Thursday 21 September 2017

Greece Crisis: EU finance ministers to meet on Saturday as Syriza accuses lenders of wanting to 'annihilate' Greece

* Euro zone eyes "Plan B" if Greece spurns deal on Saturday
* Syriza accuses lenders of wanting to "annihilate" Greece
* Critical 48-hour period starts with EU leaders due in Brussels
* Big gaps remain on taxes, pensions, labour reform

Italian Prime Minister Matteo Renzi, center, speaks with Greek Prime Minister Alexis Tsipras, left, and German Chancellor Angela Merkel during a round table meeting at an EU summit in Brussels on Thursday, June 25, 2015. (AP Photo/Geert Vanden Wijngaert)
Italian Prime Minister Matteo Renzi, center, speaks with Greek Prime Minister Alexis Tsipras, left, and German Chancellor Angela Merkel during a round table meeting at an EU summit in Brussels on Thursday, June 25, 2015. (AP Photo/Geert Vanden Wijngaert)
Greek Prime Minister Alexis Tsipras, left, and Italian Prime Minister Matteo Renzi speak with German Chancellor Angela Merkel during a round table meeting at an EU summit in Brussels on Thursday, June 25, 2015. Greece and its creditors launched a new round of talks in Brussels early Thursday in a fresh bid to unlock billions of euros in loans and save the country from bankruptcy. (AP Photo/Geert Vanden Wijngaert)
Greece's Prime Minister Alexis Tsipras arrives at the EU Council headquarters at the start of a European Union leaders summit in Brussels, Belgium, June 25, 2015. REUTERS/Eric Vidal
Irish Prime Minister Enda Kenny, right, arrives for a meeting of the EPP party prior to an EU summit in Brussels on Thursday, June 25, 2015. Greece and its creditors launched a new round of talks in Brussels early Thursday in a fresh bid to unlock billions of euros in loans and save the country from bankruptcy. (AP Photo/Francois Walschaerts)

Renee Maltezou and Robin Emmott

Greece failed again to clinch a deal with its international creditors this evening, setting up a last-ditch effort on Saturday to either avert a default next week or start preparing to protect the euro zone from financial market turmoil.

Euro zone 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.

Protesters carry placards that read
Protesters carry placards that read "Stop to new and old bailouts" during an anti-bailout demonstration in Athens, Greece June 25, 2015. E REUTERS/Alkis Konstantinidis

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.

Read more here: 'Europe has humiliated us' say Greek protesters who occupied EU office in Dublin 

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 euro zone 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.

Greece's Prime Minister Alexis Tsipras (L) speaks with European Union Foreign Policy Chief Federica Mogherini as they arrives for a family photo at the EU Council headquarters during a European Union leaders summit in Brussels, Belgium, June 25, 2015. REUTERS/Philippe Wojazer
Greece's Prime Minister Alexis Tsipras (L) speaks with European Union Foreign Policy Chief Federica Mogherini as they arrives for a family photo at the EU Council headquarters during a European Union leaders summit in Brussels, Belgium, June 25, 2015. REUTERS/Philippe Wojazer
Women talk inside a cafe in Athens, Greece June 25, 2015. Monthly reports by Greece's financial crimes units highlight just how common tax dodging is, from doctors to farmers to contractors and civil servants. That, and the prevalence of small- and medium-sized businesses and the self-employed, as well as the sizeable shadow economy, shows just how difficult it is to crack down on Greece's corruption and tax evasion, which leftist Prime Minister Alexis Tsipras has made one of his priorities. To match Insight EUROZONE-GREECE/TAXES REUTERS/Alkis Konstantinidis

"The climate is that either by Saturday Greece accepts or on Saturday there will be a discussion about Plan B," a euro zone official at the summit said, referring to measures that would be needed in the case of a default to prevent a Greek bank collapse and limit any market contagion to other euro area countries.

