Greek talks collapse as EU is 'running out of patience'
Published 15/06/2015 | 02:30
Talks on breaking a deadlock between Greece and its international creditors collapsed after just 45 minutes, with European leaders venting their frustration as Athens stumbled closer towards a debt default that threatens its future in the euro.
With Athens insisting it would never give in to demands from the EU and IMF for pension and wage cuts, the European Commission declared that the negotiations in Brussels, also involving the European Central Bank, had not succeeded.
Following what it called this "last attempt" at a solution, the commission said euro zone finance ministers would now tackle the issue when they meet on Thursday.
Neither side doubts the urgency of reaching a deal, as Greece must repay €1.6bn to the IMF by the end of this month or default.
With no technical deal apparently possible, the ministers are likely to have to make difficult political decisions on Greece's membership of the euro.
Failure to keep Greece in the euro, after years of arduous negotiations and two emergency bailouts totalling €240bn, would send it lurching into the unknown.
Last Friday, Greek Prime Minister Alexis Tsipras had indicated he would accept painful compromises on demands for austerity and reform in return for debt relief.
But the commission said in a statement that "the Greek proposals remain incomplete".
"While some progress was made, the talks did not succeed as there remains a significant gap between the plans of the Greek authorities and the joint requirements of Commission, ECB and IMF," it said. These amounted to up to €2bn a year in permanent budget savings.
EU officials said Athens had moved closer to the lenders on the size of Greece's primary surplus - the budget balance before its debt repayments - but had not said how it intended to achieve this. Otherwise the Greek delegation, led by Deputy Prime Minister Yannis Dragasakis, had offered nothing new.
Mr Dragasakis said the Greek delegation was ready to resume talks but blamed European lenders for insisting on pension cuts and VAT hikes to close the projected budget gap.
European leaders have piled pressure on Tsipras to offer major concessions in the search for a deal with the EU and IMF as the country faces a debt default in just over two weeks.
The talks' failure followed signs of an increasingly confrontational line by Greece's EU partners. The toughest language came not from Greece's long-standing conservative critics but from German Social Democrat chief Sigmar Gabriel, who until recently had been regarded as sympathetic, at least by Berlin standards.
He wrote in 'Bild' newspaper that he wanted to keep Greece in the euro. "But not only is time running out but so too is patience across Europe. Everywhere in Europe, the sentiment is growing that enough is enough," said Mr Gabriel, who is vice-chancellor in Angela Merkel's government.
"The shadow of an exit of Greece from the euro zone takes on ever clearer shape," he said. "Repeated, apparently final attempts to reach a deal are starting to make the whole process look ridiculous. There is an ever greater number of people who feel as if the Greek government is giving them the runaround."
Germany's 'Frankfurter Allgemeine Sonntagszeitung' reported that European Commission President Jean-Claude Juncker warned Mr Tsipras about the risk of "Grexit" - a Greek exit from the euro.
Mr Tsipras says imposing yet more austerity on a country whose economy has shrunk by a quarter in recent years is futile, and will only deepen the suffering of Greeks whose living standards have already dived as unemployment soars.
US-based economic analyst Jacob Funk Kirkegaard cast doubt on the Athens government's longevity.
He said Europe now seemed to be giving up on trying to coax Mr Tsipras towards the political centre, opting for a confrontation that might lead to "a new and more realistic government".