Greece looks past Europe in search for new funds

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Greece is turning to the Middle East, Russia and China in a bid to secure funds as its European paymasters continue to squabble about its debt levels.

Prime (Berlin: 48P.BE - news) minister Antonis Samaras has already booked a visit to Qatar for November (Xetra: A0Z24E - news) 27 “with the aim of attracting investors”, Greek government sources confirmed, and is planning further trips before Christmas.

The move reflects Athens’ determination to shore up its crumbling economy with foreign investment and also to break its financial reliance on the increasingly divided “troika” creditors — the European Union, the European Central Bank (Other OTC: CBSU.PK - news) , and the International Monetary Fund.

Leaders insisted that eurozone finance ministers would agree to release the crucial €31.5bn (£25.2bn) tranche of aid to Greece when they meet on Tuesday. They are expected to push ahead with plans to give Greece two extra years to meet tough austerity targets, despite opposition from IMF (Other OTC: IMFAF.PK - news) head Christine Lagarde.

The agreement to reduce Greece’s debt to 120pc of GDP by 2020 — the so-called “debt sustainability” target — was a condition for the IMF’s involvement in the second Greek bail-out.

Ms Lagarde insisted the troika would come to an agreement eventually. “You know, it’s not over until the fat lady sings, as the saying goes,” she said yesterday. “It’s a question of working hard, putting our mind to it, making sure that we focus on the same objective, which is that … Greece can operate on a sustainable basis, can recover, can get back on its feet, can re-access markets as early as possible.”

Vittorio Grilli, Italy’s finance minister, said: “We know there are several options for helping Greece get through this very important challenge … I am clearly optimistic that we can come to a decision.”

Douglas Renwick, Fitch Ratings Director, backed the decision to delay Greece’s debt targets: “With Greece you have to be realistic on how much time they need.”

Meanwhile, Jens Weidmann, head of the Bundesbank, warned Greece would have to write down more of its debt because the current level is “not sustainable”. Germany’s central banker said a haircut “will be necessary at the end” so Greece can “regain access to capital markets”. But he warned that a restructuring would only happen after Athens had imposed its austerity measures and carried out its radical structural reforms.

However, Europe’s tough stance attracted criticism from one of China’s biggest investment bosses. Jin Liqun, chairman of the supervisory board of the £300bn China Investment Corporation (CIC) said Brussels’ “current strategy is leading us up a blind alley.” Mr Jin, who said the EU’s failure to deal with its debt crisis was damaging the global economy, called for leaders to review its tough policies. In a thinly-disguised swipe at Germany, Mr Jin said: “The eurozone needs to strike a proper balance between austerity and growth.”