Voice Of Post

Greece must make up its mind, says Schaeuble, Greece must make up its mind whether it wants to extend the bailout programme, German finance minister Wolfgang Schaeuble has said.

"None of my colleagues so far understands what Greece wants... whether Greece itself knows is not clear either," he added.

On Monday night, Greece rejected a plan to extend its €240bn (£178bn) bailout.

The Greek government called the proposal by the Eurogroup "absurd" and "unacceptable".

But Greek Finance Minister Yanis Varoufakis declared he was ready to do "whatever it takes" to reach agreement over Greece's bailout, despite the collapse of the talks.

And he said he was prepared to agree a deal under different conditions.

Arriving for talks with eurozone finance ministers on Tuesday, UK Chancellor George Osborne warned that failure to reach a deal on Greece's bailout programme would have "very severe" consequences for economic stability across Europe.

The Greek stock exchange fell in early trading but recovered round as the day progressed. In early afternoon, the main Athens stock market was down 0.8%.

Stock exchanges across Europe all fell in morning trade before recovering.US investment bank JP Morgan claimed over the weekend that €2bn worth of deposits was flowing out of Greek banks each week and estimated that if that were to remain the case, they would run out of cash to use as collateral against new loans within 14 weeks.

JP Morgan's estimate is based on a calculation that a maximum of €108bn of deposits is left in Greek banks.

The most up-to-date figures from the Greek central bank show deposits dropped 2.4% month-on-month in December to €160.3bn from €164.3bn, marking the third monthly fall in a row.

Deadline
Dutch Finance Minister Jeroen Dijsselbloem, who is also chairing the Eurogroup meetings of eurozone finance ministers, warned on Monday night there were just days left for talks.

Mr Dijsselbloem said it was now "up to Greece" to decide if it wanted more funding or not.

Ahead of Tuesday's meeting, he said: "I hope they [Greece] will ask for an extension to the programme, and once they do that, we can allow flexibility, they can put in their political priorities.

"Of course, we will see whether their programme remains on track. But that is the way forward. It's really up to the Greeks. We cannot make them or ask them. It really it really is up to them. We stand ready to work with them, also [over] the next couple of days."

Greece's current bailout expires on 28 February. Any new agreement would need to be approved by national governments, so time is running out to reach a compromise.

Without a deal, Greece is likely to run out of money.Mr Varoufakis said on Tuesday that ministers would "continue to deliberate", in order to enhance the chances of a deal.

He added he wanted to achieve "a very good outcome for the average European. Not for the average Greek, the average Dutch person or the average German".

"We know in Europe how to deliberate in such a way as to create an honourable solution out of an initial disagreement," Mr Varoufakis said.

But he dismissed talk of "some flexibility" in the programme as "nebulous" and lacking in detail.The apparent deadlock in Brussels is hardly surprising, because the two sides have very different goals.

The Greek government wants to scrap the current bailout deal, because of the very painful programme of spending cuts and other austerity measures that come with it. Instead, it wants a bridging loan to help it meet its short term needs, while a new deal is hammered out. Having been elected on an anti-austerity ticket, it can't afford to back down, or it will be accused of betraying Greek voters.

But other members of the eurozone, and Germany in particular, have a very different agenda. They want Greece to accept an extension to the current deal - with the rather uncertain promise of "flexibility" if it plays ball.

They don't want to show any signs of weakness, because of the signal that could send to anti-austerity movements in countries such as Spain, Portugal or Cyprus.

It would also be politically toxic in Germany, where many voters dislike the idea that they are paying for Greece's mistakes.

That doesn't mean a compromise is impossible. It simply means any deal would have to be presented as both an end to the current austerity programme and a continuation of it. A political fudge, in other words - and Brussels has plenty of experience in putting those together. So a short-term solution is possible, but far from certain.