Tags: greece | europe | merkel | deal

Merkel Urges Greece and Creditors to Keep Pushing for Deal

Friday, 12 June 2015 07:39 AM

German Chancellor Angela Merkel urged Greece and its creditors on Friday to keep pushing for a cash-for-reforms deal after Brussels negotiations hit stalemate, as European leaders heaped pressure on Athens to give ground.

Time is fast running out for Greece to reach agreement with its EU and IMF lenders and avert a default at the end of June that could see it tumbling out of the euro zone. But talks ended without a breakthrough on Thursday night and the International Monetary Fund team abruptly left Brussels.

Both sides tried to keep hope alive on Friday and a Greek minister said he hoped for an agreement on June 18. European Commission President Jean-Claude Juncker said the ball was in the Greek government's court, while the Eurogroup chief demanded "serious proposals" for reforms.

Greece needs a deal to unlock aid or loosen curbs on how much it can borrow in short term debt before a 1.6 billion euro ($1.8 billion) IMF repayment due by the end of this month.

"Where there's a will there's a way but the will has to come from all sides so it's important that we keep speaking with each other," Merkel told a conference in Berlin.

Despite the warnings of imminent default, Greek Prime Minister Alexis Tsipras is showing no signs of alarm. His first engagement after rushing home from Brussels on Thursday was an open air pop concert celebrating the revival of the ERT state TV station, closed exactly two years ago under cuts ordered by the country's European Union and IMF lenders.

Renewed uncertainty put European markets on the backfoot and sent Greece's top share index down on Friday morning. The German tabloid Bild reported that the German government was holding "concrete consultations", including about how Athens might introduce capital controls restricting bank withdrawals in Greece and transfers abroad should the country go bust.

Economists believe a solution remains possible but acknowledge that the creditors may soon tell Athens to accept their demands or face "Grexit" — market shorthand for Greece becoming the first country to exit the euro zone.

"We are getting close to ... this take-it-or leave-it scenario," said Derek Halpenny from the Bank of Tokyo-Mitsubishi. "But nobody in my view is ready to trade the 'Grexit' view yet. The expectation is still that a deal will be reached."


Tsipras faces major problems in meeting promises he made before his election in January. He has vowed to end the waves of austerity imposed by previous governments at the lenders' behest. He also needs to keep the country in the euro zone: a poll this week showed an overwhelming 77.4 percent of Greeks favored keeping the common currency.

But the creditors are demanding yet more austerity and refusing to release any aid until Athens backs down, raising the risk of default and a euro zone exit.

Nevertheless, Tsipras put on a show of calm confidence at the evening concert outside the ERT headquarters in an Athens suburb.

Still in the blue suit he wore at the Brussels talks, he was mobbed by supporters as he arrived at the party. "It's a celebration of democracy. It is not the government that reopened ERT but the struggles of the Greek people. Today we should all be happy and look to the future with optimism," he said.

Major sticking points in the talks remain. Athens has balked at measures such as curbing pension benefits and raising value-added tax, and pressed lenders for more help to reduce the debt burden. Its own delegation also flew home from Brussels on Thursday.

For a deal to work, EU officials said Tsipras' government needed to come up with new savings and tax measures to replace those that Athens finds unacceptable. People familiar with the talks said the two sides have come closer to agreeing a primary surplus target but cannot agree on how to achieve it.

Germany's finance ministry spokesman called the IMF's departure from the talks a "warning" to Greece, although Juncker stressed that the Fund's decision to withdraw its team did not mean the Washington-based lender had given up on a deal.

Juncker also said he had given Tsipras a set of propositions in discussions on Thursday evening, but it was not immediately clear how Greece would respond, or whether it would send counter proposals to take the talks forward.

"No matter what we do, if we don't start addressing the debt issue, there is no chance that the Greek economy kickstarts," said Alekos Flabouraris, a state minister. "And if the Greek economy doesn't kickstart, we cannot deal with unemployment, shops will close down."

Anger against the grinding austerity measures imposed on Greece has simmered in the capital Athens. A group of about 50 workers gathered outside the deputy labour minister's office on Friday, demanding jobs.

That followed a larger protest by the Communist-affiliated trade union PAME on Thursday night, thousands of whom gathered to protest in a central square.

Asked about the upcoming IMF payment, Deputy Finance Minister Dimitris Mardas told SKAI radio: "It is our job to be paying our obligations at the time when they are due."

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German Chancellor Angela Merkel urged Greece and its creditors on Friday to keep pushing for a cash-for-reforms deal after Brussels negotiations hit stalemate, as European leaders heaped pressure on Athens to give ground.Time is fast running out for Greece to reach...
greece, europe, merkel, deal
Friday, 12 June 2015 07:39 AM
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