Euro leaders give Tsipras the cold shoulder

Brussels: Greek Prime Minister Alexis Tsipras faced widespread opposition from euro-area governments to his key demand for a debt writedown, with many policymakers holding out only an existing pledge to grant easier repayment terms.

Governments from Berlin to Lisbon rejected Tsipras’s central request, saying they believed that conditions on bailout loans are already favourable.

Greece retreated from its call late on Monday, with finance minister Yanis Varoufakis outlining plans in a meeting with financiers in London to exchange existing borrowings for new bonds linked to growth.

“It’s important for everyone in the European Union that Greece respect its commitments, comply with European rules like everyone,” Portuguese Prime Minister Pedro Passos Coelho said. During the three years of Portugal’s rescue program, “we did our part of the job and so we can demand that the others also do so”, he said on 30 January.

Tsipras and Varoufakis embarked this week on tours of European capitals attempting to convince governments to look kindly upon the week-old government’s demand for debt relief. Greece’s creditors in the 19-nation euro bloc showed little appetite to offer major concessions.

“Europe will continue to show solidarity with Greece, as well as other countries especially impacted by the crisis, if they undertake their own reforms, savings efforts,” German Chancellor Angela Merkel told Hamburger Abendblatt in an interview published on 31 January. “There was already a voluntary waiver by private creditors— banks have already written off billions in Greek debt. I don’t see a further haircut.”

Greek bonds and stocks rallied on Monday following a statement from Tspiras promising to abide by existing financial obligations.

They extended gains on Tuesday after Varoufakis proposed to exchange some Greek debt owned by the European Central Bank and the European Financial Stability Facility (EFSF) for new securities, according to a person who attended the meeting in London and asked not to be identified because they weren’t authorized to speak publicly. Varoufakis indicated that the move would allow Greece to avoid imposing a formal haircut on creditors, the person said.

Tsipras visited Cyprus before trips to Rome, Paris and Brussels, with Berlin not yet on the agenda.

“In our opinion, the conditions are very favourable for Greece,” Estonian finance minister Maris Lauri said on Monday, adding that the country doesn’t support a writedown of Greek debt and instead requires “Greek reforms to continue.”

In total, Greece’s euro-area neighbours have granted it €195 billion in bilateral loans and through their participation in the EFSF, part of the region’s firewall, according to Bloomberg Economics. Governments are also on the line as capital owners of the ECB and the International Monetary Fund. At €60 billion, Germany has the largest total exposure to Greek public debt of any euro-area government, according to Bloomberg Economics’ calculations. France’s exposure stands at €46 billion, and Italy’s at €40 billion.

Tsipras and European commission president Jean-Claude Juncker will meet on Wednesday morning in Brussels to see where debt talks head next. Any solution that emerges must pass muster with all euro-area nations, said Margaritis Schinas, a spokesman for the Brussels-based commission.

“We’re not going to change everything because of one electoral result that some people may like and some people don’t like,” Juncker said on Tuesday at the European Parliament in Brussels.

The EU’s starting point for talks is Tsipras’s pledge to seek a “mutually beneficial agreement” for Greece and Europe as a whole. The Greek leader said Greece won’t act unilaterally and won’t duck its obligations to the ECB or the IMF. France, the euro-area’s second-largest economy, has shown willingness to help Greece reach a deal.

It’s “legitimate” for Greeks to be concerned about their debt burden, French finance minister Michel Sapin said after meeting Varoufakis in Paris on 1 February. Greece’s creditors should offer the country a “new contract,” Sapin said. Bloomberg

John Martens and Rebecca Christie in Brussels, Boris Cerni in Ljubljana, Joao Lima in Lisbon, Lorenzo Totaro in Rome, Corina Ruhe in Amsterdam, Alexander Weber in Vienna, Radoslav Tomek in Bratislava, Slovakia, Ott Ummelas in Tallinn, Dara Doyle in Dublin, Angela Cullen and Jana Randow in Frankfurt, Maria Tadeo in Madrid, Kati Pohjanpalo in Helsinki, Jonathan Stearns and Mark Deen in Paris and Julia Verlaine and Svenja O’Donnell in London contributed to this story.