Read more here: Ireland will not support debt relief for Greece - Taoiseach 

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.

Riot policemen stand guard in front of the Tomb of the Unknown Soldier during an anti-bailout demonstration in Athens, Greece June 25, 2015. EU leaders discussed Greece's debt crisis with Prime Minister Alexis Tsipras for some two hours on Thursday in an unscheduled addition to their regular summit but insisted that negotiations be run by finance ministers, an EU official said. REUTERS/Alkis Konstantinidis
Riot policemen stand guard in front of the Tomb of the Unknown Soldier during an anti-bailout demonstration in Athens, Greece June 25, 2015. EU leaders discussed Greece's debt crisis with Prime Minister Alexis Tsipras for some two hours on Thursday in an unscheduled addition to their regular summit but insisted that negotiations be run by finance ministers, an EU official said. REUTERS/Alkis Konstantinidis
People line up inside a tax office in Athens, Greece, June 25, 2015. Monthly reports by Greece's financial crimes units highlight just how common tax dodging is, from doctors to farmers to contractors and civil servants. EUROZONE-GREECE/TAXES REUTERS/Alkis Konstantinidis

Merkel earlier told centre-right party leaders there must be a deal before markets open on Monday, two participants said.

Her comments behind closed doors echoed the height of euro zone debt crisis talks in 2011-12, when EU leaders fearing a meltdown of the 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.

Read more here: Greece crisis: ECB limits funding lifeline for Athens amid Bundesbank protest 

A girl holds an icon next to a Greek flag, in front of the parliament building, during a protest against the construction of the first official mosque in Athens, Greece, June 25, 2015. REUTERS/Marko Djurica
A girl holds an icon next to a Greek flag, in front of the parliament building, during a protest against the construction of the first official mosque in Athens, Greece, June 25, 2015. REUTERS/Marko Djurica
Protesters march during an anti-bailout demonstration in front of the parliament building in Athens, Greece June 25, 2015. EU leaders discussed Greece's debt crisis with Prime Minister Alexis Tsipras for some two hours on Thursday in an unscheduled addition to their regular summit but insisted that negotiations be run by finance ministers, an EU official said.REUTERS/Alkis Konstantinidis

Without a deal at the weekend to unlock frozen aid, Greece, which has received two bailouts worth 240 billion euros since 2010, is set to default on a crucial repayment to the International Monetary Fund 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.

Greece's Prime Minister Alexis Tsipras arrives at the EU Council headquarters at the start of a European Union leaders summit in Brussels, Belgium, June 25, 2015. REUTERS/Eric Vidal
Greece's Prime Minister Alexis Tsipras arrives at the EU Council headquarters at the start of a European Union leaders summit in Brussels, Belgium, June 25, 2015. REUTERS/Eric Vidal
Greece's Prime Minister Alexis Tsipras arrives at the EU Council headquarters at the start of a European Union leaders summit in Brussels, Belgium, June 25, 2015. REUTERS/Eric Vidal

Read more here: Greece crisis: Debt talks stumble as IMF plays hardball 

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 accept 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.

Read more here: Greek crisis talks still deadlocked 

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.

"ANNIHILATING MEASURES"

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, told Mega TV.

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 in an interview with state broadcaster ERT.

Read more here: Dear Greece - you do realise you've painted yourselves into a corner, right? 

Frustration was palpable on both sides, with one euro zone 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.

ECB policy-setters held the limit on this emergency funding for Greek banks steady for a second day running after weeks of increases, raising pressure on Athens.

The more concessions Tsipras makes, the more resistance he will face in parliament within his coalition and on the streets, where recent protests, some organised with Syriza's support, have underlined opposition to yet more belt-tightening.

"The lenders' hard core faction does not want a deal but a rift, Greece's humiliation and the fall of the Tsipras government," Dimitris Papadimoulis, a Syriza member of the European parliament, tweeted. "It won't get its way."

Reuters

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