Merkel meets European, IMF chiefs for Greek debt talks

Reuters News
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Posted: Jun 01, 2015 1:35 PM

By Tom Körkemeier and Jan Strupczewski

BERLIN/BRUSSELS (Reuters) - The chiefs of the European Central Bank and the International Monetary Fund met the leaders of France and Germany late on Monday to discuss how to proceed with Greek debt negotiations.

EU officials said ECB chief Mario Draghi and Christine Lagarde of the IMF joined the German and French leaders, and the president of the European Commission, with the aim of reaching a joint position on how to negotiate with Athens.

"They will discuss how to proceed and whether they should make a new offer for an agreement to (Greek Prime Minister Alexis) Tsipras," one EU official said of the Berlin talks.

The unexpected development came after Tsipras fired a broadside at international creditors that officials said bore little resemblance to his private talks with EU leaders.

The euro zone has set a deadline of Friday to conclude the slow-moving talks to allow time for institutions and ministers to approve a deal and secure parliamentary backing to disburse frozen aid before Greece's bailout expires at the end of June.

Athens is due to make a 300-million-euro ($327.93 million) repayment to the IMF on Friday amid growing doubts about its ability to meet all this month's financial obligations.

In an article in the French daily Le Monde which European diplomats said appeared intended to show Greek voters how hard he was fighting, Tsipras accused the lenders of making "absurd proposals" and disregarding Greek democracy.

Officials close to the talks between Greece and the Commission, the ECB and IMF earlier dismissed market rumors of the imminent announcement of a deal.

On Monday evening, German Chancellor Angela Merkel, French President Francois Hollande and Commission President Jean-Claude Juncker gave brief statements before meeting in Berlin to discuss the digital economy. They made no mention of Greece.

One EU official said any offer from Greece's creditors to Athens would not be framed as an ultimatum. An IMF spokeswoman confirmed Lagarde was in Berlin. The ECB declined to comment when asked about the meeting.

GREEK IN-FIGHTING

In a sign of in-fighting in Tsipras' government as the negotiations near a crunch point, Greece's nominee to represent it at the IMF was forced to withdraw on Monday following a backlash against her within the ruling leftist Syriza party.

Hard leftists in Syriza objected to the choice of Elena Panaritis, a former Socialist lawmaker and World Bank analyst, who they said had supported past Greek bailout programs.

Tsipras' article in Le Monde was posted on the newspaper's website before the leftist Greek leader held an hour-long telephone conference with Merkel and Hollande on Sunday, which a German spokesman said took place in a constructive atmosphere.

Referring to creditors' demands for further pension cuts and rejection of restoring collective wage bargaining, Tsipras said they amounted to "the complete abolition of democracy in Europe" and the creation of a "technocratic monstrosity".

Asked about the sharp contrast between the article's defiant tone and his second teleconference with the EU's senior leaders in four days, European diplomats said the public show of anger should not be taken too seriously.

"There is a negotiation going on which isn't easy but is making progress," said a diplomat familiar with the exchanges.

German EU Commissioner Guenter Oettinger told Die Welt newspaper there was still a chance of a deal this week, saying Greece had stopped paying suppliers and contractors weeks ago as cash runs out.

Commission chief Juncker has been trying to build bridges with Greece on the key outstanding issues of a primary budget surplus and pension and labor market reforms.

In a potential sign of progress, Die Welt reported that Tsipras was ready to discuss pension reforms.

Investors shed low-rated euro zone bonds on Monday due to uncertainties about the debt talks and Greece's ability to make the IMF payment, although two euro zone sources said they expect Athens to pay the installment.

One euro zone official said it was less likely that Athens would be able to pay a second installment of 340 million euros on June 12 without a new injection of cash or a delay. It then owes 556 million euros on June 16 and another 340 million on June 19.

(Additional reporting by Lefteris Papadimas and Renee Maltezou in Athens, Elizabeth Pineau in Paris and Andreas Rinke in Berlin; Writing by Paul Taylor and Paul Carrel; Editing by Angus MacSwan)