Greece debt crisis: Talks to resume in Brussels

A government official said Greece’s delegation had expected talks in Brussels on Wednesday to focus on Greek proposals that “the institutions had accepted as a basis for discussion on Monday”.

Differences over pensions, sales-tax rates, debt relief and corporate taxes have left Prime Minister Alexis Tsipras’s government and his country’s creditors grappling for common ground before the June 30 expiry of Greece’s euro-area bailout.

“This odd position maybe hides two things: either they do not want an agreement or they are serving specific interests in Greece”, Tsipras said. German finance minister, Wolfgang Schauble, said he was “Not optimistic that we have an agreement tonight”.

The Greek government may think it has given significant ground in its latest proposal. “They have, however, rather gone backwards”.

Alex Stubb, Finland’s finance minister, said last night that by which time “we hope to have a concrete proposal”, according to the Telegraph, while Pierre Muscovici, the European Commissioner for Economics, tweeted: “Where there’s a will, there’s a way”.

That could lead to Greece exiting the eurozone, with possible repercussions for the rest of Europe and the world economy.

A deal on a draconian austerity package is vital for creditors to unfreeze 7.2 billion euro (£5.1 billion) in bailout money that would get prime minister Alexis Tsipras off the hook for the time being.

All 28 European Union leaders will be in Brussels on Thursday and Friday for a regular summit, allowing for some breathing room for negotiations.

‘Unfortunately we have not reached an agreement yet, ‘ said Jeroen Dijsselbloem, the Dutch finance minister, the FT reported.

Mr Tsipras has criticised Greece’s creditors for rejecting his ideas, which they say are not viable.

The Greek side is seeking to offset the impact of the changes with other measures, sources said.

Creditors are fed up with Athens’ lack of cooperation. “So, after the comprehensive Greek proposals, I am confident we will reach a compromise”.

The Athens government faces default if it fails to make a €1.6 billion International Monetary Fund debt repayment by Tuesday. “If the austerity program is tight, Mr. Tsipras will have problems getting that through his parliament, because he was elected with the promise to end the suffering situation of the Greek population”.

But in counter-proposals handed to Greece on Wednesday, creditors are calling for further measures on retirement, value-added tax for restaurants, and for defense expenditure to be slashed by 400 million euros instead of the proposed 200 million euros.

Can Greece stay in the euro?

Greece’s banking system has been kept afloat by cash injections from the ECB as wary Greeks withdraw their deposits, but on Thursday, the Bank of Greece did not request extra liquidity from the ECB, reflecting a stabilization in the withdrawals.

Diplomats said the lenders’ tactics reflected exasperation at his refusal to compromise on key reforms of pensions, labour markets, wages and taxation, which cross his Syriza party’s self-declared “red lines”.