UPDATE 2-Greece isolated in euro zone, ministers to meet Feb. 11
(Adds Commission position, final paragraph)
By Jan Strupczewski
BRUSSELS, Feb 6 (Reuters) - Greece's new government was
isolated at its first meeting with senior euro zone officials
but will have a chance to put forward its plans at a special
meeting of finance ministers of the currency bloc next week, EU
officials said on Friday.
Eurogroup finance ministers will discuss how to proceed with
financial support for Athens at a special session next Wednesday
in preparation for talksamong European Union leaders on the
issue the following day.
The meeting, to start at 1630 GMT in Brussels, will be a
chance for the leftist-led government elected on Jan. 25 to
explain how it wants to reform its economy and consolidate
publicfinances while respecting commitments Greece accepted
under previous governments.
Euro zone officials made no progress at a preparatory
meeting on Thursday evening because the positions of Athens and
other euro zone countries were so far apart.
"It was Greece against all others, basically one versus 18,"
one official said, describing the discussions.
The new government is dominated by the hard-left Syriza
party which campaigned on a platform of demanding a partial debt
write-off,putting an end to austerity measures and reversing
some of the reforms of last four years.
Prime Minister Alexis Tsipras and his ministers promised in
their first days in office to raise the minimum wage, re-hire
some sacked government employeesand stop some privatisations.
This clashed with the commitments made by previous
governments to the International Monetary Fund and euro zone
countries, which have lent Athens a total of 240 billion euros.
The position of euro zone countriesis more in line with
that of Germany, which spell out in a paper prepared for the
meeting that it did not agree to any rolling back of reforms or
commitments made by previous Greek governments. [ID:nL6N0VE4S3]
"There were no conclusions after thetalks last night. It is
up to the Greek government to tell us what they want to do," one
euro zone official said.
Greece is free to design its own reforms in line with
Syriza's campaign promises, as long as the end result is in line
withcommitments to stronger public finances, debt repayment and
reforms, the official said.
"The overall policy mix may reflect the priorities of
Syriza. But it has to make sense financially," a second official
said.
Time to reach a deal isshort, because Greek banks will no
longer be eligible to use Greek government bonds as collateral
in daily refinancing operations with the European Central Bank
from Feb. 11.
After that, they will have to rely on emergency liquidity
assistancefrom the Greek central bank, which is more costly and
can be stopped by the ECB if there are no prospects for a deal
between the euro zone and Greece.
Moreover, some analysts say Greece could run out of cash as
early as March if it does not getfurther euro zone help.
"Greece's financing needs over the next five years may
amount to 30-35 billion euros," Unicredit bank said in a
research note.
"However, if we set the primary surplus at 1-1.5 percent of
GDP and assume thatprivatisations will stop, as requested by
the Greek government, overall financing needs would rise to 60
billion euros," Unicredit said.
"In any case, a very quick fix is needed because in 2015
there will be a peak in both redemptions andfinancing needs.
Without external support, Greece could run out of cash as soon
as March," the bank said.
A European Commission official said the EU executive saw the
best way forward as extending Greece's existing programme. This
would require
16:29-06/02