Deal with Greece 'still a long way to go', says Germany

Greek Prime Minister Alexis Tsipras' government has rejected the latest terms set by creditors to unlock bailout aid.
Greek Prime Minister Alexis Tsipras' government has rejected the latest terms set by creditors to unlock bailout aid.PHOTO: BLOOMBERG

BRUSSELS - Germany downplayed the chances of an imminent deal with Greece as Prime Minister Alexis Tsipras' government rejected the latest terms set by creditors to unlock bailout aid and avert a debt default.

The downbeat tone from Germany, the European Union's paymaster, yesterday reinforced the brinkmanship at play ahead of talks between Mr Tsipras and the heads of three creditor institutions: International Monetary Fund (IMF) managing director Christine Lagarde, European Commission president Jean- Claude Juncker and European Central Bank president Mario Draghi.

"Our impression is that there's still a long way to go," German Finance Ministry spokesman Martin Jaeger said in Berlin.

Creditor institutions have made "exceptionally generous" concessions, and "it's now up to the Greek side to show some movement", Mr Jaegar said.

In Athens, Mr Tsipras dug in his heels over the conditions attached to any deal before heading to Brussels. The talks aimed to patch together a deal before Greece's bailout expires and about €1.5 billion (S$2.2 billion) in payments is due to the IMF next Tuesday.

Euro zone finance ministers were due to convene early this morning to close any gaps before leaders arrive for a two-day summit tomorrow.

Mr Tsipras took to Twitter earlier yesterday to denounce creditors for refusing to accept his own proposals for higher taxes, and his government later rejected a counter proposal tabled by creditors, saying it differed little from an earlier document which had also been shot down.

"The repeated rejection of equivalent measures by certain institutions never occurred before - neither in Ireland nor Portugal," Mr Tsipras tweeted.

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

Greek Economy Minister George Stathakis said only three of Athens' 50 proposals were still in dispute. But with so little time left to reach a deal, the talks were particularly fraught.

European stocks retreated after capping their biggest four- day rally since January on Tuesday. Wall Street also opened lower.

The Greek proposals, which euro zone leaders welcomed on Monday as a basis for further negotiation, included a series of tax hikes and higher contributions to pensions to raise revenue and hit budget targets.

Officials said the IMF was most concerned about the balance of the package, which was skewed too much towards tax increases rather than structural reforms. Also still in dispute were Greek demands for debt relief and IMF-led pressure for more steps to reform Greece's costly pension system.

Greece would need to put agreed measures through its Parliament by Monday so that other euro zone Parliaments can endorse the deal and unblock aid funds. If it defaults on the IMF payment, this could trigger a bank run and its eventual exit from the euro zone.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on June 25, 2015, with the headline 'Deal with Greece 'still a long way to go', says Germany'. Print Edition | Subscribe