Greek PM to visit Berlin as Athens seeks loan breakthrough

Athens (AFP) - Greek Prime Minister Alexis Tsipras will meet German Chancellor Angela Merkel in Berlin next week, his office said Monday, amid efforts to stop a war of words between Greece and its eurozone partners.

"The German chancellor has invited Alexis Tsipras to visit Berlin on March 23," the Greek premier's office said, adding that the two leaders had spoken on the phone.

It will be Tsipras' first visit to the German capital since he came to power in January pledging to roll back austerity reforms to the consternation of many of its eurozone partners including Germany.

Tsipras and Merkel will also meet this week at a European summit, with the Greek leader saying in a Monday interview that he was confident of a loan deal, adding that pro-austerity opponents would not scupper the negotiations.

"The issue will be dealt with at a political level by the end of the week, until the summit or if need be, at the summit itself," Tsipras told the Ethnos daily, referring to the March 19-20 meeting of European leaders.

European officials had earlier sought to halt an escalating war of words between the radical new Greek government and German officials over Athens' revisionist plans.

"The situation is serious," European Commission spokesman Margaritis Schinas said, noting that Greece and its creditors had to show progress on a list of reforms agreed on February 20.

"The priority this week is to continue to work on the pledges made on February 20," Schinas said.

EU Council chief Donald Tusk also tried to calm tempers.

"It is not only about money and geopolitical threats. It is about dignity, emotions. We have to avoid anything that can humiliate the other side," he said in an interview with six European dailies.

- 'Errors of elite' -

In his Monday interview, Tsipras had insisted that Greece was no "colony", reacting to European criticism of his decision to name a nationalist party as his coalition partner in January.

And he spoke of certain European nations "existentially linked with austerity" who were "playing with Europe's future" and would attempt to block a deal giving Athens concessions, although he insisted that other "prudent political forces" would prevail.

However, German Finance Minister Wolfgang Schaeuble, an austerity advocate, stressed Monday that members of Greece's elite, not Brussels or Berlin, were responsible for the country's financial crisis.

"When Greece constantly tries to claim that the source of its problems is outside the country, it is not telling its people the truth," Schaeuble said at a discussion on Europe's future in Berlin.

He called the situation in Greece "a tragedy" due to "the errors of its elite and not because of Europe, Brussels or Berlin."

The Greek state is facing a cash squeeze this month because it has not yet received the remaining funds from its 240-billion-euro ($255-billion) EU-IMF rescue package as the new government is still locked in discussions with its international creditors on a revised reform plan.

The debt-wracked country managed on Monday to scrape together over 500 million euros to repay the International Monetary Fund. But it faces another debt deadline Friday when it has to pay over 300 million to the IMF, and redeem 1.6 billion euros in treasury bills.

To meet the payments, Athens will auction 1.0 billion euros in three-month treasury bills on Wednesday.

- 'Honour commitments' -

Tsipras did not identify the countries he thought might sink a solution to Greece's financial crisis, but the premier recently singled out the conservative administrations of Spain and Portugal for allegedly trying to block Greece's plans.

On Monday Spain's leader insisted he didn't want Greece to leave the euro, just keep to its commitments.

"Right now what I would like is for Greece to honour its commitments like we others are all doing," said Prime Minister Mariano Rajoy in a radio interview.

EU council chief Tusk said that if Greece dropped out of the EU "it would be the most dramatic chapter in all the history of the European Union."

Tusk said a Greek exit from the euro would be "idiotic", but added pointedly: "We have had too many events in European history that happened by accident."

In addition to holding back promised funds, the European Central Bank has limited the power of Greek banks to assist the state by buying its short-term treasury bills.

As an emergency option, the government last week submitted a law that directs the cash reserves of pension funds into state debt purchases -- a move the country's main public sector union opposed.

"The money of the funds is 'sacred'," the Adedy union said.

"We expect (the government) to exhaust every other option... and abandon this idea," it said.