Greek finance minister says he does not believe Europe would let his country leave the eurozone, but decision on its fate is expected by Thursday

Fears that Greece could leave the eurozone continued to mount on Saturday, despite its finance minister saying that Europe would not allow that to happen.

Yanis Varoufakis told BBC Radio 4’s Today programme: “I don’t believe that any sensible European bureaucrat or politician will go down that road.”

Asked whether the EU and the International Monetary Fund (IMF) were bluffing, he said: “I hope they are.”

Varoufakis said Greece had not agreed to the proposals offered by its creditors because they were “yet another version of the failed proposals of the past”.



Greek officials and the country’s creditors were due to resume talks in Brussels on Saturday. Athens needs to reach a deal before the end of June to avoid running out of money and defaulting on payments due to the IMF.



It is expected to make counter-proposals at Saturday’s talks in Brussels in a bid to end a five-month standoff since Alexis Tsipras’s anti-austerity government was elected in January.

In a signal that Athens may be prepared to make major concessions, Tsipras told Greek officials attending Saturday’s talks: “If we arrive at a viable accord, even if it is a difficult compromise, we will take up the challenge because our only criteria is to get out of the crisis … The decisions and how we handle them belong to us completely, despite their difficulty.”

Whatever needs to be done “should be done quickly”, said the deputy finance finister, Dimitris Mardas, who predicted that there would be a deal.

Eurozone finance ministers will meet on Thursday in Luxembourg and that meeting is now viewed as the deadline for a decision on Greece’s fate.



Officials preparing for the Luxembourg talks included the default scenario in their discussions for the first time at a meeting on Thursday night in Bratislava.

Until then they had refused to countenance the prospect of a default and the issue has not been discussed at any official level.

The German chancellor, Angela Merkel, is said to have resigned herself to the prospect, and an opinion poll for ZDF television found that 51% of Germans wanted Greece to leave the eurozone, up from 33% at the start of the year.

Varoufakis sought to play down the level of dissatisfaction with Greece in Germany. “I think [Merkel] does not even begin to contemplate an exit of Greece from the eurozone,” he said. “What matters, in the context of the European Union, is that we get it together and work towards a sensible solution that is mutually beneficial.”

The European Central Bank chief economist, Peter Praet, said on Saturday that the bank’s governing council wanted Greece to remain in the eurozone.

Fears that a “Grexit” would cause chaos in European markets have subsided in recent months and officials believe it would not cause lasting damage to the euro.

The vice-president of Germany’s Bundesbank said, however, that the full extent of the fallout of a Greek departure was not certain.

“The direct contagion effect on other countries is smaller because the direct claims of banks on Greece are smaller, but no one knows what the indirect effects would be,” Claudia Buch told the Rheinische Post newspaper.

On Friday it appeared Greece was still refusing to back down. In a policy document leaked to the Greek press, the Tsipras government once again called for a debt restructuring and ruled out pension cuts or labour market reforms that would include wage decreases.



It attacked the IMF’s decision to walk out of negotiations on Thursday, arguing that it represented pressure not on Greece, but on Germany. The IMF said the gap between the two sides was too wide and there had been no progress in talks.

The negotiations have gone from bad to worse in the past 10 days and reached stalemate, with Tsipras refusing to table proposals that would satisfy Greece’s creditors by agreeing to pension cuts and tax increases. He has been insisting on a form of debt writedown - which is anathema to the Germans.

The eurozone, in turn, has reverted to the pre-Tsipras practices of the past five years of serving up ultimatums and policy diktats to the Greeks.

Standard & Poor’s lowered the rating of Greece’s biggest four banks on Friday, two days after doing the same to Greek government bonds, which it had already rated as junk.

The ratings for Alpha Bank, Eurobank, the National Bank of Greece and Piraeus Bank were cut from CCC+ to CCC, S&P said.

“The downgrade reflects our view that Greek banks will likely default within the next 12 months in the absence of an agreement between the Greek government and its official creditors,” the agency said.