Greece crisis to dominate summit as eurogroup talks stall

Euro zone finance ministers will meet on Thursday in Brussels in an effort to break the Greek impasse, after the third crisis eurogroup meeting in less than a week failed to yield any progress.

The crisis is now expected to dominate the two-day summit of EU leaders that begins this afternoon, after Greek prime minister Alexis Tsipras failed to bridge differences between Greece and its creditors on a new reform deal.

Following more than six hours of talks between Mr Tsipras and the EU and IMF's most senior officials on Wednesday, negotiators emerged empty-handed from the European Commission headquarters in Brussels, prompting the eurogroup meeting of finance ministers to be suspended after an hour.

The Greek government said that the institutions had tabled a proposal that transfers the burden of austerity to workers and pensions in a way that is “socially unfair”.

But in a sign that a deal could still be imminent, Mr Tsipras returned to the negotiating table following the eurogroup meeting and was due to resume talks with Jean- Claude Juncker and other senior EU officials late on Wednesday night.

The eurogroup will meet at 1pm local time, with the summit of EU leaders scheduled to start at 4pm.

Parliamentary mandate

Earlier Finnish finance minister

Alex Stubb

said he would be “positively surprised” if a deal was agreed on Wednesday night, noting that ministers had to keep their parliamentary mandate in mind. “These are not decisions that we take lightly and we have to work them through first,” he said.

German finance minister Wolfgang Schaüble said things were “not much further forward” from Monday’s meeting.

With time running out for Greece to unlock bailout cash before the expiration of its bailout and IMF repayment deadline next Tuesday, officials are hoping that finance ministers will be in a position to sign off on a deal before this afternoon’s summit, though a further eurogroup meeting over the weekend has not been ruled out.

European stock markets fell sharply as it emerged that the bailout talks were running into difficulty.

Latest proposal

It is understood that the IMF in particular is unhappy with the balance of spending cuts and tax rises contained in the latest Greek proposal. While the Greek plan is proposing total fiscal adjustment of €8 billion over this year and next, the IMF fears that the plans are too dependent on tax increases.

Among the concessions being demanded by creditors are the earlier elimination of a supplementary benefit for low-income pensioners and the inclusion of restaurants and the catering industry in the higher 23 per cent VAT rate. The institutions are also opposed to various measures to increase corporate tax contained in the latest Greek proposals.

Any deal agreed in Brussels is expected to be scrutinised and voted on by the Greek parliament before Tuesday. Before leaving for Brussels, Mr Tsipras strongly criticised the creditors for not accepting the Greek proposals.

“The insistence of certain institutions of not accepting parametric measures has never happened before – not in Ireland, nor in Portugal,” he said. “This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed.”

Mr Tsipras is facing resistance from within his own party, Syriza, and from its junior coalition partner in government to ceding further concessions to creditors.