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Posted 2015-02-20 02:01:11 - by Hà Trung Thành
A Greek and a European flag flutter outside the Greek embassy in Brussels, 19 Feb

Eurozone finance ministers are preparing for a key meeting to consider the proposal by Greece to extend its European loan programme.

Friday's meeting in Brussels is the eurozone's third attempt to reach a deal to manage Greece's debt.

Germany on Thursday rejected a Greek request for a six-month extension to its eurozone loan programme.

The rejection came despite the European Commission calling the Greek request "positive" only minutes earlier.

Greece had sought a new six-month assistance package, rather than a renewal of the existing deal which linked bailout money to tough austerity conditions.

Prime Minister Alexis Tsipras won elections in late January on a platform of rejecting those austerity measures.

Greece could run out of money by the end of the month without a deal and deposits continue to flow out of its banks.


A German finance ministry spokesman said Greece's new suggestion was "not a substantial proposal for a solution".

An elderly Greek woman sells garlic outside a store in central Athens, 19 FebGreece could run out of money by the end of the month without a deal

Later on Thursday, Mr Tsipras spoke with German Chancellor Angela Merkel by telephone.

One Greek government official described the 50-minute call as "constructive", adding: "The conversation was held in a positive climate, geared towards finding a mutually beneficial solution for Greece and the eurozone."

The United States urged European leaders and Greece to all make concessions. Treasury Secretary Jack Lew spoke by phone with several senior European officials.

Meanwhile, Italian Prime Minister Matteo Renzi spoke to Mr Tsipras and European Commission President Jean-Claude Juncker in a further effort to strike a deal, an Italian government source said.


Greece formally requested a six-month extension to its eurozone loan agreement on Thursday, offering major concessions as it raced to avoid running out of cash within weeks.

The BBC's Mark Lowen in Athens says Germany's swift rejection of the proposal suggested "a rift between Brussels and Berlin at the very highest level".

Greece's Finance Minister Yanis Varoufakis (R) and German counterpart Wolfgang Schaeuble, 5 FebThere has been little sign of agreement between Greece's Finance Minister Yanis Varoufakis (R) and German counterpart Wolfgang Schaeuble

A top European official said the stand-off had come down to a clash of personalities between German Finance Minister Wolfgang Schaeuble, who objected to the negotiating style of his Greek counterpart, Yanis Varoufakis.

"There is a real problem of personalities and I understand that. Schaeuble is outraged by comments made by Varoufakis," the official said.

The Greek request letter includes a pledge to maintain "fiscal balance" for a six-month period, while it negotiates with eurozone partners over long-term growth and debt reduction.

The Greek government was also reported as saying that its extension proposal was in order to give Athens enough time, without the threat of "blackmail and time deficits", to draw up a new agreement with Europe for growth over the next four years.

Bank of Greece, 18 FebDeposits are continuing to flow out of Greek banks

The German finance ministry spokesman said the Greek request was an attempt at "bridge financing, without meeting the requirements of the programme. The letter does not meet the criteria agreed upon in the Eurogroup on Monday."

But shortly before the German rejection of the proposal, a European Commission spokesman said that Mr Juncker regarded the letter as a "positive sign, which, in his assessment, could pave the way for a reasonable compromise in the interest of the financial stability in the euro area as a whole".

"The detailed assessment of the [Greek loan] letter and the response is now up to the Eurogroup," the spokesman added, referring to Friday's meeting.

In comments aimed at Germany, a Greek government source said the Eurogroup had "just two choices: to accept or reject the Greek request. We will now discover who wants to find a solution, and who does not".

Friday's decision on the Greek proposals must be unanimous.

Chart showing declining Greek bank deposits

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