Greece has made no secret of its precarious financial position, but the minister’s comments suggest the country has even less time than many policy makers thought to resolve its standoff with Europe.
Eurozone officials have asked Greece to come up with a specific funding plan by Wednesday, when finance ministers have called a special meeting to discuss the country’s financial situation.
The country needs €4 billion to €5 billion to tide it over until June, by which time it hopes to negotiate a broader deal with creditors, Mr. Stathakis said, adding that he believes “logic will prevail.”
If it doesn’t, he warned, Greece “will be the first country to go bankrupt over €5 billion.”
If the Greek government runs out of cash, the country would be forced to default on its debts and reintroduce its own currency, thus abandoning the euro. Most of the €240 billion in aid that Europe and the International Monetary Fund have pumped into the country would be lost.
Greece’s new, leftist government has been in a tug of war with its European creditors for days over relaxing strictures of its bailout program. Athens is pressing for less-onerous terms so it can reverse some of the austerity measures weighing on the country, but its partners in the euro currency area, led by Germany, have refused.
Before the two sides can address Greece’s broader bailout framework, however, they need to quickly find a way to keep the country solvent.
Mr. Stathakis said Athens has asked for €1.9 billion in profits from Greek bonds held by other eurozone governments. In addition, the government wants the eurozone to allow Greece to raise an additional €2 billion by issuing treasury bills, he said.
Both proposals clash with the rules governing Greece’s bailout and eurozone officials have dismissed them.
Europe wants Athens to commit to further labor-market and other reforms as a precondition for more money. The new government is refusing, arguing that it was elected to turn back many of the painful measures Europe and other creditors have demanded of it.
Berlin worries that the eurozone would lose leverage over Athens if it gives into its request for an interim loan. Without a binding agreement from Greece to continue its reform program, officials say Germany is unlikely to back down.
Berlin, which is counting on financial pressures to force the Greek government’s hand, believes time is on Germany’s side.
Those pressures are being felt across Greece’s economy. Its banks lost €8 billion to €10 billion in deposits in January alone, government officials say. The banking system’s woes were exacerbated by the ECB’s decision earlier in the week to no longer accept Greek government bonds as collateral from banks seeking funds.
Greek lenders will instead have to rely on emergency central-bank funding, which is more expensive and requires renewal every couple of weeks.
Germany’s strong-arm strategy carries substantial risk. In addition to possibly triggering Greece’s exit from the euro, it carries political overtones.
Many Europeans already view Germany as the continent’s unyielding paymaster. Refusing to compromise with Greece’s new government over a few billion euros would further cement that image and open Berlin to accusations that it is ignoring Greece’s plight and riding roughshod over the democratic process.
Such resentments could fuel Europe’s other ascendant antiausterity movements, particularly in Spain, where the Podemos party, modeled on Greece’s governing leftists, has recently surged in the polls.
Even if Germany backs down on refusing Greece short-term funding, the two sides remain far apart on revising the broader framework. In addition to far-reaching economic reforms, which the Greek government says it won’t stomach and Berlin insists are essential, there are a host of other obstacles.
In private, German officials say there may be some leeway in extending the repayment schedule for Greece’s debt to the eurozone’s bailout funds and individual member states, but Berlin is less willing to lower the interest payments due on this debt.
Yet nothing short of a substantial reduction in those interest payments would give Greece’s government the fiscal flexibility it needs to meet its promises to end austerity.
On another crucial issue, supervision, Berlin appears ready to accept some changes. Greece’s bailout is overseen by the European Commission, the European Central Bank and the International Monetary Fund—the so-called troika.
Many Greeks feel the troika has humiliated their country. Doing away with the group is one of the new government’s key demands.
“We don’t want to see the IMF coming back to Greece,” Mr. Stathakis said.
German officials insist such changes can only be cosmetic tweaks—the troika could be renamed and some of its meetings held outside of Greece—designed to make a new program easier for Athens to sell to Greek voters and lawmakers. But they point out that IMF programs have always involved minute scrutiny of recipient governments.
