Greece crisis: New Government expected to request extension of bailout programme
Greece edged a day closer to a possible euro exit as top European policy makers inisisted that the government there must request an extension of its bailout programme, something Greek leaders vow they will not do.
Unlike three years ago when fears Greece could crash out of the euro panicked investors, markets are holding steady.
The euro recovered from a dip and stocks recovered losses that followed the breakdown of talks on Monday, as money markets took the view that both sides will eventually step back from the brink.
The Greek situation is coming to a head as senior Eurozone figures - including Eurogroup chair Jeroen Dijsselbloem - retained a tough line, insisting the wise move would be for Athens to ask for the extension ahead of a deadline later this week, before its bailout ends on February 28.
Greek finance minister Yanis Varoufakis is taking an equally firm line, but he once again said he believed a solution could be found to the impasse, yesterday.
Talks between Eurozone finance ministers and Greece broke down on Monday night - the second time in less than a week - raising further concerns about the prospect of Greek exit from the Eurozone.
Discussions allegedly ended after Greek negotiators settled on a draft agreement with the European Commission, only for the text to be replaced with alternative wording when it came to signing the deal.
All eyes are now on the European Central Bank, which must decide today whether to extend Emergency Liquidity Assistance (ELA) funds to Greek banks to keep them in cash while the crisis unfolds.
There was no sign of a softening in stance from Germany and yesterday, Mr Dijsselbloem, the Dutch finance minister who chairs the Eurogroup, stuck to his guns, saying Athens must seek an extension: "It's really up to the Greeks. We cannot make them or ask them."
Finance Minister Michael Noonan didn't speak to reporters in Brussels yesterday, but a spokesman said his position is close to that of Mr Dijsselbloem. Mr Noonan has already said that a bailout extension would be the best immediate way of making progress.
The Greek government, led by far left party Syriza, came to power last month on a promise to end austerity measures and to renegotiate the bailout deal.
While the pressure is on Greece, Mr Varoufakis showed little sign yesterday that he was preparing to capitulate. Speaking in Brussels he said he remained upbeat that a deal could be secured.
"The next step is the responsible step. Europe will continue to deliberate in order to enhance the chances of being able to achieve a very good outcome for the average European,'' Mr Varoufakis said. ''We know in Europe how to deliberate in such a way as to create a very good solution."
UK Chancellor George Osborne warned that failure to reach a deal would be very severe for economic and financial stability. He said ''competence, not chaos'', was needed.