Greece deal in doubt as Germany says Greek proposals ‘not substantial’
Greece’s international creditors poured cold water on the chances of a breakthrough at an emergency summit on Monday aimed at finding a deal to save Athens from default and a possible exit from the euro.
European paymaster Germany warned that eleventh-hour reform proposals submitted by leftist Greek premier Alexis Tsipras were not “substantial,” with France seeing a breakthrough only in coming days.
The rainy weather reflected the mood in Brussels as a succession of eurozone ministers dampened earlier market-boosting hopes that leaders meeting later could seal a deal to end the five-month standoff.
“I do not know of any new proposals. We do not have any substantial proposals until now,” said Wolfgang Schaeuble, the hard-line finance minister of German Chancellor Angela Merkel.
Tsipras’ new offer is a last-ditch bid to avoid defaulting on a 1.5-billion-euro IMF payment on June 30 and prevent Athens from crashing out of the single currency and possibly the EU.
Discussions between Greece’s radical government and its lenders have been stalled by disagreements over fresh austerity measures demanded in exchange for the final 7.2 billion euro tranche of its international bailout, which also expires at the end of the month.
Tsipras Seeks ‘viable’ Deal
Tsipras was elected in January promising to end five years of austerity caused by bailouts, and his office said Monday the new offer still refused concessions on key red lines, including on budget targets, pensions and increasing the VAT on electricity.
“We’re here to conclude a viable economic accord,” Tsipras said as he arrived to EU headquarters for meetings with his country’s creditors — the European Union, European Central Bank and International Monetary Fund.
But with officials saying that there had been confusion overnight with Greece apparently initially sending the wrong proposals, Eurogroup chief Jeroen Dijsselbloem said it would be “impossible to have a final assessment” on Monday.
The emergency eurozone summit was called last week by EU President Donald Tusk in a bid to resolve the crisis at the highest level after finance minister-level talks collapsed last week.
Tsipras has long been trying to get the issue dealt with at the political level by EU leaders, with Athens resisting cutting a deal with ministers and technocrats at the numbercrunching level.
Ahead of the summit, Tsipras sat down on Monday with Christine Lagarde, the head of the IMF, the Washington-based creditor that has taken the toughest line against Greece, and a top official of the ECB.
The ECB is a key player in the crisis amid growing fears of a bank run in Greece, and on Monday it again decided to inject more emergency funding into the cashstrapped country to cover withdrawals of cash by worried depositors.
Earlier financial markets surged on hopes of a breakthrough at the summit and were still higher later, with Athens up by 5.1 percent. The DAX 30 in Frankfurt was up 2.7 percent.
The mood darkened when European Commission Jean-Claude Juncker, despite greeting Tsipras with kisses, a hug and a playful slap to the face, warned that a deal was “was not there yet.”
Irish Finance Minister Michael Noonan — whose own country was also bailed out — said a disorganized Athens had submitted multiple proposals overnight, creating confusion and making it impossible for the ministers to pave the way for a deal.
“There was such confusion during the night with all the alternative versions of the Greek proposals coming in that there hasn’t been any preparation,” he said.
“So my expectation is that we will be meeting again on Thursday before the full Council meeting.”
All 28 European Union leaders are due to gather for a full summit in Brussels on Thursday and Friday where the Greek debt crisis may now finally come down to the wire.
In Paris, French President Francois Hollande called for a “lasting accord” that could be possible in “the coming days.”
Failing a deal, Greece is likely to default on the IMF payment of around 1.6 billion euros (US$1.7 billion), setting up a potentially chaotic “Grexit” from the eurozone, which Greece’s central bank has said could also see it cast out of the EU.
The EU’s involvement in Greece’s bailout, which was to provide 240 billion euros (US$270 billion) in loans in exchange for drastic austerity measures and reforms, runs out at the end of this month, but IMF support was supposed to continue to March 2016.
A Greek flag waves as the sun’s rays shine through clouds at the ancient Acropolis hill, in Athens, Monday, June 22.