Greece rejects 'impossible' finance deal, confident solution will be found

Talks between Greece and euro zone finance ministers over the country's debt broke down on 16 February when Athens rejected a proposal to request a six-month extension of its international bailout as "unacceptable".

The unexpectedly rapid collapse raised doubts about Greece's future in the single currency area after a new leftist-led government vowed to scrap the €240bn (£177.32bn) bailout, reverse austerity policies and end cooperation with EU/IMF inspectors.

Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting, said Athens had until February 20 to request an extension, otherwise the bailout would expire at the end of the month. He told reporters the best way forward would be for the Greek authorities to seek an extension of the programme.

Greek Finance Minister Yanis Varoufakis hit back, complaining that Dijsselbloem had refused to discuss a proposal from the executive European Commission that would have given Athens a four-month breathing space in return for the new government holding off on major policy changes.

"We were offering to refrain from effectively implementing our own programme, the programme that we were elected to implement, for a period of six months. And all we were getting back was a nebulous promise of some flexibility that was never specified," he said.

"Under those circumstances, ladies and gentlemen, it proved impossible for the Greek government, despite our infinite good will, to sign the offered communique. And so the discussions continue," he said.

In comments that appeared aimed at playing on divisions among European officials, he said he would have signed a text put to him before the meeting by Pierre Moscovici, the EU's economics commissioner.

The talks were expected to last late into the night, but collapsed in less than four hours.

Both sides showed signs of fraying patience, with several ministers complaining of disappointment and fearing disaster.

Dijsselbloem spoke of a need to rebuild trust and Greek officials grumbled that Varoufakis was presented with an unacceptable text as soon as he walked into the room.

"All that tonight has proven is that Europe is going through a difficult process of adjusting to the fact that there is a government now in Greece which is challenging a programme that has been going for five years, which has failed, quite clearly, in the minds of all people who don't have a vested interest in pretending that it hasn't failed. And our difficulty is to convince our partners that Europe must cut its losses with a programme that is not working," Varoufakis said.

He sought to play down the setback as a temporary hitch rather than an impasse.

"I have no doubt that within the next 48 hours, Europe is going to come together, officially 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 doing the real work which is necessary to establish common ground and to build a new contract between Greece and Europe which would be both good for Greece and for Europe," Varoufakis said.

How long Greece can keep itself afloat without international support is uncertain.

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 €2bn a week.