Tensions grow over debt relief, Greece sees blackmail

Euro area Finance Ministers suspended debt relief package for bailed out Greece in response to extra spending on pensions announced by Greek Prime Minister Alexis Tsipras while his country’s debt is still worth around 180% of national GDP. “The institutions have concluded that the actions of the Greek government appear to not be in line with our agreements,” said a spokesman for Eurogroup chief Jeroen Dijsselbloem, the head of the Euro area body that supervises Athens’ 86 billion euro bailout.

Conversely, EU Economic and Monetary Affairs Commissioner Pierre Moscovici saw “no reason to question” the debt relief deal. As Greek Finance Minister Euclid Tsakalotos appeared confident the issue could be solved, this new development sent the yield on Greece’s 10-year bond to 7.01% that is an unsustainable level for the Greek State. Tsipras’ move came as a surprise for Greece’s creditors although tensions have been escalating for some time, even with the IMF yet seen as a more understanding actor than the Eurogroup.

Tsipras stood so far by his decision to boost welfare benefits for low-income pensioners while after 8 years of an endless crisis the Greeks seem desperate to find their way out.