PARIS/BRUSSELS: Debt-laden Greece and EU paymaster Germany struck hardline postures ahead of a crucial meeting of eurozone finance ministers Monday on the future of an unpopular international bailout for Athens, but France called for a compromise.
With officials involved in preparatory talks offering conflicting assessments of whether there had been progress on an interim compromise, German Finance Minister Wolfgang Schaeuble maintained a typically tough line, saying Greece had lived beyond its means for a long time and there was no appetite in Europe for giving it any more money without guarantees.
"What I have heard so far has not strengthened my optimism. It seems like we have no results so far," he said as he arrived for talks starting at 3 p.m. (1400 GMT) in Brussels. "I'm quite sceptical. The Greek government has not moved, apparently."
French Finance Minister Michel Sapin hinted at a slight easing of eurozone opposition to Greek requests for an end to austerity and a new debt deal, saying Europe must respect the political change in Athens. On arrival in Brussels, he urged the Greeks to extend their current deal to allow time for talks.
EU Economics Commissioner Pierre Moscovici, a former French finance minister, declined to discuss what might happen if they failed to reach a deal. The "only aim," he told reporters on arrival for the meeting, was to keep Greece in the eurozone, fully respecting its commitments to creditors while "taking into account the programme that the Greek voters chose."
Radical leftist Greek Prime Minister Alexis Tsipras's government was elected last month on a pledge to scrap the bailout, reverse austerity measures and get rid of supervision by the hated "troika" of the European Commission, the European Central Bank and the IMF.
Greece's eurozone partners to date have shown little desire to cut Athens any slack on the austerity demanded in return for 240 billion euros ($270 billion) in financial assistance.
If Monday's meeting ends in a breakdown, Greece could be headed for a credit crunch that could force it out of the eurozone. Progress, however, could mean further negotiations, perhaps later in the week.
Greek Finance Minister Yanis Varoufakis said his country would no longer be treated as a "debt colony" subjected to "the greatest austerity for the most depressed economy."
"The lines that we have presented as red will not be crossed," he said in a New York Times article.
"Our government is not asking our partners for a way out of repaying our 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."
Tsipras had a late telephone call with European Commission President Jean-Claude Juncker on Sunday, whose office said the EU's chief executive was "making a last effort in an extremely difficult situation."
Speaking on France 2 television, Sapin took a much softer line than has been heard from the eurozone in recent weeks, saying there was "fortunately" some chance of a deal. He appeared to be positioning France as a compromise broker.
Germany had a point in insisting that Greece stick to commitments made to its creditors, Sapin said, but Athens was justified in saying the Greek people had mandated the new government to pursue a different policy.
"Greece must respect European rules ... be we must respect the Greek people's vote. There is a new policy and we must help Greece put this policy in place," he said.
There was no such flexibility from Schaeuble.
The Greek government was behaving "quite irresponsibly," he said On Deutschlandfunk radio.
Deposit outflows in Greece have picked up as initial talks have shown little result. The ECB has allowed emergency funding for banks by the Greek central bank so far, but a failure of the debt talks could mean the imposition of capital controls.
Eurozone member Cyprus was forced to close its banks for two weeks and introduce capital controls during a 2013 crisis. Such controls would need to be imposed when banks are closed. Greek banks are closed next Monday for a three-day weekend marking the start of Orthodox Lent.
The ECB will review its policy on Wednesday in the light of the Brussels talks, but an ECB source said it was unlikely to pull the plug on Greek banks as long as the terms of a future programme were still under discussion.
Greek bond yields inched up Monday but investors remained cautiously optimistic that Athens would reach a new debt deal with its European partners later in the day.
The chief executive of Morgan Stanley bank, James Gorman, said he believed the likelihood of Greece negotiating a debt restructuring were greater than the country being forced out of the euro. He also doubted that the monetary union was in danger.
Tsipras has requested a bridge program to be put in place for a few months while a new debt relief deal is agreed to replace the existing bailout, which has already forced drastic cutbacks onto ordinary Greeks.
The current program expires at the end of the month. A Eurogroup meeting last week ended without progress, although technical talks were later agreed and took place over the weekend to identify the gaps between the bailout scheme and the new government's plans.
Some of the problems facing the Eurogroup are semantic. The Greeks, for example, will not countenance anything that smacks of an "extension" to the old bailout or a continued role for the "troika."
Tsipras, who rode to power on a wave of anti-austerity and anti-bailout anger, would have a hard time explaining a climb-down so soon.
Even a cosmetic change could have practical consequences. An "extension" may not prompt many eurozone national ratifications unless it involves additional funds from eurozone governments.
Any new financing program, on the other hand, might require parliamentary approval in several countries and could also bring Germany's Constitutional Court into play.
Among those requiring a parliamentary vote on a new bailout are Germany, Slovakia, Estonia and Finland, all identified by one EU veteran as among hard core of opponents to Greece's plan.