Greece and its euro zone partners engaged in brinkmanship on Monday, with leftist Prime Minister Alexis Tsipras insisting his country would not extend its reform-linked bailout and Germany saying it would get no more money without such a programme. European Commission President Jean-Claude Juncker warned Greeks not to expect the euro zone to bow to Tsipras’ demands in a growing confrontation which spooked financial markets and prompted U.S. and Canadian pleas for calm and compromise.
Escalating the rhetoric, Greece’s finance minister said the euro zone could collapse “like a house of cards” if Athens were forced out. A Greek finance official said he did not believe Juncker, German Chancellor Angela Merkel or IMF chief Christine Lagarde would let Greece go bankrupt. Tsipras set out plans on Sunday to scrap Greece’s “cruel” austerity programme, ruled out any extension of its 240 billion euro EU/IMF bailout, which runs out at the end of this month, and vowed to seek reparations from Germany for World War Two.
His uncompromising maiden policy speech to parliament triggered a further slide in Greek bank stocks to near record lows and a sharp spike in government bond yields, sending wider jitters around Europe’s financial markets. Visiting Austria on Monday, Tsipras said he was confident of striking a compromise with European partners in the coming days and renewed his appeal for a “bridge” arrangement until June to allow time to negotiate a restructuring of Greece’s debt.