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Greece bailout crisis: talks enter last-minute search for a deal

Crisis talks between Greece and its creditors have resumed in Brussels, in a desperate search for compromise.

The latest round of technical talks comes ahead of an emergency meeting on Thursday of the 19 finance ministers of the eurozone – the fourth in eight days – and a long-planned summit of all 28 EU leaders.

Eurozone ministers were expected to work through Wednesday night to resolve the impasse over the Greek bailout, but the meeting broke up after little more than an hour, when it became clear both sides remained far apart on how to fix the Greek economy.

The Greek prime minister, Alexis Tsipras, met the heads of the International Monetary Fund, European Central Bank and European commission late on Wednesday night, but talks ended in the early hours of Thursday with Greece “remaining firm on its position”, according to a Greek government official. Tsipras had already met the same institutions for six hours earlier on Wednesday, where he resisted demands for deeper spending cuts.

Greece’s lenders are pressing Athens to accept more austerity in exchange for releasing €7.2bn (£5.1bn) in desperately needed bailout funds. Tsipras, who has been seeking to wrest back control over the Greek economy, has accused the lenders of not wanting a deal and serving “special interests” in Greece.

As Wednesday’s talks ended in stalemate, a senior Syriza official accused the creditors of trying to blackmail Greece. “The lenders’ demand to bring annihilating measures back to the table shows that the blackmail against Greece is reaching a climax,” Nikos Filis, the Syriza’s parliamentary spokesman told Mega TV, reported Reuters.

The technical talks in Brussels are aimed at preparing the way for the finance ministers’ meeting at 1pm local time (1200 BST).

“Where there is a will, there is a way,” tweeted Pierre Moscovici, European commissioner for economic affairs.

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European leaders hope to rubber-stamp a deal before the end of their two-day summit, which starts on Thursday afternoon.

The German chancellor, Angela Merkel, has been reluctant to allow Greek talks to derail the long-planned summit, where leaders will discuss how to deal with thousands of migrants fleeing poverty and war and hear a presentation from the British prime minister, David Cameron, on his hopes for EU reform.

Uncertainty over the Greek crisis weighed on European stock markets. In early trading the FTSE fell by 0.4%, the French CAC index slid by 0.9% while Germany’s Dax was down by 0.5%. Shares in Spain and Italy were 0.6% and 0.7% lower, respectively. In Japan, the Nikkei index fell 0.3%, after optimism about the Greek debt crisis lifted it to its highest level since 1996 earlier in the week. The Dow Jones closed on Wednesday nearly 1% lower, despite better-than-expected growth data for the US economy.

Carl Weinberg, chief economist at High Frequency Economics, told his investors to expect more conflicting reports, both positive and negative. “We have no idea how this will end.”

Time is running out fast, with Greece’s eurozone bailout set to expire on Tuesday, when it is also due to repay €1.6bn to the IMF.

The Tuesday deadline is doubly pressing because the ECB, which is keeping the Greek banking system on life support, has indicated it will not support banks if the bailout programme expires without a new agreement in place. Without ECB support, Greek banks are expected to buckle, which would force the Tsipras government to impose capital controls and threaten an exit from the eurozone.

Even if a deal is finally struck in Brussels, Tsipras has to get the compromise through a rebellious and recalcitrant parliament. The German and other eurozone parliaments also have to ratify the package before it can be implemented, raising questions as to whether all this can be accomplished before the Tuesday deadline.

 

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