Crunch Greece Debt Talks Resume to Avert Default
Greek Prime Minister Alexis Tsipras restarted critical talks with creditors in Brussels on Thursday in a frantic bid for a bailout deal to save Athens from defaulting next week and possibly crashing out of the euro.
Difficult talks that stretched late into the night on Wednesday failed to produce a breakthrough in the five-month standoff, as cash-strapped Greece's negotiators rejected reforms demanded by its EU-IMF lenders.
Leftist leader Tsipras began fresh talks at 0700 GMT with the heads of the European Commission, the International Monetary Fund and European Central Bank, the three main monitors of Greece's bailout.
The aim is to finalise a deal in time to have it approved by eurozone finance ministers meeting at 1100 GMT and then by EU leaders meeting at a summit in Brussels on Thursday night, ahead of a June 30 IMF payment deadline.
"Where there is a will, there is a way," Pierre Moscovici, the European Commissioner for Economic Affairs, tweeted as he headed into the talks.
Asian stocks slid on Thursday morning over fears of the global economic fallout from a possible default, continuing the slide by the eurozone's main markets on Wednesday.
- Greece pulls some proposals -
Discussions have become increasingly acrimonious as the deadline looms and on Wednesday Greece withdrew some of its reform proposals, apparently for the first time since negotiations began.
Greek government sources said two were withdrawn from the list under pressure from Tsipras's left-wing Syriza party, including an unpopular increase in pensions contributions.
The Greek side is seeking to offset the impact of the changes with other measures, sources said.
But a European source told AFP there was "hope of an agreement between the (creditor) institutions and Greek authorities".
Tsipras's government, elected in January, has vowed to end years of austerity imposed under two bailouts worth 240 billion euros ($270 billion), exacerbated by long-term recession and high unemployment.
Its European-IMF lenders have refused to unlock the last 7.2 billion euros of Greece's bailout before it expires on June 30, with Greece needing to pay a 1.5-billion-euro IMF loan repayment on the same day.
Hopes of a deal had faded on Wednesday when Tsipras lashed out at creditors just minutes before meeting European Commission President Jean-Claude Juncker, IMF chief Christine Lagarde and European Central Bank boss Mario Draghi.
"This strange position maybe hides two things: either they do not want an agreement or they are serving specific interests in Greece," Tsipras said.
The eurozone finance ministers subsequently suspended their talks on Wednesday after just one hour.
EU President Donald Tusk warned last week of the growing risk of a "chaotic, uncontrollable Grexident" -- Greece crashing out of the euro and perhaps also the EU, which it joined in 1981.
- Plans and counter-plans -
The new plans submitted Sunday by Greece aim to raise eight billion euros, mostly through new taxes on the wealthy and businesses, VAT increases and a cut in defence spending.
But in counter-proposals handed to Greece on Tuesday, creditors are calling for early retirement to be abolished and an increase in the retirement age from 62 to 67 by 2022, not 2025.
Despite Athens' fears for its tourism sector, they are sticking to demands for a 23 percent value-added tax rate for restaurants, instead of the current 13 percent.
Creditors also propose to increase corporation tax and they want defence expenditure to be slashed by 400 million euros instead of the proposed 200 million euros.
Greece's banking system has been kept afloat by cash injections from the ECB as wary Greeks withdraw their deposits. On Wednesday, it increased emergency liquidity funds for the fifth time in eight days.
Athens has also warned any accord would need to be approved by parliament before June 30, which risks splitting Tsipras's Syriza party, where many on the left wing view him as reneging on campaign promises.
Any Greek agreement will also need to deal with what comes next, with EU officials suggesting an extension of the bailout until the end of the year, followed by a possible third aid package to keep Greece afloat.
Source: Agence France Presse
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