Europe

Greece crisis: PM Tsipras tells creditors to 'get real'

Prime Minister Alexis Tsipras Image copyright AP
Image caption Prime Minister Alexis Tsipras has refused cuts to pensions

Greek Prime Minister Alexis Tsipras has said his government will wait patiently for international creditors to become "realistic", after talks on a debt deal in Brussels failed.

Mr Tsipras rejected demands for pension cuts, citing his country's dignity.

Time is running out for Greece to unlock bailout funds from the EU and IMF and a European Commission spokesman said "significant gaps" remained.

One European Commissioner said it was time to plan for an emergency.

Guenther Oettinger, who is also a member of German Chancellor Angela Merkel's centre-right CDU, said if negotiations with Greece failed and its government rejected a deal on pension cuts, then on 1 July Greece would have to be considered an "emergency area".

Image copyright Reuters
Image caption Greece is at risk of defaulting on a major repayment to the IMF at the end of June

Without a cash-for-reforms debt deal with the EU and IMF, Greece is expected to default on a €1.5bn (£1.1bn; $1.7bn) debt repayment to the IMF due by the end of the month.

The Athens government's bailout deal with the EU also runs out on 30 June and Mr Tsipras has been trying to unlock the final €7.2bn instalment.

Speaking to Greek newspaper Ton Syntakton, Mr Tsipras warned that "further cuts to pensions after five years of looting under the bailouts can only be viewed as serving political expediency".

"We will patiently wait until creditors turn to realism. We have no right to bury the European democracy in the land where it was born."


What next for Greece?

Image copyright AFP

Timeline

  • 17 June: ECB expected to reassess continuing support for Greek banks in case of default
  • 18 June: Eurozone ministers meet - seen as last chance to reach deal that Greece can ratify by end of June
  • 30 June: Eurozone bailout with Greece runs out + deadline for Greek €1.5bn debt repayment to IMF

How close is Greece to Grexit?

Greece special report


Germany loses patience - by Jenny Hill, BBC News Berlin

Image copyright AP
Image caption Sigmar Gabriel (L) has in the past been seen as sympathetic to Greece

"The Greek government is playing with fire," said Vice-Chancellor Sigmar Gabriel, warning time and patience were running out. The prevailing mood is one of irritation as the need to find a solution grows more urgent. Volker Kauder - a close ally of Chancellor Merkel and the parliamentary leader of her conservative party - told German TV that Greece had to "get back to reality".

Greek Finance Minister Yannis Varoufakis, in an interview with tabloid newspaper Bild, ruled out a Grexit but took the opportunity to reiterate demands for Greek debt to be restructured and for emergency talks led by Angela Merkel.

Perhaps that's no surprise. The chancellor has made it clear she wants to keep Greece in the eurozone. "Where there's a will there's a way," she says, in a phrase she has also used for Britain's renegotiation of its EU relationship. But she has reportedly acknowledged the possibility of a Grexit and is under pressure domestically on Greece. One conservative colleague, Wolfgang Bosbach, has threatened to resign rather than support another bailout deal.


Pension wrangle

Europe wants Greece to make spending cuts worth €2bn (£1.44bn), to secure the final bailout funds.

IMF chief economist Olivier Blanchard, in a blog post, explained that Greece needed to cut pension expenditure - which already accounted for more than 16% of GDP - by 1% of GDP. He also argued it could be done while protecting the poorest pensioners.

"Just as there is a limit to what Greece can do, there is a limit to how much financing and debt relief official creditors are willing and realistically able to provide given that they have their own taxpayers to consider," he said.

As pressure on Greece intensified, the Athens stock market fell more than 6%.

CDU figures in Germany lined up to criticise Greece's position, with deputy party leader Volker Bouffier condemning Greek demands as unrealistic and Julia Kloeckner from the party executive accusing Mr Tsipras of overplaying his hand.

Even the head of the centre-left Social Democrats (SPD) in Germany's coalition, Sigmar Gabriel, who has been seen as more sympathetic to the Greek position, has warned the Athens government that time is running out. "Everywhere in Europe, the sentiment is growing that enough is enough," he wrote in Bild newspaper.

Greece in numbers

€320bn

Greece's debt mountain

€240bn

European bailout

  • 177% country's debt-to-GDP ratio

  • 25% fall in GDP since 2010

  • 26% Greek unemployment rate

Reuters

In a further sign of widespread German frustration, the head of the influential IFO Institute for Economic Research, Hans-Werner Sinn, said he believed the Berlin government should refuse further funding for the Greek economy.

A leading MP in Mr Tsipras's left-wing Syriza party, deputy speaker Alexis Mitropoulos, said if talks failed, the prime minister would have to consider either a referendum or fresh elections.

Mr Tsipras's Syriza-led coalition swept to power in late January, with an anti-austerity mandate.

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