The Latest: Germany suggests Greece issue IOUs domestically

ATHENS, Greece (AP) — The latest on Greece’s financial crisis (all times local):

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3:55 p.m.

The German government is arguing that one possible way to help Greece meet its financial obligations in coming days, before a full bailout program is established, is for the country to issue IOUs for domestic needs.

Finance Ministry spokesman Martin Jaeger said Wednesday that “we have included this element in the discussion” among eurozone nations on how to keep Greece afloat while talks proceed on the details of a full bailout deal. The talks are expected to last weeks.

Jaeger says that IOUs are just one of “various conceivable approaches.”

Greece needs short-term financing among other things to repay a loan to the European Central Bank due next week and to clear arrears with the International Monetary Fund.

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3:45 p.m.

More than half of the governing left-wing Syriza party’s central committee has signed a statement slamming the agreement Greece reached with its European creditors earlier this week, describing it as a coup against their nation by European leaders.

The statement, signed by 109 of the committee’s 201 members, says the agreement was “the result of threats of immediate financial strangulation” and is a new bailout with “humiliating terms of supervision, destructive for our country and its people.”

Greece’s parliament is expected to vote Wednesday on the austerity bill required to get a new bailout package.

“On July 12 a coup was carried out in Brussels that proved that the aim of the European leadership was the exemplary annihilation of a people who envisaged that another path could be followed beyond the neoliberal model of extreme austerity,” the statement says. “A coup that goes directly against any kind of notion of democracy and popular sovereignty.”

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3:15 p.m.

Germany says eurozone leaders were aware of the International Monetary Fund’s analysis of Greece’s debt situation when they drew up a preliminary bailout package and that, while Berlin takes the IMF’s conclusions seriously, its position isn’t new.

The IMF said Tuesday that Greece needs debt relief going “far beyond what Europe has been willing to consider so far.” Germany says an outright debt cut would be illegal under European law and argues that there’s only limited room for maneuver on lesser forms of debt relief.

Finance Ministry spokesman Martin Jaeger says that the European approach of making countries’ debt sustainable by getting budgets in shape has worked well elsewhere.

He says Germany still believes that approach can work in Greece with the help of economic reforms and a privatization fund.

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2:55 p.m.

The European Commission says there are “serious concerns” about the sustainability of Greece’s debt load amid a worsening in its economy.

The Commission says in a report that its main forecasts are for debt to reach 165 percent of GDP in 2020, 150 percent in 2022 and 111 percent in 2030. In an ‘adverse’ scenario, in which the economy does worse than expected, the debt load would hit a massive 187 percent, 176 percent and 142 percent, respectively.

The left-wing government of Prime Minister Alexis Tsipras took office in January. The Commission says that since the end of last year, there was a “very significant weakening of commitment to reforms and backtracking on previous reforms” which quickly led to a “significant deterioration of debt sustainability.”

The Commission has cut its growth estimates and expects up to a 4 percent contraction in Greece’s economy this year, compared with a 0.5 percent rise predicted early this year.

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2:30 p.m.

Greece’s Alternate Finance Minister Nadia Valavani has resigned from government in protest over the austerity measures the country is asked to implement in exchange for a bailout.

Arriving in Parliament, Valavani said she was not going to vote in favor of the agreement, and that this meant she could not stay on as part of the government.

Earlier, Greece’s finance ministry released a letter she had sent to the prime minister on Monday morning, saying that if he returned from Brussels having made commitments for harsh austerity measures she would be unable to continue as a member of the government.

Prime Minister Alexis Tsipras agreed to a deal Monday morning under which Greece must pass through parliament harsh austerity measures his left-wing government had long battled against in return for the start of negotiations on a third bailout of about 85 billion euros.

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1:50 p.m.

The European Commission is proposing to give Greece 7 billion euros in loans from a special fund overseen by all 28 EU nations so it can meet debts due in coming days.

The loan would be made pending the start of a full bailout program agreed on between the 19 eurozone leaders on Monday.

Since Greece needs to meet debt payments as soon as next week, eurozone nations have been looking for a way to give it a first, quick loan. They are considering tapping a fund, the EFSM, which is backed by all 28 countries in the EU. The problem is that non-euro nation Britain does not want to help pay for Greece, which it considers a eurozone issue.

EU Commissioner Valdis Dombrovskis says that dipping into the EFSM “is not an easy option” but says there are no other obvious options.

Once the full bailout package is operational, the initial loan could be repaid with money from the new program.

Domvrovskis adds that the Commission is looking for guarantees to protect non-euro nations on such a loan.

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1:15 p.m.

An independent United Nations expert on foreign debt says Greece’s creditors may break international law if the austerity measures they demand lead to undue hardship.

Juan Pablo Bohoslavsky says he is concerned about reported shortages of medicines and food caused partly by restrictions on money transfers.

He says in a statement Wednesday that European institutions, the International Monetary Fund and the Greek government must ensure that any bailout deal safeguards the right to health care, food and social security.

Bohoslavsky says “there is real legal risk that some of the harsh austerity measures could be incompatible with European and international human rights law.”

He is scheduled to visit Greece Nov. 30 to Dec. 7.

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11:45 a.m.

Greece’s finance ministry says the banks will remain closed through Thursday.

The ministry says the transactions that can be carried out at the few bank branches that are allowed to open are being broadened. Apart from allowing pensioners without bank cards to withdraw 120 euros per week, they will also process payments for credit card bills, debts to the state like taxes and utility bills, and the payment of insurance company bills.

They will also allow the transfer of funds between accounts in the same bank.

Banks have been shut in Greece since June 29 and capital controls have been imposed restricting ATM cash withdrawals to 60 euros per day, and to 120 euros per week for pensioners and the unemployed without bank cards. Credit and debit card payments within the country are allowed, as are electronic banking transactions within the country. Bill payments abroad or sending funds abroad require special permission.

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11:40 a.m.

Spanish Prime Minister Mariano Rajoy says he will put the new Greek rescue plan up for debate and vote in Parliament, even though it is not obligatory.

The proposal is more symbolic than anything. Rajoy backs the rescue deal and his conservative Popular Party’s absolute majority in Parliament guarantees its approval.

Rajoy made the proposal Wednesday saying Spanish taxpayers were being asked to guarantee a lot of funds under the deal. He did not set a date for the vote.

He announced the measure during a parliamentary debate on the recent European Union summit.

Six EU countries are obliged to submit the plan to parliamentary vote.

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9:30 a.m.

A German official says criticism by Greek Prime Minister Alexis Tsipras of the preliminary bailout deal with creditors isn’t helpful.

Tsipras told state TV that “the policies imposed on us were irrational” but the deal was the best Greece could get. Creditors are demanding that the Greek Parliament pass initial legislation on Wednesday.

Germany led eurozone countries pushing a hard line. Deputy finance minister Jens Spahn criticized Tsipras’ comments, telling ARD television: “This is not just about saving (money); it is about this country needing an idea of how it wants grow economically again, how it wants to be successful, change structures and win trust.”

He added: “If someone then says, ‘I don’t actually stand by what I’m doing now,’ I find that difficult. That doesn’t necessarily create trust.”

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