Greece still struggling to clinch new bailout

Last Updated Feb 16, 2015 3:46 PM EST

BRUSSELS - Greece's finance minister says an ultimatum the eurozone gave on the bailout talks is not helpful, but adds Athens is willing to find a solution within two days.

Eurozone creditor nations had told Greece that it would have to accept by the end of the week to extend the country's bailout program. Athens has ruled that out, saying it wants to scrap the deal and agree on a new one with easier terms.

Finance Minister Yanis Varoufakis says Greece is ready to "do whatever it takes reach agreement in next two days."

He says Greece will not accept the austerity terms included in the current bailout program.

"Europe will do the usual trick: It will pull a good agreement or an honorable agreement out of what seems to be an impasse," he said.

Greece and its European creditors began fresh talks on Monday over the country's request to ease its bailout terms, but expectations for a quick deal are low despite a fast-approaching deadline.

Optimism was curbed by German Finance Minister Wolfgang Schaeuble, who said does not expect a solution can be found at the meeting in Brussels. Greek shares were down 3.6 percent in midday trading, while the eurozone's Euro Stoxx 50 index shed 0.1 percent.

"I am very skeptical, because the Greek government apparently hasn't moved at all" in its demands, Schaeuble told reporters as he arrived for talks among the 19 countries using the euro currency.

Greece wants to scrap its existing bailout deal -- worth 240 billion euros (currently $273 billion) from other countries that use the euro and the International Monetary Fund -- and replace it with a new one. In the meantime, it wants a short-term "bridge agreement" that can keep it solvent after Feb. 28, when the current bailout deals ends.

Greek Prime Minister Alexis Tsipras says he also wants to ease the amount of belt-tightening demanded in return for the loans. The austerity is aimed at reducing public debt, but has also caused the economy to shrink by a quarter and unemployment to soar above 25 percent.

Greece's eurozone partners say they are still waiting to hear concrete proposals from Athens and would prefer to extend the current program, at least to buy space for further talks.

"We certainly would accede to a Greek request for an extension to the program, and if that were to happen some of the road blocks would fall away and it would be possible to get down to specifics," said Ireland's finance minister, Michael Noonan.

His French counterpart Michel Sapin, said: "What I would prefer today would be an extension of the program, which would provide some margin of security as well as time for discussion and negotiations."

Some four hours before the meeting was due to start, Greek Finance Minister Yanis Varoufakis and the eurozone chairman, Jeroen Dijsselbloem, arrived at European Union headquarters in Brussels but declined to speak to reporters.

Germany's Schaeuble said Athens was in no position to make demands.

"I feel sorry for the Greeks," he told German radio earlier Monday. "They've elected a government that's behaving pretty irresponsibly at the moment."

In an Op-Ed in The New York Times Monday, Varoufakis said Greece is not looking to avoid paying its debts.

"We are asking for a few months of financial stability that will allow us to embark upon the task of reforms that the broad Greek population can own and support, so we can bring back growth and end our inability to pay our dues," he wrote.

Time is short. If no deal is reached by Feb. 28, Greece's banks could be cut off from affordable funding from the European Central Bank. A serious deterioration in Greek banks' finances could cause depositors to withdraw money, potentially causing a collapse in the banking system.

Ultimately, that could force the government to leave the eurozone -- a move informally dubbed Grexit -- so that it can print its own money and rescue its banks.

Any agreement with creditors will require approval by national parliaments in eurozone countries, which would add further delays.

Asked if emergency funding for Greek banks could be extended "for months," a top ECB official, Peter Praet, said in an interview with Portuguese newspaper Jornal de Negocios that "when you have a systemic crisis, you may need flexibility in terms of duration."

The bank's governing council next reviews the funding permission Wednesday.

Berenberg Bank analyst Holger Schmieding said time and money are running out for Greece.

"A subtle change in tone in Athens suggests that the new Greek government has started to notice," he said in a note. "But whether (Tsipras) has really grasped how close he has already pushed Greece to the abyss of wholesale financial crisis, recession and Grexit and whether he is ready to perform the inevitable U-turn to avoid that fate remains a very open question."