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Greek PM meets EU's Juncker as debt drama nears climax

Thursday, June 4, 2015 - 06:57
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Prime Minister of Greece Alexis Tsipras (left) shakes hands with the European Union Commission President Jean-Claude Juncker prior to their meeting at the European Union Commission headquarter in Brussels, on June 3, 2015.

[BRUSSELS] Greek Prime Minister Alexis Tsipras held crunch talks with European Commission chief Jean-Claude Juncker in Brussels on Wednesday to try to seal a desperately-needed bailout deal as the country's debt crisis nears its climax.

Radical anti-austerity leader Tsipras was presenting a reform plan to end a gruelling four-month standoff and unlock the final 7.2-billion-euro (S$10.88 billion) tranche of Greece's international rescue package.

But Greece's creditors were sceptical and insisted Tsipras had to work from their own tougher proposal if he wants the funds to help make a critical payment to the IMF on Friday and avoid possible default.

Mr Juncker and Mr Tsipras shook hands for the cameras but made no comment - Mr Juncker also avoided a repeat of previous light-hearted moments when he mocked the Greek leader's refusal to wear a tie - before going in to what the EU described as a "working dinner".

Eurogroup chief Jeroen Dijsselbloem, the head of the eurozone finance ministers' bloc who was also in Brussels for the talks, said that it was an "important meeting but I am not expecting a deal this evening."

Greece's eurozone partners and its creditors in the EU, European Central Bank and International Monetary fund want a deal by Friday, when Athens must repay the IMF 300 million euros.

Fears of a messy Greek exit from the euro are growing, with its current 240-billion-euro bailout programme is due to run out at the end of June, and a total of 1.6 billion euros in payments due to the IMF in total this month, which Athens does not have.

LAST-MINUTE PHONE CALL

In the hours before the Tsipras-Juncker meeting there were frantic efforts to bridge the gap between the demands of the creditors and the hard-left Syriza government's determination to end five years of austerity.

Syriza chief Tsipras, who was elected in January on a vow to refuse any more bailout programmes that would mean more painful cuts to Greek finances, appealed to European leaders to show unity.

"We must avoid division," Mr Tsipras said as he headed for Brussels, adding: "I am certain the leadership of Europe will do what must be done, it will join the side of realism." German Chancellor Angela Merkel and French President Francois Hollande acknowledged "the necessity" to lower primary surplus targets - a key sticking point with Athens - during phone talks on Wednesday with Tsipras, Greek sources said.

Athens has insisted on lower targets that would allow it to honour promises to voters to increase public spending, having already made compromises on pension reform and sales tax.

Mr Hollande said a deal could be "days, even hours away".

But the leader of Europe's fiscal hawks, German Finance Minister Wolfgang Schaeuble, poured cold water on the prospects of an agreement.

Mr Schaeuble said he had heard some elements of the Greek plan, which "change nothing in my assessment to colleagues in Dresden. It rather confirms it", referring to a G-7 meeting last week when he said optimism was not justified.

Meanwhile ECB chief Mario Draghi said the ECB wanted Greece to remain in the single currency, but that a "strong agreement" was needed.

SYRIZA'S NOD NEEDED

Greece was notably absent when the creditors hatched their plan at a closed-door meeting in Berlin on Monday between Mr Hollande, Dr Merkel and Mr Juncker, plus Mr Draghi and IMF boss Christine Lagarde.

They are likely to demand tougher reforms than the 46-page proposal the Greek premier said he would present in Brussels, which aims to overhaul the struggling Greek economy whilst breaking with harsh austerity.

Any deal must be approved by the rest of the eurozone, where Greece's hardheaded stance during negotiations and its flirting with Russia have alienated some other countries.

Mr Tsipras would meanwhile face the challenge of getting an agreement through a vote at home.

This could be tough given that he is under intense pressure from Syriza's influential radical wing to reject any reform plan that piles more austerity on the recession-hit country.

Some Syriza officials have said they would rather hold snap elections than accept more austerity.

AFP