broke within weeks.

“He won’t be dealing with semantics,” said one of his senior aides before Thursday’s summit. “Rather, he will try to reach out and bring them to an understanding that will avert usage of such terms.”

Despite the stalemate, Tsipras and the head of the Eurozone finance ministers, Joreon Djisselbloem, reached agreement on the sidelines of the summit to keep a team of technocrats in Brussels into the weekend to review Athens’ new short-term financing proposals.

“We didn’t cover the full nine yards, but we did take some important steps,” Tsipras said at a news conference after the agreement. “We proved that the spirit of the European Union is one of cooperation, not confrontation.”

An official involved who requested anonymity because of the sensitive talks said the technocrats would “compare and contrast” Greece’s proposed changes. “It will be a cost-assessing exercise,” the official said, adding that the findings would be presented at a meeting Monday of the Eurozone’s financial ministers for final review.

The continued meetings raised hope that the two sides could get past Wednesday’s breakdown. Greek bonds rose Thursday, and the Athens stock exchange closed 6.7% higher.

Greek officials expressed optimism that they were gaining ground.

“The focus of all talks now as well as Monday’s eurogroup meeting will center on the transition from the current bailout program to the new Greek one,” said a Greek official who also requested anonymity. “Greece’s positions are clear. It is defending them and it is convincing” its European partners.

Tsipras took office last month with a promise to relieve austerity measures that were designed to satisfy lenders but that many Greeks say have caused suffering.

Greece has a $1.7-billion loan payment to the International Monetary Fund due next month, the start of string of redemptions that continue through August. Without some sort of a financing deal, the nation might find itself forced to default on its $351-billion debt.

What’s more, with Tsipras and his new Cabinet relatively inexperienced – only one member has served in government before – observers say there could be potential for an error or miscalculation.

Tsipras has been touring European capitals trying to drum up support for a plan to ease austerity and reduce the crushing debt burden. At Wednesday’s negotiations, Varoufakis proposed a short-term financing plan to tide Greece over until August, when a new debt deal could be hammered out.

Germany, Europe’s powerhouse economy, insists that the new Greek government meet commitments made by the former one. Any hint of softness toward Athens could embolden similar anti-austerity movements in Europe.

Still, said officials who attended Wednesday’s negotiations, Germany and other members of the Eurozone – nations that share the euro currency – appeared to be in “listening mode.”

“Increasingly, there is a realization that something more permanent has to come into place,” said Tony Nash, global vice president of Delta Economics. “You cannot keep people under austerity for years and years with no ability for them to come out of it.”

Since the Greek economy skidded off the fiscal cliff in 2010, Greeks have seen their incomes drop by 25% and the unemployment rate rocket to 27%, driving more than 300,000 young workers abroad to seek work.

In Brussels, Tsipras told reporters there should be a deal that would restore Europe’s dynamism, vowing to improve the country’s finances to mainly relieve the burden on the growing number of poor Greeks.

“It’s time to bring back the growth agenda to get back on a path of social solidarity needed for people and our common European future,” he said. “We are now at a critical crossroads for Europe. We must show that Europe can bridge its difference and find solutions in line with its founding principles.”

Carassava is a special correspondent.