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Greek Saga Continues With Talks Failing

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Greek Prime Minister Alexis Tsipras will convene his inner circle to plot the next move in the standoff with international creditors after a round of top-level talks failed to yield a breakthrough.

After meeting in Brussels with European Commission President Jean-Claude Juncker and Dutch Finance Minister Jeroen Dijsselbloem, who also heads the group of his euro-area counterparts, Tsipras stuck to his position that any basis for an accord must be a Greek proposal. He said the plan should avoid spending cuts and tax increases, rather than what was drafted in recent days by creditors.

“The realistic proposals on the table are the proposals of the Greek government,” Tsipras told reporters early Thursday in the Belgian capital. We can’t “make the same mistakes, the mistakes of the past,” he said.

Months of impasse looked closer to being resolved this week after a flurry of activity starting with European leaders and the International Monetary Fund meeting in Berlin on Monday night. Tsipras now returns to Athens with the euro region pressing for an agreement to be wrapped up by June 14, according to a Greek official.

Without access to capital markets, the country has to meet four payments to the IMF totaling more than 1.5 billion euros ($1.7 billion) in June, while its euro-area-backed bailout also expires this month. The first one is due on Friday, and Tsipras signaled that Greece will meet it: “Don’t worry,” he said in response to a reporter’s question about the matter.

Mixed Markets

Greek markets reflected the fluctuating expectations regarding a conclusion of a deal. Bonds rose, with the yield on the government’s two-year security extending this week’s decline by 19 basis points to 22.6 percent. The Athens Stock Exchange Index was down 2.5 percent at 10:45 a.m. local time after rising 4.1 percent on Wednesday.

The European Commission said in a statement after the evening talks that “intense work” will continue and “progress was made in understanding each other’s positions on the basis of various proposals.” Earlier in the day, German Chancellor Angela Merkel said she was working all out to reach an agreement and holding bilateral calls.

Tsipras will meet later today with his closest associates to evaluate the discussions in Brussels, a government official said. Asking not to be identified in line with policy, he said he wasn’t aware of another meeting with Juncker on Friday.

‘Constructive Will’

Tsipras said demands by the euro area and the IMF for cuts in the income of poor pensioners and increases in value-added tax on power are unacceptable, highlighting what have been red lines in Greece’s stance since his anti-austerity Syriza party swept to power in snap elections in January.

Greek Prime Minister Tsipras Says Agreement in Sight

“Ideas like cutting benefits for low-income pensioners, or raising the VAT rate for electricity by 10 percentage points, can’t be a basis for discussion,” he said.

The premier sought to paint the commission, the European Union’s executive arm, as more favorable to his proposals than are other creditor representatives deemed by Greece to be taking a harder line in the aid deliberations.

“There was a constructive will from the European Commission to reach a common understanding,” he said.

Greece has looked to the commission for support to dilute the austerity-first formula that’s underpinned two Greek rescues totaling 240 billion euros since 2010. This has led to clashes with creditors who say such bailout conditions have worked for other countries such as Ireland now out of aid programs and Greece should get no special treatment.

Creditors want the targets for the primary budget surplus – - the budget balance excluding interest payments — to be 1 percent of gross domestic product this year, 2 percent of GDP in 2016, 3 percent in 2017 and 3.5 percent in 2018, said the Greek official, who called these proposals a “good basis” for further deliberations on the matter.

Tsipras said both sides were “very close” to an agreement on the targets for the primary surplus.

(Source: Bloomberg)