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.

‘Such con­fu­sion’

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.

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