A stony-faced Merkel reiterated what she had said in Brussels on Friday after a late-night session with Tsipras – that a 20 February agreement with the eurozone extending Greece’s bailout until the end of June remained the yardstick. That agreement obliges Tsipras to deliver a persuasive menu of detailed fiscal and structural reforms which need to be vetted by the eurozone before any further bailout funding can be released. Asked if she had reached any agreements with Tsipras, Merkel avoided the question and stressed she was only one of 19 eurozone national leaders.
Tsipras was believed to have told the German leader that Greece faced insolvency within weeks without the release of more funds, which are being held up because he has failed to produce a coherent policy package. “The medium-term liquidity problem is well known,” he said. “We inherited it.” While neither side wants Greece to leave the euro, the lack of agreement in Berlin signalled a digging in of hardline positions on both sides that could result in a major negotiating failure. Support for the Greek government remains strong at home, in inverse proportion to the lack of trust in Tsipras among his main creditors. A growing majority of Germans do not believe Greece will do what it must to stay in the euro and would prefer to see it leave. The Eurasia group risk consultancy on Monday raised its assessment of the chance of Greece having to quit the euro to 30%, up from a previous 20%. “The prospects of a deal over Greece are diminishing, as Germany, the eurogroup and Greece continue to posture,” said Mujtaba Rahman, its eurozone analyst. “The chances of capital controls, and ultimately, Greece’s exit from the euro, are also increasing. While Berlin still wants to keep Greece in the eurozone, it can and will not be flexible regarding the conditions attached to more financial aid.”
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