News analysis: Time running out for compromise deal on Greek debt after Eurogroup ultimatum

Time was running out for a compromise deal on the Greek debt crisis between Greece and its international lenders after the ultimatum issued at the end of the latest Eurogroup meeting in Brussels on Monday evening, political analysts in Athens warned on Tuesday.

Newly elected Leftist Prime Minister Alexis Tsipras were left with a couple of days to make a final critical decision which will decide the country's economic future and stay in the euro zone.

Monday's round of talks between the two sides collapsed for a third time in a week when Greek Finance Minister Yanis Varoufakis refused to sign a draft requesting an extension of the four-year bailout program which expires in February 28.

Within minutes the Eurogroup head Jeroen Dijsselbloem gave the Greek government until Friday to review its stance and request an extension to the current bailout, so that there is time to discuss in coming months proposals to make the Greek sovereign debt sustainable, as Athens requested.

Without an accord in time, Greece faces the prospect of being left without the vital life line of multi-billion euro aid which kept the country afloat since 2010. The risk of a Greek exit from the euro zone has increased again, according to analysts.

For the Left government which was elected on January 25 on an anti-bailout and anti-austerity agenda so far "there is no option of agreeing to the continuation of a "mistake which caused a humanitarian crisis."

"We will not sign an agreement at gunpoint...The government cannot be blackmailed with ultimatums... We are confident. There is no bluff on the table, we do not play poker," Greek government spokesman Gavriil Sakellaridis said speaking to Greek media on Tuesday.

He stressed that the government wants a "mutually beneficial agreement," a remark repeated by Varoufakis in Brussels ahead of an ECOFIN Council meeting.

Meanwhile, the clock is ticking and the pressure is increasing for Athens. Besides the next critical Eurogroup meeting which could be set for Friday the focus was now also on the European Central Bank (ECB), which must decide on Wednesday whether to extend Emergency Liquidity Assistance mechanism (ELA) funding to Greek banks while an agreement was still pending.

With 20 billion euros withdrawn from ailing Greek lenders over the past three months due to political uncertainty, according to estimates, without ELA funds Greece could face a cash crunch within weeks, analysts warned.

"As days go by, the dilemmas faced by Prime Minister Alexis Tsipras are becoming clearer... Tsipras will either reach a compromise with a modified program and a renamed troika or take the battle to the very end," according to Alexis Papachelas, Executive Editor of "Kathimerini" (Daily) newspaper.

What is this end?

"It means being prepared to receive a phone call from Mario Draghi, who represents the euro zone's iron fist, warning that the European Central Bank will cut off emergency liquidity to Greece's banks unless a deal is achieved. This threat has already been used against Cyprus and in forcing Greece and Ireland to sign up to bailout programs," he explained in an opinion article.

"From here on, after everything that took place at the Eurogroup, there are not many options available to the Greek government and Mr. Tsipras. The ultimatum has been specified and it is supported by all of the Finance Ministers of the euro zone. Greece has been left alone, without allies and time is limited," Antonis Karakoussis, Managing Editor of "Vima" (Tribune) daily, added.

Mr. Tsipras will either seek out a compromising solution, accepting the extension of the current program, or he will walk the path of conflict and falling out, assuming full responsibility of his choice, according to Karakoussis.

In both cases the path will not be easy for the 40-year old Premier. In the first case he will most likely face the wrath of voters who elected him for his hard anti-bailout stance and the hardliners within his party who will not go along with the imposed changes in the policy program.

But the second path seems more thorny and dangerous. In case of a rift with lenders Greece enters "unchartered waters" and risks a financial collapse and Grexit after five years of painful sacrifices to avert it.

The ball is now in the Greek Prime Minister's court, warned analysts. Enditem