German, Greek finance ministers at odds at first meeting

Greece wants a new deal on its debt, while Germany won't budge on the existing terms in return for rescue money from the European Central Bank, International Monetary Fund and European Union – or the 'troika' - that keeps the the Hellenic Republic from going bankrupt.

BERLIN // Greece’s new finance minister failed to convince his German counterpart to immediately back a new approach on Greece’s debt when they met on Thursday for the first time since the anti-bailout Syriza swept to power in Athens.

Germany’s Wolfgang Schaeuble said he and Greece’s Yanis Varoufakis “agreed to disagree” at their meeting in Berlin, and that a writedown, or haircut of Greece’s debt, was not on the negotiating table.

“Greece belongs to the euro,” Mr Schaeuble said. “But we don’t really agree on what we have to do now despite a very intense, open discussion.”

Berlin’s views matter as it is the biggest European contributor to Greece’s five-year bailout programme.

Germany is a staunch proponent of the strict fiscal discipline that Greece has to impose in return for the rescue money that has prevented it going bankrupt. Still, the deep income and spending cuts hit the Greek economy hard. It is now around a quarter smaller than it was six years ago while unemployment, particularly among the young, is near record-high levels.

Mr Varoufakis insisted that it is not Athens’ intention to default on its debts and that it wants to carve out a new compromise deal that will be to the mutual benefit of Germany and Greece.

He said Greece would do everything to avoid any default and said he was confident that Athens and its partners would “put the D-word out of court”.

“We didn’t discuss Greece’s debt schedule for repayments, we didn’t discuss a [debt] haircut,” Mr Varoufakis said. “We set the scene for deliberations that will lead to an approach that will put an end to this seemingly never-ending crisis.”

Varoufakis said the Greek government is looking for a bridging programme between now and the end of May to give room for talks on “a new contract” with the European Central Bank, International Monetary Fund and European Union.

Schaeuble renewed offers to help Greece strengthen its tax system and said some things the new government has announced do head in the right direction – such as getting the rich to pay tax and combating corruption.

But he said that “some of the measures that have been announced … don’t necessarily go in the right direction.” He also made it clear that it’s important to respect existing agreements, arguing that “reliability is the condition for confidence.”

The discussions came as the European Central Bank tightened the screws on the country’s banking system, in a move that many in the financial markets think piles pressure on the new government to swiftly conclude a compromise debt deal.

* Associated Press