Greece and creditors fail in 'last attempt' to reach deal

(Agencies) Updated: 2015-06-15 10:12

A young man skates at the entrance of the Bank of Greece headquarters in Athens, Greece in this June 10, 2015 file photo. Greece's situation took a turn for the worse last week when the International Monetary Fund's delegation walked out of negotiations in Brussels citing "major differences" with Athens over how to save the country from bankruptcy. [Photo/Agencies]

BRUSSELS/ATHENS - Talks on ending a deadlock between Greece and its international creditors broke up in failure on Sunday, with European leaders venting their frustration as Athens stumbled closer towards a debt default that threatens its future in the euro.

European Union officials blamed the collapse on Athens, saying it had failed to offer anything new to secure the funding it needs to repay 1.6 billion euros ($1.8 billion) to the International Monetary Fund by the end of this month.

Greece retorted it was still ready to talk, but that EU and IMF officials had said they were not authorised to negotiate further. Athens insists it will never give in to demands for more pension and wage cuts.

"This is very disappointing and sad. It was a last attempt to bridge our differences but the gap is too large. One can discuss a gap, but this is an ocean," said a person who was close to the talks.

Both sides acknowledged the talks had lasted less than an hour, although even here accounts differed: Greece put the length at 45 minutes, EU officials at half an hour.

Following what it called this "last attempt" at a solution, the EU's executive Commission said euro zone finance ministers would now tackle the issue when they meet on Thursday.

With no technical deal apparently possible, the ministers are likely to have to make difficult political decisions on Greece's membership of the currency bloc.

Failure to keep Greece in the euro, after years of arduous negotiations and two emergency bailouts totalling 240 billion euros, would send it lurching into the unknown and mark a historic blow to the EU's most ambitious project.

Last Friday, Greek Prime Minister Alexis Tsipras had indicated he would accept painful compromises on demands for austerity and reform in return for debt relief.

But the Commission said after the talks, which also involved the European Central Bank, that "the Greek proposals remain incomplete".

"While some progress was made, the talks did not succeed as there remains a significant gap between the plans of the Greek authorities and the joint requirements of Commission, ECB and IMF," it said. These amounted to up to 2 billion euros a year in permanent budget savings.

EU officials said Athens had moved closer to the lenders on the size of Greece's primary surplus - the budget balance before its debt repayments - but had not said how it intended to achieve this. Otherwise the Greek delegation, led by Deputy Prime Minister Yannis Dragasakis, had offered nothing new, they added.

Dragasakis said the Greek delegation remained ready to resume talks but blamed European lenders for insisting on pension cuts and value-added tax hikes to close the projected budget gap.