by Dan Alexe Following the collapse of the talks between Greece and its creditors in Brussels on Monday evening, the European Central Bank will decide on Wednesday whether to maintain emergency lending to Greek banks that are bleeding deposits at an estimated rate of 2 billion euros a week. Athens faces some heavy loan repayments in March. The ECB has allowed the Greek central bank to provide emergency lending to the banks, but a failure of the debt talks could mean the imposition of capital controls. Greek shares led a European retreat Tuesday as investors reacted negatively to the breakdown in talks between Greece and its creditors in the 19-nation Eurozone over the country's attempt to renegotiate its financial bailout. A meeting on Monday was cut off short, with the Eurozone issuing Greece an effective ultimatum, saying the country must accept a key condition by the end of the week or face having to meet its debt commitments on its own — a prospect many in financial markets think would leave Greece little option but to leave the euro. Greek shares opened more than 4 % lower. The latest bout of jitters emerged after the Eurozone told Greece it has to ask for an extension to its bailout program by Friday before further negotiations on the country's future financing and economic course can take place. Investors are worried that the two sides are poles apart, especially as Greece's new left-wing Syriza government made scrapping the bailout program a cornerstone of its election campaign. "I hope that they will ask for an extension to the program and once they do that we can allow flexibility inside the program," said Jeroen Dijsselbloem, the top official in the Eurozone as he arrived for a meeting in Brussels of European Union finance ministers. "They can put in their political priorities." Without some sort of financing arrangements in place after the current bailout ends after Feb. 28, Greece would face trouble meeting its obligations, such as debt repayments, over the coming months. Bankruptcy and a potential exit from the euro would loom for Greece once again. Greek Finance Minister Yanis Varoufakis played down the collapse of the talks and laid out his hope that a deal will be concluded in time. "We know in Europe how to deliberate in such a way as to create a very good solution, an honorable solution out of initial disagreement," he said. Seemingly determined not to be browbeaten by a chorus of EU ministers intoning that he needed to swallow Greek pride and come back to ask for the extension, Finance Minister Yanis Varoufakis, a left-wing academic economist, voiced confidence that a deal on different terms was within reach within days. "I have no doubt that, within the next 48 hours Europe, is going to come together and we shall find the phrasing that is necessary so that we can submit it and move on to do the real work that is necessary," Varoufakis told a news conference, warning that the language of ultimatum never worked in Europe. He cited what he called a "splendid" proposal from the European Commission by which Greece would get four to six months credit in return for a freeze on its anti-austerity policies. He said he had been ready to sign that - but that Dijsselbloem had then presented a different, and "highly problematic", deal. A draft of what Dijsselbloem proposed, swiftly leaked by furious Greek officials, spoke of Athens extending and abiding by its "current programme" - anathema to a government which, as Varoufakis said, was elected last month to scrap the package. Germany, the euro zone's main paymaster and Greece's biggest creditor, stuck to its hard line. German Finance Minister Wolfgang Schaeuble said before the talks that Greece had lived beyond its means for a long time and there was no appetite in Europe for giving it any more money without guarantees it was getting its finances in order. Varoufakis spelled out in a combative New York Times column Greece's refusal to be treated as a "debt colony" subjected to "the greatest austerity for the most depressed economy", adding: "The lines that we have presented as red will not be crossed."
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