This Article is From Jun 03, 2015

Greek Prime Minister Heads to Brussels for Crunch Debt Deal Talks

Greek Prime Minister Heads to Brussels for Crunch Debt Deal Talks

File Photo: Greek Prime Minister Alexis Tsipras (Associated Press)

Brussels: Greek Prime Minister Alexis Tsipras headed for last-ditch talks with European Commission chief Jean-Claude Juncker in Brussels today to lay the ground for a deal that will keep the country from bankruptcy.

Tsipras warned European leaders against sowing divisions ahead of the meeting, which will discuss rival reform plans presented by debt-stricken Athens and its international creditors after a lengthy stand-off.

A deal would unlock the final 7.2 billion euros ($8.0 billion) tranche would help Greece make a critical 300 million euro repayment to the International Monetary Fund on Friday and avoid a possible default.

"We must avoid division," Tsipras said as he left Athens, adding: "I am certain the leadership of Europe will do what must be done, it will join the side of realism."

Four months of fractious talks have stalled over the resistance of Greece's anti-austerity Syriza government to reforms demanded by Greece's creditors, the EU, IMF and European Central Bank.

But the European Commission warned that a final deal would not be reached at the meeting, which was expected to begin at 1830 GMT at its huge glass-and-steel Berlaymont headquarters in Brussels.

"We do not expect any final outcome tonight, this is a first discussion not a concluding one," said Juncker's spokesman, Margaritis Schinas.

European Central Bank president Mario Draghi said Wednesday that the ECB wanted Greece to remain in the single currency, but that a "strong agreement" was needed between Athens and its creditors.

'No negotiating'

Tsipras will still have to get any deal through a vote at home, a tough task given that he is under intense pressure from Syriza's influential radical wing to reject any reform plan that piles more austerity on the recession-hit country.

But without a deal by the end of this week, fears are growing that Greece could default, possibly setting off a chain reaction that could end with a messy exit from the eurozone and cause havoc to the economy in Europe and the world.

Friday's payment is part of a total 1.6 billion euros it needs to repay the global lender this month, funds it currently lacks, while its current 240 billion euro bailout is due to run out at the end of June.

The Greek premier said the purpose of his trip was to present Juncker his government's 46-page proposal on how to overhaul the struggling Greek economy whilst breaking with harsh austerity.

But Greece's creditors -- the EU, IMF and ECB -- are widely understood to have their own plan sealed at a closed-door meeting in Berlin on Monday involving Juncker and the leaders of France and Germany.

The Brussels talks will involve major face-saving efforts on both sides as Tsipras seeks to maintain his radical mantle, and the rest of the 19-country eurozone tries not to appear soft on Athens.

Eurogroup chief Jeroen Dijsselbloem was at first said by officials to be attending on Wednesday, but Commission spokesman Schinas later declined to confirm that, amid reports that Tsipras did not want the hardliner present.

Officials said ECB and IMF representatives would also be present.

The ECB is not only one of biggest lenders to Athens, but also provides a crucial cash lifeline that is for now keeping Greece's banking system alive while the talks drag on.

Germany, the eurozone's biggest economy and driver of austerity politics, meanwhile insisted Wednesday that the talks would be conducted on the basis of the proposals put forward by the creditors and not by Athens.

Dutch Prime Minister Mark Rutte also said Wednesday there would be "no negotiating".

But France and Spain said they were both "confident" of the chances of a deal.

'No take-it-or-leave-it'

European sources said Athens would be spared ultimatums, even though time was running out.

"It is not a take-it-or-leave-it document but an initiative to accelerate talks as the timing to get a deal in time for the end of the month is getting tight," a European source close to the negotiations told AFP.

The two proposals will clash primarily on the so-called primary surplus, the amount of public revenue the Greek government should have left over every year to pay down its mountain of debt.

Athens said this should be no more than 1.5 percent of annual output next year, while according to a report in the Financial Times, the creditors are demanding a far more ambitious two percent.

Greece has stuck to its guns in its proposals on labour rights but is compromising on privatisations plus reforms to sales tax and the pension system.

But Syriza's radical wing is keeping Tsipras under pressure, with some officials saying the government would rather hold snap elections than accept a deal with more austerity.
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