Time running out over Greece crisis

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Published: Thursday 25th June 2015 by The News Editor

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Eurozone ministers will make their third attempt in four days to break the deadlock in the Greek debt crisis after the latest talks were halted after barely an hour.

With time running out to avert a potentially catastrophic default by the radical left Syriza government, finance ministers from the 19 single currency bloc members will return to the negotiating table in Brussels today to try to hammer out a deal.

It means their deliberations will take place alongside a meeting of EU leaders who are holding a two-day summit in the Belgian capital who will almost certainly find themselves drawn into the negotiations.

Ministers arrived for last night’s meeting with hopes of a settlement fading after the International Monetary Fund (IMF) gave short shrift to the latest Greek plan for 8 billion euros (£5.7 billion) of “austerity” savings.

The IMF complained that the plan was too weighted towards tax increases – which, it argues, stifle economic growth – and that the government in Athens needed to do more to cut spending.

That infuriated Greek Prime Minister Alexis Tsipras, who has made the protection of pensions and public sector wages a “red line” in the negotiations with his country’s creditors.

He even hinted at fears that there were those in the eurozone or elsewhere who wanted to see his government fall.

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

“This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed.”

However, IMF director Christine Lagarde said the Greek plans were simply not viable.

“You can’t build a programme just on the promise of improved tax collection, as we have heard for the past five years with very little result,” she said in an interview with the French Challenges magazine.

Even if there is a deal in Brussels – giving the Athens government access to a new 7.2 billion euro (£5.1 billion) tranche of bailout funds – it may still not be enough to avert a collapse, sending the country crashing out of the euro.

Without the additional funding, Athens will be unable to make a 1.6 billion euro (£1.2 billion) repayment to the IMF due next Tuesday. If it fails to meet the deadline it will be declared in default.

But before the money is released it has to be approved by the Greek parliament – where Mr Tsipras is facing a possible revolt from hardliners from the Syriza left opposed to any further austerity – and the other eurozone governments.

To add to the pressure, German officials have reportedly said they will not put any deal to the Bundestag until it has been accepted by the parliament in Athens.

Published: Thursday 25th June 2015 by The News Editor

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