BRUSSELS: Greece failed again to clinch a deal with its international creditors yesterday, setting up a last-ditch effort tomorrow to avert a default next week amid fears of financial market turmoil.
Eurozone finance ministers ended their third meeting in a week without agreement after the three creditor institutions put a final cash-for-reform proposal on the table in a showdown with Athens’s leftist government.
German Chancellor Angela Merkel, whose country is Greece’s biggest creditor, said Greek positions on some issues seemed even to have gone into reverse.
“The door is still open for the Greek side to come with new proposals or accept what is on the table,” Eurogroup chairman Jeroen Dijsselbloem told reporters before briefing European Union leaders, meeting at a summit next door, on the impasse.
Greece thrust its way onto the agenda of a 28-nation EU summit that had been due to focus on migration, the long-term future of the eurozone and launching a renegotiation of Britain’s membership terms.
The leaders spent two hours on an unscheduled discussion of the Greek crisis, appealing to Prime Minister Alexis Tsipras to accept the proposals on the table and spare the Greek people worse suffering, EU officials said.
Tsipras urged fellow leaders to take responsibility and not leave Greece’s fate in the hands of the International Monetary Fund, but they declined to intervene, saying the talks must be run by finance ministers, the officials said, adding the tone of the discussion was friendly and not confrontational.
Greek Finance Minister Yanis Varoufakis played down the latest setback and said Athens stood by its own proposals, based largely on raising taxes and social charges that the lenders say would not raise enough revenue to plug a gaping budget hole.
“The institutions are going to look again at the two documents — our documents and their own. There will be discussions with the Greek government, and we’ll continue until we find a solution,” Varoufakis told reporters.
Merkel earlier told centre-right party leaders there must be a deal before financial markets open on Monday, two participants said.
Her comment behind closed doors echoed the height of eurozone debt crisis in 2011-12, when EU leaders fearing a meltdown of their single currency, held repeated weekend summits.
The sources also quoted her as telling the European People’s Party meeting that Berlin wanted a solution but would not be “blackmailed” by Greece.
Without a deal on the weekend to unlock frozen aid, Greece, which has received two bailouts worth ¤240bn since 2010, is set to default on a crucial repayment to the IMF next Tuesday.
That could trigger a bank run and capital controls, possibly setting Athens on a path out of the euro zone and undermining the founding principle that membership is irrevocable.
Market jitters are on a much smaller scale now than in 2012, due mostly to the European Central Bank’s bond-buying programme, and are largely confined to Greek assets. However, many EU officials and analysts say the longer-term damage to the 19-nation single currency area from a possible Greek exit could be more profound.
ULTIMATUM
After five months of acrimonious negotiations, the heads of the European Commission, ECB and IMF gave Tsipras an ultimatum to offer a credible reform plan by mid-morning on Thursday.
Instead, he arrived at a meeting with Jean-Claude Juncker, Mario Draghi and Christine Lagarde with a paper demanding an immediate commitment to debt relief for Greece, officials said.
The creditors have refused to discuss easing Athens’ debt burden until Greece has adopted and implemented the economic reforms promised under its existing bailout programme.
Diplomats said the lenders’ tactics reflected exasperation at his refusal to compromise on key reforms of pensions, labour markets, wages and taxation, which cross his Syriza party’s self-declared “red lines”.
The mood in Brussels has swung from hope to foreboding this week but seasoned diplomats cautioned that in EU negotiations the situation often looks bleakest before a last-gasp deal.
Greek officials said they had modified their reform proposals, notably to restore an exemption from value added tax for Greek islands, as demanded by Tsipras’s coalition partners.
They said the government has already compromised by offering to raise taxes and pension deductions, but the lenders kept revising downwards estimates of how much each measure proposed by Greece could raise, making it difficult to come up with an acceptable offer.
Hardline Austrian Finance Minister Hans Joerg Schelling said the final deadline for a deal was Sunday, a day before a German parliament sitting that would have to approve the release of aid to meet the IMF payment.
Greek politicians in Tsipras’ party continued to be defiant. “The lenders’ demand to bring annihilating measures back to the table shows that the blackmail against Greece is reaching a climax,” Nikos Filis, Syriza’s parliamentary spokesman, said.
He said the Greek side was maintaining its insistence on debt relief as part of any accord, in comments that were echoed by Labour Minister Panos Skourletis. “There cannot be a deal without a substantial reference and specific steps on the issue of debt,” Skourletis said.
Frustration was palpable on both sides, with one eurozone official describing the loss of trust in the Greeks as “extreme” and questioning whether an agreement was realistic given the intransigence from Athens.
In Frankfurt, powerful German Bundesbank chief Jens Weidmann voiced concern in a speech about the continued provision of emergency liquidity assistance to keep Greek banks afloat in the face of massive deposit withdrawals.
Reuters
ATHENS: In a traditional cafe in a working-class neighbourhood of Athens, 55-year-old musician Stelios Maragakis said he has the solution to Greece’s debt crisis: Ditch the euro.
“We must return to the drachma. The only way to save Greece is the drachma,” he said, sipping from a small glass of spirit, Greek music sounding in the background. It remains a minority view, but demands by Greece’s creditors for more tough reforms are increasing the appeal of the idea among the country’s 11 million inhabitants.
Support for dropping out of the eurozone has risen to 30 percent in polls taken in recent weeks from the 20 percent level it had held for years, said Costas Panagopoulos, the head of ALCO polling institute. “It is still a minority but it is growing,” he said.
The reasons, he said, were not just austerity measures and seemingly endless talks with Greece’s lenders but also open talk among some politicians about regaining control over the country’s economic affairs by leaving the euro. The drachma, one of the world’s earliest currencies, has its origins in the word “to grasp” and was dropped and reintroduced several times before being replaced by the euro in 2002.
Joining the single currency brought robust growth and a strong support for Europe, but the economy has shrunk by about a quarter since the start of the recession in late 2008, more than one in four people are jobless and the idea of leaving the protective 19-nation eurozone club is no longer taboo.
The idea of yet more austerity brought a grimace to the face of 65-year-old Athens resident Kostas Grammenos. “We’re a bankrupt country, so let’s go wherever we need to go - the drachma? The drachma ... and start over,” he said.
Eurozone politicians have also for the first time ever openly discussed this possibility, a sharp move away from the stated irrevocability of the euro. Opinion polls issued by other Greek pollsters GPO and Public Issue over the past two weeks have also shown a marked drop in the majority support for the euro — even if it is still wide.
Although 69.7 percent of Greeks answered yes in a June 16 GPO poll when asked whether they want their country “to stay in the euro at all costs”, that was substantially down from 80.3 percent in January.
Queuing to get cash from an ATM, an Athens resident who gave his name as Vassilis said: “What more can we be afraid of? We’ve been destroyed for five years now, there is nothing else for us to be scared of. For me it would be better to return to the drachma, to have our own currency.”
Reuters
