BRUSSELS: Greece again failed to clinch a deal with its international creditors Thursday, setting up a last-ditch effort Saturday to avert a default next week amid fears of financial market turmoil.
Eurozone finance ministers ended their third meeting in a week without a deal after the three creditor institutions put a final cash-for-reform proposal on the table in a showdown with Athens’s leftist government.
“The door is still open for the Greek side to come with new proposals or accept what is on the table,” Eurogroup chairman Jeroen Dijsselbloem told reporters before briefing EU leaders on the impasse.
Greek Finance Minister Yanis Varoufakis played down the latest setback after Athens submitted its own proposals, based largely on increases in tax and social contributions that the country’s lenders say would not raise enough revenue to plug a gaping budget hole.
“The institutions are going to look again at the two documents – our documents and their own. There will be discussions with the Greek government, and we’ll continue until we find a solution,” Varoufakis said.
German Chancellor Angela Merkel told center-right party leaders there must be a deal on Greece before financial markets open Monday, two participants said. Her comment echoed the height of eurozone debt crisis in 2012, when EU leaders feared a meltdown of their single currency.
The sources also quoted her as telling the European People’s Party meeting that Germany, the biggest creditor nation, “will not be blackmailed” by Greece.
Without a deal by the weekend to unlock frozen aid, Greece, which has received two bailouts worth 240 billion euros since 2010, is set to default on a crucial repayment to the IMF next Tuesday.
That could trigger a bank run and capital controls, possibly setting Athens on a path out of the eurozone and undermining the founding principle that membership is irrevocable.
“The decision lies exclusively with the Greek authorities. They have, however, rather gone backward,” German Finance Minister Wolfgang Schaeuble said.
Market jitters are on a much smaller scale now than in 2012, thanks largely to the European Central Bank’s bond-buying program, and are mostly confined to Greek assets. However, many EU officials and analysts say the longer-term damage to the 19-nation single currency area from a possible Greek exit could be more profound
After five months of acrimonious talks, the heads of the European Commission, ECB and IMF gave leftist Prime Minister Alexis Tsipras an ultimatum to offer a credible reform plan by mid-morning Thursday, saying they would otherwise send their own version to the Eurogroup.
Greece let the deadline slip, saying it stood by proposals it had submitted Monday with some modifications. They included restoring an exemption from value added tax for Greek islands, as demanded by Tsipras’ coalition partners.
The move came before EU leaders met for a summit on migration, the long-term future of the eurozone and launching a renegotiation of Britain’s membership terms, which has been overshadowed by the Greek crisis.
Diplomats said the lenders’ tactics reflected exasperation at Tsipras’ refusal to compromise on key reforms of pensions, labor markets, wages and taxation, which cross his Syriza party’s self-declared “red lines.”
Greek officials say the government has already compromised by offering to raise taxes and pension deductions. They say the lenders keep revising downward estimates of how much each measure proposed by Greece could raise, making it difficult to come up with an acceptable offer.
Eurozone officials said there would be no further meetings between the creditors and Greece until Saturday morning’s Eurogroup session – both to prevent Tsipras trying to get a political deal at the summit and to make clear to his government that the choice was now “take it or leave it.”