‘Grextension’ has officially entered the euro-lexicon

Even by EU standards the fact that last night’s euro group meeting ended without a basic agreement does not bode well for Greece or its international partners as they try and forge a resolution to the deepening Greek impasse.

Going into yesterday’s meeting - the first in a series of crunch talks this week - Greek finance minister Yanis Varoufakis was facing pressure to present a concrete plan to the eurogroup. Minister for Finance Michael Noonan expressed the frustration of many of his counterparts on his way into the meeting, pointing out that he had received very little “pre-meeting information.” “If we knew precisely what the request was, well then we could see what scope there was to negotiate an agreement.”

In the end, the eurogroup didn’t even get down to any substantive level of detail. Discussion initially focused on four, relatively vague, “principles” presented by Greece - the need for financial stability, financial sustainability and debt restructuring, and the imperative to address Greece’s humanitarian crisis. But the main nub of the discussion centred on Greece’s willingness to agree to some form of extended bailout programme.

The government of Alexis Tsipras has consistently said it will not apply for an extension of the Troika programme when it expires on February 28th. Instead it wants to negotiate a “bridging” arrangement before a more long-term solution is found in the summer, a proposal opposed by EU lenders who say that some form of programme must be in place.

The document under consideration last night was an attempt to strike a delicate balance between the two positions. It included a commitment to “explore the possibilities for extending and successfully concluding the present programme,” while adding that this could “bridge the time” for Greece and the euro group to “work on possible new contractual arrangements.”

But event the heroic attempt at semantic compromise in the text was not enough to convince Mr Varoufakis.

When German finance minister Wolfgang Schauble left the meeting shortly before 11 pm it appeared that a text had been agreed. But following a phonecall to Athens, Mr Varoufakis said he could not sign the communiqué. Focus now turns to Monday and Tuesday’s meetings of finance ministers in Brussels. In the meantime, euro-watchers can expect to hear lots about a new acronym that entered the euro-lexicon last night - “Grextension” . Whether Athens and its international lenders can come up with some sort of temporary programme framework which is acceptable to all will be a key issue in the coming days.