Merkel said to expect Greek funding talks to drag for months

By Arne Delfs

Germany expects talks with Greece to drag on until after the current round of bailout funding runs out at the end of the month and is prepared to play a waiting game until April or May, when the country approaches a cash crunch, a person familiar with the matter said.

Greece would not immediately go bankrupt at the end of February because it has resources to last beyond that point and Germany is ready to hold off until there is a more urgent need to strengthen its bargaining position, said the person, who asked not to be identified discussing internal talks.

Chancellor Angela Merkel, who is still assessing Prime Minister Alexis Tsipras?s motives, is taking a tough approach with the new premier and wants to avoid being drawn into a duel with him, another official said. No one from the chancellery has met with him yet.

Greece is already backing down from earlier demands, retreating Monday from its call on the euro area to write down its debt, and instead proposed to exchange existing borrowings for new bonds linked to the country?s growth. The proposal marks a change of course for Tsipras, who bowed to virtually unanimous opposition just a week after he took office.

?The Greek government is still working on its position,? Merkel said today in Berlin, declining to comment on specific proposals. ?That?s more than understandable considering the government has been in office for a few days. We?re waiting for recommendations and then we?ll go into talks.?

Avoiding haircut

Greek stocks and bonds surged after Finance Minister Yanis Varoufakis outlined plans late Monday to swap some debt owned by the European Central Bank and the European Financial Stability Facility for new securities. Speaking to about 100...