Greek Deal Unravels As Both Sides Reject Proposals

Last-ditch Greek rescue hopes dashed as Alexis Tsipras faces austerity ultimatum - Telegraph

Greece's eurozone future was thrown into fresh turmoil on Wednesday night as talks broke down after creditor powers demanded further austerity measures to release the funds the country needs to avoid a debt default.

Dashing tentative hopes that an agreement could be struck at European Union leaders summit on Thursday, a meeting of finance ministers was suspended after only an hour as Prime Minister Tsipras was summoned for further late night talks with his bail-out chiefs.

Earlier in the day, Greece's three lending institutions rejected Athens' €8bn reform plans, despite widely hailing it as a positive step forward only days ago. Greece now faces an imminent debt default and expiration of its bail-out June 30.

In a five-page set of counter proposals, creditors instead demanded Athens' Leftist government carry out more spending cuts, abolish exemptions on VAT and implement a root and branch overhaul of its pensions system. 

The breakdown came after Athens seemed to renege on its previous commitments to end tax privileges for its islands and phase out supplementary pensions for the poorest.

But the government was quick to reject the new demands, attacking them as "absurd" and sure to bring "Armageddon" to the beleaguered economy . 

Having been hauled back to Brussels on Wednesday morning, a wounded Mr Tsipras released an ambiguous statement suggesting ulterior motives behind lenders' fresh demands. 

“The repeated rejection of equivalent measures by certain institutions never occurred before — neither in Ireland nor in Portugal," he said. 

“This curious stance may conceal one of two possibilities: either they don’t want an agreement or they are serving specific interest groups in Greece.”

Greek crisis: deal unravels as both sides reject proposals and Tsipras is summoned to late night talks - Telegraph

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• ECB agrees to pump more money into Greek banks
• Finance ministers meeting aborted after an hour
• Last-ditch Greek rescue hopes dashed as Alexis Tsipras faced with austerity ultimatum 
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Greece talks to drag into EU summit

Talks aimed at preventing an imminent Greek default are set to drag into Thursday’s (25 June) EU summit, after a promised evening of high drama ended prematurely with little movement from either Greece or its creditors.

Hastily arranged on Monday, Wednesday evening’s Eurogroup was billed as the final showdown in negotiations.

It came after the Greek government proposed to raise an additional €8 billion, raising hopes of a deal to unlock the remaining €7.2 billion of its bailout programme.

But creditors remained unsatisfied and the meeting of eurozone finance ministers broke up after barely an hour, with no fresh proposal from either side.

For his part, Greek prime minister Alexis Tsipras spent most of Wednesday across the road from the EU Council in the European Commission. 

He spoke with the creditors’ top represenatives: commission president Jean-Claude Juncker , the European Central Bank’s (ECB) Mario Draghi, and International Monetray Fund (IMF) chief Christine Lagarde. The chairman of the Eurogroup, Dutch finance minister Jeroen Dijsselbloem also took part. 

Finance ministers will reconvene at 1pm on Thursday, EU sources said.

Dijsselbloem noted that the Tsipras-creditors talks could go on past midnight. “We are determined to continue work during the night if necessary”, he told reporters.

Earlier on Wednesday, the IMF revealed its disquiet with the Greek plan, which focused on tax rises on businesses and wealthy Greeks. 

Creditors want to scrap a planned levy on corporate profits over €500,000, as well as planned taxes on video games and 3G and 4G licences. 

They also want Greece to increase pension contributions and to set up a Social Welfare Review aimed at reducing pension spending by 0.5 percent of GDP.

In a statement, the Greek government accused them of trying to “transfer the burden to wage earners and pensioners in a way which is socially unfair.” 

Greece “cannot agree with such a direction”, it said.

The talks are aimed at helping Greece to repay €1.6 billion to the IMF by 30 June. But some national parliaments would need to ratify any agreement, tighetning the timeframe of the default.

Ministers indicated that the question of restructuring Greece’s debt, which stands at 175 percent of GDP, for the long term would not be raised in the negotiations.