Greece may leave EU if talks fail: central bank

ATHENS • A warning by Greece’s central bank that the country risked being driven from the eurozone and, ultimately, the European Union failed to break a deadlock with creditors before a potentially decisive meeting of European finance ministers.

A top Greek negotiator said Athens was ready to make unspecified concessions, but once again ruled out any cuts to pensions — a major sticking point in the negotiations. Germany, the eurozone’s most powerful economy, stuck to its line that Greece had to make significant moves to break the stalemate.

Athens has until the end of June to find a way out of the impasse before it faces a 1.6-billion euro ($2.2-billion) repayment due to the International Monetary Fund, potentially leaving it bankrupt and teetering on the edge of the eurozone.

“It won’t work without Greece moving significantly,” German Foreign Minister Frank-Walter Steinmeier said in Berlin.

Greek negotiator Euclid Tsakalotos confirmed that Greece does not have the money to repay the IMF and said the leftist government would only accept a deal that was sustainable and addressed debt, financing and investment — issues the European Union has said it does not want to open at this stage.

“If you have that, then the Greek government will sign the deal,” Tsakalotos said. “If it doesn’t have that kind of deal, there is no point in signing onto something that you know is going to fail.”

Hopes that a deal might be struck on Thursday at a meeting of European finance ministers looked increasingly remote.

“People are getting anxious on both sides. Athens expects Brussels to move. And Brussels expects Athens to move. And it’s stuck,” said a senior EU diplomat, who declined to be named. “It’s very dangerous, and we may have an accident.”

Making clear the huge stakes at play, the Greek central bank said reaching an accord was “a historical imperative” that the country could not ignore.

“Failure to reach an agreement would ... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and, most likely, from the European Union,” the Bank of Greece said in a monetary policy report.

Greek Prime Mi n i s t e r Alexis Tsipras accused the creditors on Tuesday of trying to “humiliate” his country by demanding more budget cuts to unlock desperately needed frozen aid.

Tsipras wants his European partners to renegotiate Greece’s debt burden, but they have ruled that out for now and instead want to see a fresh round of economic reforms.

“If we don’t have an honourable compromise and an economically viable solution, we will take the responsibility to say ‘no’ to the continuation of a catastrophic policy,” Tsipras said after meeting Austrian Chancellor Werner Faymann.

Faymann, one of the European leaders most sympathetic to Athens, flew to Greece seeking a last-ditch deal.

“I can’t see a solution lying before me, but I see that if we are convinced we want one, we have a good chance,” he said.