The Greek prime minister, Alexis Tsipras, leaves the European commission HQ without an agreement. Photograph: Yves Herman/Reuters
Eurozone finance ministers meeting ends without agreement after fourth diplomatic failure in eight days.......
Talks on the Greek debt crisis between eurozone finance ministers have ground to a halt after Athens rejected counter-proposals from its creditors.
Eurozone finance ministers came to Brussels for an emergency meeting but failed to bridge their differences with Greece, in the fourth diplomatic failure in eight days. The EU commissioner for economic and financial affairs, Pierre Moscovici, said Greece and its creditors were still at loggerheads over reforms to Greek pensions and VAT rates, which lenders want to be toughened as a quid pro quo for giving Athens further bailout funds.
Greece’s creditors - the European Commission, International Monetary Fund and European Central Bank - are demanding further spending cuts in Athens before agreeing to release the €7.2bn in funds that the country needs in order to meet a €1.6bn payment due to the IMF next Tuesday. The finance ministers are expected to reconvene on Saturday for further talks as the crisis goes to the wire.
Eurozone finance ministers have failed to break the long-running deadlock between Greece and its creditors
The Greek finance minister, Yanis Varoufakis, said both sides would continue to seek an agreement, as they attempt to square the differences between a Greek plan submitted on Monday and a counter-proposal from the lenders. He said: “We shall continue our deliberations, 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.”
Meanwhile, the IMF told reporters in Washington that it would not move its 30 June deadline for the €1.6bn payment. “As a matter of longstanding policy, the Fund does not extend payment deadlines,” said a spokesman for the IMF.
Wrangling over the Greek debt crisis is overshadowing a summit of all 28 EU leaders, where politicians are discussing migration and David Cameron’s proposals for renegotiating Britain’s relationship with the EU.
But hopes of a breakthrough were fading even before the ministers sat round the table. Arriving at the meeting, Germany’s finance minister, Wolfgang Schäuble, said Greece had moved backwards, a message that was echoed by the German chancellor Angela Merkel. The chair of the Eurogroup of finance ministers, Jeroen Dijsselbloem, said ministers would be waiting to hear ideas from the Greeks.
Ahead of the meeting on Thursday morning, the Greek prime minister, Alexis Tsipras, spent more than three hours in a meeting with the leaders of the International Monetary Fund, European Central Bank and European commission, but left without an agreement.
Despite the stalemate, Tsipras said he was confident of reaching a compromise that would allow Greece to overcome the crisis: “European history is full of disagreements, negotiations, and then compromises.”
Rumours were swirling that Greece’s creditors were going to present Athens with an ultimatum to accept their austerity plan in exchange for releasing €7.2bn (£5.1bn) in bailout funds.
But one EU diplomat said there was no take-it-or-leave-it deal and institutions remained available for further discussion.
The two sides still appear to be far apart, however. Greece’s creditors want the Tsipras government to make deeper spending cuts, as well as faster and more sweeping reforms to the Greek pension system, according to a leaked version of the creditors’ counter-proposals that is very similar to an earlier version rejected by the Greeks on Wednesday.
Greece’s lenders are pressing Athens to accept more austerity in exchange for continuing the bailout programme worth €240bn (£171bn). Tsipras, who has been seeking to wrest back control over the Greek economy, has accused the lenders of not wanting a deal and serving “special interests” in Greece.
As the talks stagger on, a senior Syriza official accused the creditors of trying to blackmail Greece. “The lenders’ demand to bring annihilating measures back to the table shows that the blackmail against Greece is reaching a climax,” Nikos Filis, the Syriza’s parliamentary spokesman, told Greek broadcaster Mega TV.
Carl Weinberg, chief economist at High Frequency Economics, told investors to expect more conflicting reports, both positive and negative about the Greek crisis. “We have no idea how this will end,” he added.
Time is running out fast, with Greece’s eurozone bailout set to expire on Tuesday, alongside the IMF payment.
The Tuesday deadline is doubly pressing because the ECB, which is keeping the Greek banking system on life support, has indicated it will not support banks if the bailout programme expires without a new agreement in place. Without ECB support, Greek banks are expected to buckle, which would force the Tsipras government to impose capital controls and threaten an exit from the eurozone.
The ECB, which is holding daily meetings on Greece, has pumped about €89bn into the Greek financial system to keep banks afloat. On Thursday it decided to maintain emergency liquidity funding at current levels, suggesting that the pace of withdrawals from Greek banks may have ebbed.
Even if a deal is finally struck in Brussels, Tsipras has to get the compromise through a rebellious and recalcitrant parliament. Germany’s parliament and those of other eurozone countries also have to ratify the package before it can be implemented, raising questions as to whether all this can be accomplished before the Tuesday deadline.
Many observers fear that any deal emerging from Brussels may only be a temporary stopgap that does little to ease the massive debt burden weighing on the Greek economy.
“Without a substantial form of debt relief, which looks unlikely in an initial agreement, Greece’s debt ratio will remain unsustainably high and the crisis will continue,” said Jonathan Loynes, chief European economist at Capital Economics.