Greek gov’t holds emergency meetings

Greece says it won’t exit the Eurozone, but European markets are bracing for what some have called a “Grexit” [Xinhua]

Greek Prime Minister Alexis Tsipras convened his cabinet on Monday afternoon following a collapse in the latest round of talks with International Monetary Fund and European Central Bank creditors.

Despite earlier optimism that a compromise could be reached to extend Greece with loans to meet its debt requirements at the end of June, little to no headway was made in talks over the weekend and the meeting appears to have ended after only an hour with the Greeks refusing to increase pension cuts as an austerity measure.

The IMF says that up to 75 per cent of public spending is allocated to pension funds.

There are now fears that Greece could default on its $1.7 billion due on June 30, and some European lawmakers are saying that markets should brace for an emergency situation on July 1.

On Monday, French President Francois Hollande urged Tsipras to return to the negotiations as European markets braced for increasing possibility that Greece could exit the eurozone.

European media has called such a possibility a “Grexit”. European markets fell in opening trading on Monday: the benchmark Stoxx Europe 600 index fell 1.2 per cent, reversing last week’s trends when it appeared a deal between the EU and Greece could be reached.

The four-month impasse follows the election win of Tsipras’ party – Syriza – which won the January general elections largely on a platform promise to aggressively restructure its ECB and IMF bailout debt.

Syriza has previously indicated that it wanted a delay in repayment schedules.

It has said that it wants a political – rather than financial – solution and insists any negotiation over Greek economic reform should be considered at the heads of state level, not among finance ministers.

Athens has also said that “The more our [EU] partners want austerity, the more the problem with the debt will get worse”.

European negotiators say they are frustrated that despite concessions made by heavyweights like Germany, the Greek government has yet to make any of its own. They say they want Greece to come up with new economic reform packages

Last week, European media were already reporting that Germany – which has traditionally taken a hard position on Greece’s debt and demanded extensive economic reforms before releasing vital funds – had been willing to compromise.

Germany was considering allowing Greece to receive incremental financial assistance from the IMF and European Central Bank in exchange for a much more manageable set of reforms for Athens to implement.

The next round of talks is scheduled for June 18 with a European business summit looming on June 25.

In the meantime, Greek cabinet officials say a “Grexit” is not an option as local media considers the possibility of a national referendum on proposed EU austerity measures.

The BRICS Post with inputs from Agencies