EU

Greece debt crisis: EU summit cancelled as talks continue

Published

11 years ago

July 12, 2015

A summit of all European Union members planned for Sunday (12 July) has been cancelled as "very difficult" talks over a third bailout deal for Greece continue.

Eurozone finance ministers adjourned the talks last night and they have now resumed.

European Council president Donald Tusk said a meeting of Eurogroup leaders would go ahead at 14:00GMT and "last until we conclude talks on Greece".

Without a deal, it is feared Greece could crash out of the euro.

Marathon talks on Saturday had ended without agreement and Eurogroup leader Jeroen Dijsselbloem described negotiations as "very difficult".

"We have had an in-depth discussion of the Greek proposals, the issue of credibility and trust was discussed and also of course financial issues involved," Dijsselbloem told reporters. "It is still very difficult but work is in progress."

Talks resumed at 9h GMT.

Frustrated and fatigued, finance ministers have gathered for a second day to try and resolve the clear divisions within the eurozone over Greece.

France and others are pushing for a deal with Greece, while a group of sceptical countries led by Germany harbour grave reservations.

But there are still influential players pushing for an announcement today that negotiations on a third bailout with Greece can begin.

That should be enough to allow the European Central Bank to intervene once again, and prevent Greek banks going out of business.

The fact that a meeting of all 28 EU leaders has been cancelled suggests that the focus is still on finding a deal within the eurozone, rather than looking at the consequences of a Greek exit.

The ministers have reportedly discussed in detail the option of easing Greece's debt burden as long as Athens enacts legislation immediately to reform taxation, pensions and administration. There will be no write-down of debt.

But the talks remain complex and European Commission Vice President Valdis Dombrovskis said it was "utterly unlikely" a mandate would be achieved in Sunday's meeting to start formal negotiations on the third bailout.

Slovakian Finance Minister Peter Kazimir was similarly downbeat, saying: "It's not possible to reach a deal today. We can agree on certain recommendations for the heads of state. That's all. The breach of trust... it's so big, it's not possible to achieve the deal."

Finnish Finance Minister Alexander Stubb said he was "still hopeful" of a deal but that on a scale of one to 10, Greece and its eurozone partners were "somewhere between three and four" on achieving a deal.

Reports on Saturday suggested that German ministers were drawing up a plan that would allow Greece to exit the eurozone temporarily if this weekend's talks fail - something Athens says it is not aware of.

Dimitrios Papadimoulis, vice president of the European Parliament and a member of Greece's ruling Syriza party, reacted angrily to the eurozone's approach in the talks so far.

"What is at play here is an attempt to humiliate Greece and Greeks, or to overthrow the [Alexis] Tsipras government," he said.

The measures submitted in the latest Greek document include:

Tax rise on shipping companies;
unifying VAT rates at standard 23%, including restaurants and catering;
phasing out solidarity grant for pensioners by 2019;
€300 million ($332m; £216m) defence spending cuts by 2016;
privatisation of ports and sell-off of remaining shares in telecoms giant OTE, and;
scrapping 30% tax break for wealthiest islands.

As the talks drag on, Greece's financial situation is close to collapse.

Greece fell into arrears on an International Monetary Fund repayment on 20 June and faces a €3bn payment to the European Central Bank on 20 July.

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