Greece says enough conceded for eurozone deal, now in hands of creditors

Greece went into crunch talks over the extension of an emergency loan program Friday confident that it has conceded enough to secure a deal, with Athens suggesting that an agreement could be close but that it was now in the hands of creditor nations.

“We have covered four-fifths of the distance. They also need to cover one-fifth,” one official told Reuters as eurozone finance ministers prepared for a vital third meeting in Brussels over the Greek bailout. The Finnish finance minister, part of a skeptical group led by Germany, likewise hinted at a “spark of hope” in finding a compromise that would see Greece remain in the eurozone.

Although Athens has dropped some of its key demands in a six-month extension proposal, it remains to be seen if Germany, which to date has doggedly insisted that Greece adhere to stringent austerity conditions, will agree to the plan.

German Chancellor Angela Merkel said Friday that more changes were needed to the Greek plan for it to get the green light from Berlin.

"There is a need for significant improvements in the substance of what is being discussed," she said. The comment comes a day after Berlin dismissed Athens’ proposal as a “Trojan horse” designed to dodge its commitments.

The comment, widely reproduced in Greek press, came despite Greek Prime Minister Alexis Tsipras’ leftist government’s going back on key election pledges, promising to honor debt obligations and agreeing to continued supervision from bailout lenders and the European Central Bank.

Tsipras came to power on the back of a campaign in which he pledged to end austerity measures imposed on Greece by its eurozone creditors. But with time running out to find a solution, Athens blinked first. Its proposals put forward Thursday pulled back significantly from its previous position.

Crucially, it accepted that any extension would be monitored by the European Commission, European Central Bank and International Monetary Fund, a climbdown by Tsipras, who had vowed to end cooperation with the "troika" inspectors accused of inflicting economic and social damage on Greece. Athens also said that it would recognize the existing EU/International Monetary Fund program as the legally binding framework and refrain from unilateral action that would undermine fiscal targets.

The Greek proposal, however, stopped short of accepting that Athens should deliver a primary budget surplus, excluding debt service, equal to 3 percent of the country's annual economic output, as promised under the bailout deal.

Wider demands for a wholesale change to loan repayment terms were kicked six months down the road under the Greek plan.

The move has boosted chances that a solution could be reached to keep the country solvent after the current round of bailout funds is due to end on Feb. 28. Without a deal, the European Central Bank would face pressure to cut off emergency financing for Greek banks — a move that could force Athens into printing its own currency and leaving the euro.

The biggest obstacle remains Germany, which has suggested that despite the concessions, Athens’ has failed to provide sufficiently detailed alternatives to cost-cutting reforms imposed by the previous government in Athens — reforms that Tsipras’ Syriza party has said harmed citizens and further pushed the Greek economy downward.

The apparent intransigence of Berlin in the face of concessions visibly irked Greek officials Thursday. “At this moment it appears that there are powers that would like Greece on its knees, exactly so they can impose their will,” said Deputy Prime Minister Giannis Dragasakis.

Germany's opposition to the Greek request, which was echoed in other eurozone countries — including Belgium, Finland and Slovakia — on Thursday, sets the stage for a tense Friday meeting in Brussels, where 19 finance ministers are meeting.

But the head of the European Commission was somewhat more upbeat about Greece's request. Spokesman Margaritis Schinas said Commission President Jean-Claude Juncker saw in Greece’s latest proposal "a positive sign" that could "could pave the way for a reasonable compromise in the interest of financial stability in the euro area as a whole."

Despite enmity between the two countries’ negotiating teams, Tsipras had a 50-minute telephone call with Merkel on Thursday — believed to be their first substantive exchange since the Athens government was elected on Jan. 25.

"The conversation was held in a positive climate, geared toward finding a mutually beneficial solution for Greece and the eurozone," the official said. A German representative confirmed the call but would not comment on its contents.

With wire services