Greece debt talks founder again

Talks between Greece and its eurozone partners have broken up without agreement, intensifying doubts about whether Athens can make a crucial debt payment due in just a few days.

Finance ministers from the 19 nations using the euro currency failed to bridge differences over the kinds of reforms that Greece’s radical left government must implement to qualify for billions in new loans. The negotiations will resume on Saturday.

It was the latest in a series of negotiating road blocks, and a major setback since there had been hopes to reach a deal in time for European leaders to approve it at a summit later in the day.

“Eurogroup back later, but not today,” Finland’s finance minister, Alexander Stubb, tweeted as the talks broke up. Two EU officials said that the ministers would meet again on Saturday.

The blockage happened after leaders from the International Monetary Fund, the European Central Bank and the European Commission raised the stakes by putting forward their joint position on the reforms they would accept to offer Greece a financial lifeline.

But Greece was still not on board, and wanted to stick to a previous plan it has offered.

A Greek government official said that Athens remains “steadfast in support of the proposals” the country had made earlier in the week.

Greece’s most influential creditor, Germany, had never been optimistic about a breakthrough today.

The Greek government so far has “not moved, rather moved backwards, and so I am not very confident for our meeting today”, said German finance minister Wolfgang Schaeuble as he arrived for the eurozone meeting.

He said nothing new is on the table and added that “there is a bigger difference rather than a coming together”.

Mr Schaeuble insisted that “the decision lies exclusively with those responsible in Greece”.

Greek prime minister Alexis Tsipras was under pressure to seal a deal before facing other European Union leaders at the summit.

But he is also under massive pressure from Greeks themselves as the compromises suggested so far will mean fresh hardship for citizens already suffering the impact of past austerity measures to bring public spending into line.

According to Greek officials at the talks, creditors are seeking a different mix of austerity measures than those proposed by Athens, making the cuts more immediate.

They include broad pension cuts, higher revenue from sales tax, and a faster elimination of tax exemptions – demands that are likely to fuel dissent within the government if accepted.

Representatives from almost every Greek party were in Brussels, following developments blow by blow, to see whether they would be able to back any new deal in the Greek parliament, where a vote must pass by Monday.

“We are at a critical moment,” Greek labour minister Panos Skourletis warned on private Antenna television.

“There are issues that for us are paramount – that must be included in an agreement. These are tackling the debt so that it can go on a sustainable course, and the financing of the economy,” he said.

A senior politician in Mr Tsipras’s radical left governing party, Nikos Filis, denounced the international demands for new spending cuts as “blackmail”.

Greece has a €1.6bn euro debt to pay on Tuesday which it cannot afford unless the creditors unfreeze €7.2bn in bailout money.

A failure to reach agreement with its creditors and a default on its debts could force Greece out of the eurozone, which would be hugely painful for the country. Some experts say it could be manageable for Europe and the world economy, but that remains unclear and any failure would be likely to shake global markets.

Amid the uncertainty over Greece’s future, bank deposit holders have been pulling money out of the banks. That has forced the European Central Bank to increase emergency credit to the Greek banks on a daily basis since last week.

Experts say that if Greece does not reach a deal, it could have to put limits on money withdrawals soon.

Miranda Xafa, senior fellow at the Centre for International Governance Innovation and a former IMF official, said that the talks were now “more a matter of signing a deal, even a painful deal” that would cover Greece for three to nine months.

If no deal is struck quickly, she said, Greece could see “capital controls as early as next week”.