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Nine-hour EU finance ministers' meeting on Greece inconclusive, Malta said to be opposing bailout

Finance Minister Edward Scicluna with new Greek Finance Minister Minister Tsakalotos.

Finance Minister Edward Scicluna with new Greek Finance Minister Minister Tsakalotos.

Updated midnight - A meeting of eurozone finance ministers about a new bailout for Greece ended without decision after nine hours tonight.

Prime Minister Joseph Muscat said the meeting was inconclusive, and tomorrow's EU summit would be 'a long day'.

Sources said the finance ministers were split.

CNN mentioned opposition to a new bailout by Finland, Slovakia, Estonia, and Malta. The Maltese government, however, has never publicly ruled out a new bailout. What it has opposed is a debt write-off.

France and Italy are leading those backing Greek proposals made on Thursday.

The finance ministers will meet against tomorrow at 11am followed by the summit.

GERMAN PROPOSAL

According to some reports, the German government has argued that Greece could take a five-year "time-out" from the euro zone and have some of its debts written off if Athens fails to improve proposals it has made for a bailout.

In a paper reviewing an offer of reforms from the Greek government in return for a three-year loan, Finance Ministry officials said the plan lacked "paramount important reform areas" and wrote: "We need a better sustainable solution."

The paper, seen by Reuters and first reported by Germany's Frankfurter Allgemeine Sonntagszeitung, offered "two avenues": either tighter conditions binding the Greek government to its new promises or a temporary exit from the euro.

Finance Minister Wolfgang Schaeuble told his euro zone peers that leftist Greek Prime Minister Alexis Tsipras had to do more to persuade Berlin to open negotiations on a new loan. But several sources familiar with the talks said Schaeuble did not raise the option of "Grexit" at the table.

The ministry paper cited three things Greece could do to improve its offer "rapidly and significantly" with the support of parliament:

- Place companies and other assets to be privatised into an independent trust committed to selling them and using the proceeds to pay off national debt;

- Reform the public administration under the supervision of the European Commission;

- Legislate for automatic cuts in government spending if budget deficit targets are missed. 

THE MAIN ISSUE IS TRUST

This morning, Finance Minister Edward Scicluna said re-establishing trust between Greece and its creditors was the biggest issue on the table.

The Finance Minister told the Times of Malta that he did not foresee problems of a technical nature since the cash-for-reforms plan put forward by the Greek government was largely a re-hash of the proposals which were on the table last week, before the Greek referendum.  

Reaching a deal would very much depend on whether creditor countries were concvinced the Greek government would deliver on its promises, Prof. Scicluna said.

“It is clear why doubts still persist. We have a very strange situation involving a government that has put forward a reforms plan that is more ambitious than the packet it campaigned against only last week,” the minister said.

Prof. Scicluna said the Greek government’s change of heart was probably a result of the realisation that the alternative to a deal represented an “ugly” predicament for society and the economy.

Greek banks have been closed for almost two weeks and withdrawals have been capped at €60 per day from cash machines.

“It is positive that the Greek Prime Minister has changed the finance minister and achieved cross-party backing in parliament for his plan, but eurogroup countries would need to be assured that Cabinet ministers will have the energy and willingness to implement the reforms,” he said.

Creditor countries will probably ask for more stringent monitoring of reforms and tie disbursements to strict deadlines, issues the current Greek administration had problems with over the past five months.

Asked whether a debt haircut – forgiving part or all existing loans – was on the agenda, Prof. Scicluna said the terminology being used was debt relief.

“Debt relief can range from a drastic haircut to relaxing the terms of maturity,” he said.

Malta has opposed a haircut along with Germany and many other eurozone countries but is willing to consider more flexible repayment terms. 

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