German ministers defend positions on Greece

In a television interview with broadcaster ZDF to be screened on Sunday, German Vice Chancellor and Economics Minister Sigmar Gabriel said it was unrealistic for Germany to take on so much risk without demanding that Greece change its behavior.

"Then we will have to do the same with Italy, Spain, Portugal," Gabriel said. "The Eurozone would not be able to survive."

Gabriel did criticize Finance Minister Wolfgang Schäuble's suggestion that Greece should consider a temporary exit from the EU. "In my opinion it was not wise to present this as a German suggestion," Gabriel said.

Gabriel said Schäuble should have known that in a Social Democracy the only time to talk about a Greek exit from the Eurozone was "when the Greeks themselves want it."

In an interview published in the "Der Spiegel" on Saturday, Schäuble said: "We never said that Greece should leave the eurozone. We only called attention to the possibility that Athens itself can decide on taking a timeout. Debt relief is not possible within the currency union. European treaties do not allow it."

German lawmakers approved the reopening of debt talks with Athens on Friday by a margin of 439 to 119.

Prime Minister Alexis Tsipras has to negotiate a third bailout deal for Greece worth up to 86 billion euros ($93 billion) over the next few weeks - before likely new elections. Interior Minister Nikos Voutsis said last week that a vote could be called for either September or October.

'Greatest disaster of macroeconomic management'

In a blunt interview with the BBC on Saturday, former Greek Finance Minister Yanis Varoufakis warned that the reforms negotiated with the country's creditors were doomed to fail.

The reform program laid down by Brussels as a precondition for the bailout would "go down in history as the greatest disaster of macroeconomic management ever," Varoufakis said.

"This program is going to fail, whoever undertakes its implementation," he said. Asked when it would fail, he replied, "It has failed already."

Varoufakis suggested, however, that Prime Minister Alexis Tsipras had little option but to sign the agreement: "We were given a choice between being executed and capitulating. And he decided that capitulation was the ultimate strategy," Varoufakis said.

Greek banks re-open

The Greek government decree to re-open banks was announced hours after new ministers were sworn in on Saturday. The reshuffle removed nine ministers who had failed to support the government in the vote on new austerity reforms.

From Monday, account holders will have slightly more flexible withdrawal limits, allowing a maximum of 420 euros a week in place of the strict limit of 60 euros a day imposed when the banks closed. Restrictions on transfers abroad and other capital controls remain in place.

On Friday all 28 members states in the European Council adopted a decision granting up to 7.16 billion euros in short term financial assistance to Greece under the European Financial Stabilisation Mechanism (EFSM).

The EFSM is an emergency funding program reliant upon funds raised on the financial markets and guaranteed by the European Commission, using the budget of the European Union as collateral.

The loan will have a maximum maturity of three months and will be disbursed in up to two instalments. It will allow Greece to clear its arrears with the IMF and the Bank of Greece and to repay the European Central Bank (ECB) "until Greece would start receiving financing under a new programme from the European Stability Mechanism (ESM)," the Commission announced.

On Monday Greece is scheduled to repay the ECB 4.2 billion euros and is in arrears to the IMF.

To keep to the new program, Greece has been called upon to enact further pension reforms, open up closed professions, loosen trading rules, privatise its electricity network, reform its labor market and strengthen its banks, among other measures.

jm/gsw (Reuters, dpa)