Greece defies euro zone on pension, labor reform

Greece defied its international creditors on Thursday by sticking to quotred linesquot on pension and labor market reforms and urging lenders to give ground, dimming prospects of progress next week towards securing desperately needed financial aid.

Despite efforts by European Commission President Jean-Claude Juncker to coax leftist Prime Minister Alexis Tsipras into moving on two key conditions for releasing EU/IMF bailout funds, the Greek government spokesman said lenders could not expect Athens to make all the concessions for a deal. quotThere should not be an expectation on the part of institutions … that the government will back down on everything,quot Gabriel Sakellaridis told a news conference. quotWhen you negotiate, there should be mutual concessions. We won’t go beyond the limits of our red lines,quot he said. quotIt’s clear that we cannot cut pensions.quot Athens is running out of cash but has yet to reach a deal on reforms with its lenders, who have ruled out an agreement by next Monday’s meeting of euro zone finance ministers. Sakellaridis spelled out Greek hopes that the Eurogroup ministers will recognize progress towards an agreement in a joint statement, giving the European Central Bank leeway to let Athens sell more short-term debt to Greek banks. That would ease the immediate funding crunch, helping the government make a 750 million euro payment to the International Monetary Fund on May 12 and pay wages and pensions later. However, sources familiar with the deliberations said the ECB was highly unlikely to make such a move unless the euro zone ministers set out a very strong prospect of releasing the frozen bailout funds.

quotWe’re nowhere near that as things stand today,quot said an official close to the negotiations between Greece and European Commission, ECB and IMF. The central bank on Wednesday raised the amount of emergency liquidity assistance Greek banks can tap to counter deposit outflows and held off from tightening conditions for collateral they must present. But without a political deal, the ECB could toughen its stance in the next two weeks, the sources said. Confidence between Athens and its euro zone partners is at a low ebb after three months of radical rhetoric, obstruction of EU and IMF officials, contradictory policy statements and obdurate negotiations.