EU tells Greece's Tsipras: time's up, no more gambling

[BRUSSELS] The European Union bluntly warned Greek Prime Minister Alexis Tsipras on Thursday that time was up and he should stop playing with his cash-strapped country's future and instead take crucial decisions to avoid a devastating default.

European Council President Donald Tusk spelled out the message to the leftist Greek government in unprecedentedly forthright terms after four months of acrimonious negotiations on a cash-for-reform deal.

"There is no more time for gambling. The day is coming, I'm afraid, that someone says that the game is over," Mr Tusk told a news conference after chairing an EU-Latin America summit that was dominated by intense talks with Mr Tsipras on the sidelines.

"It is very obvious that we need decisions, not negotiations," he said, shortly before Mr Tsipras went into a meeting with European Commission President Jean-Claude Juncker.

Mr Tusk's dramatic admonition reinforced warnings by powerful German Bundesbank President Jens Weidmann and EU Economics Commissioner Pierre Moscovici that time was running out to avert a Greek state bankruptcy and possible exit from the eurozone.

Their stern tone contrasted with more optimistic noises from EU officials involved in the detailed negotiations with Greece, who said there was now a good chance of a deal in time for euro zone finance ministers' next meeting on June 18 in Luxembourg.

Late-night talks between Mr Tsipras and the leaders of Germany and France produced no breakthrough, although all sides said they had moved closer on the procedure leading to an agreement.

"At the end of the talks there was absolute unanimity that Greece will work intensively and full steam ahead ... in the coming days to solve all remaining issues," German Chancellor Angela Merkel said.

The latest in a run of sleep-defying meetings was partly political theatre, as all involved try to show their commitment to a deal - and avoid any blame for failing to avert a crunch that could unsettle the euro and the world economy. Tsipras again said he saw a solution at hand.

A senior EU official who has previously been glum on the prospects of an accord also said there was now a good chance that next week would bring an agreement acceptable to Eurogroup finance ministers.

To clinch a deal, EU officials said Tsipras's government needed to offer alternative savings and tax measures to replace proposed pension cuts and tax rises he rejected as antisocial, to deliver a modest fiscal surplus before interest payments.

People familiar with the talks said the two sides have come closer to agreeing a primary surplus target but are still wide apart on how to achieve it, with EU and IMF experts doubting that measures touted by Greece can do the job.

Greek Finance Minister Yanis Varoufakis, sidelined from the talks after infuriating his euro zone counterparts, denied that Athens had agreed to a primary surplus target of 1 percent of gross domestic product sought by the creditors.

As ratings agency Standard & Poor's downgraded Greek bonds deeper into junk status, questioning whether Athens can or wants to pay its debts, Mr Tsipras emerged after midnight from talks with Ms Merkel and President Francois Hollande to express confidence.

"I believe that Europe's political leadership realises that we must offer a viable solution to Greece and the possibility to return safely to growth with social cohesion and with a sustainable debt," he said.

Greek bank shares surged on Thursday, with a major Athens banking equity index enjoying its best performance in four months, on renewed expectations of progress in the talks.

The Athens Stock Exchange FTSE Banks Index rose almost 16 per cent, helping push up the broader Greek ATG equity index by some 7 per cent.

More dire warnings rained down on the Greek leader as he contemplates what concessions to make to clinch a deal without alienating his left-wing supporters who elected him in January on promises to put an end to years of austerity.

"There is a strong determination to help Greece," the ECB's Mr Weidmann said in a speech in London. "But time is running out, and the risk of insolvency is increasing by the day."

The main losers of a Greek default and euro exit would be Greece and the Greek people, he said. "The contagion effects of such a scenario are certainly better contained than they were in the past, though they should not be underestimated," Mr Weidmann said.

Mr Moscovici urged Athens to come up with a list of economic reforms that could make a deal possible. "I really like Greek tragedy, but now we must move to the happy ending," he said.

Ms Merkel had made clear before the meeting with Mr Tsipras that Greece needed to satisfy the three institutions representing the creditors - the European Union, European Central Bank and International Monetary Fund - rather than seeking a political fix on softer terms from her and Hollande.

Mr Tsipras renewed a call for a restructuring of Athens' debts as part of any solution. The EU says that can only be considered after a deal to complete the existing bailout is secured.

Greece will default at the end of June without fresh funds to enable it to repay 1.6 billion euros to the IMF. It put off a smaller payment last week under a rarely used rule allowing it to combine all instalments due in any month.

Mr Tsipras has denounced creditors' demands to scrap an income top-up for the poorest pensioners and to refrain from unilateral moves to reintroduce collective bargaining or raise the minimum wage - policies that are anathema for his Syriza party.

As if on cue, a Greek court ruled on Wednesday that the government should reverse cuts to private sector pensions it made in 2012 as a condition of its bailout agreement because the reductions deprived pensioners of the right to a decent life.

Brussels says he is free to put forward alternative measures provided the numbers add up and yield a primary budget surplus.

He faces pressure not just from left-wing hardliners but also from Greek voters, most of whom say they want to remain in the eurozone and want him to make concessions for a deal.

A poll showed a slight rise since April in the number who are dissatisfied with Mr Tsipras's negotiating performance with the creditors, reaching 53.4 per cent from 50.5 per cent.

REUTERS