Greece told to strike a deal or face 'dramatic consequences'

By Marion Dakers 07 June 2015

Time is running out for Syriza and Greece's lenders to find common ground, European leaders warn

German Chancellor Angela Merkel, right, will meet with the Greek Prime Minister Alexis Tsipras on Wednesday Photo: Tobias Schwartz/AFP

Greece's creditors are losing patience with the country's uncompromising stance on its debt obligations, with the heads of the European Parliament and Commission calling on Alexis Tsipras's government to find common ground for a deal or face "dramatic consequences".

Jean-Claude Juncker, President of the Commission, has vented his frustration at Mr Tsipras for rejecting the lenders' proposals last week without telling his parliament that sticking points such as income support for pensioners had been put on the table for negotiations.

"He didn't tell parliament that we did address that subject already," said Mr Juncker, adding that he is yet to receive a revised proposal from the Greek leadership following Mr Tsipras' "disappointing" comments.

"I don't have a personal problem with Alexis Tsipras, quite the contrary. He was my friend, he is my friend. But friendship, in order to maintain it, has to have some minimum rules," he said at the G7 summit in Germany.

Meanwhile, the President of the European Parliament has put further pressure on Greece to agree a deal with its international creditors and unlock rescue funding, warning of “dramatic consequences” if the indebted country resists compromise.

Martin Schulz told the Welt am Sonntag newspaper that the anti-austerity ruling party Syriza has a responsibility towards the rest of the European Union, not simply its own voters.

Martin Schulz, President of the European Parliament (picture copyright: Getty)

Mr Tsipras took a defiant stance on Friday by postponing a €300m payment to the International Monetary Fund and describing the latest reforms and funding proposal from the troika of lenders as an “unpleasant surprise” and “absurd”.

Mr Schulz echoed Mr Tsipras’s foreboding tone about how quickly Europe needs to come to an agreement. "Time is running out and the consequences would be dramatic,” he said, warning Greece against “turning down the outstretched hand again”.

He has also suggested over the weekend that if Greece were to depart from the Eurozone, it would spell “automatic exit from the EU”.

Greece's finance minister Yanis Varoufakis has made a fresh push for debt relief as part of the revised package. “As finance minister, I’ll refuse to put my signature on a deal” like the one currently on the table, Mr Varoufakis told Proto Thema newspaper. “We will not sign a deal that extends this self-feeding crisis of the last five years."

Mr Varoufakis likened Greece's situation to post-war Germany in a blog post on Sunday. "As I write these lines, the Greek government is presenting the European Union with a set of proposals for deep reforms, debt management, and an investment plan to kick-start the economy. Greece is indeed ready and willing to enter into a compact with Europe that will eliminate the deformities that caused it to be the first domino to fall in 2010.

"But, if Greece is to implement these reforms successfully, its citizens need a missing ingredient: Hope. A 'Speech of Hope' for Greece would make all the difference now – not only for us, but also for our creditors, as our renaissance would terminate the default risk."

The bickering over the weekend comes ahead of a planned meeting between Mr Tsipras and other European leaders this week to discuss the increasingly urgent funding requirements for Greece.

Angela Merkel, the German Chancellor, and the French President Francois Hollande are expected to meet with Mr Tsipras on Wednesday, having spent the weekend monitoring the situation from Bavaria, where Germany is hosting the latest G7 summit.

Barack Obama, the US President, is also at the summit and said on Sunday he is hopeful that Greece can achieve an agreement on reforms and funding without destabilising the financial markets.

Officials have said a fresh bail-out deal must be done by mid-June, in time to get political approval for the next tranche of financial support before Greece’s €240bn package runs out at the end of the month. The country has invoked a rule created by the IMF in the 1970s that allows it to bundle all of its €1.6bn payments due this month into one.

Angela Merkel and Barack Obama visiting the village of Kruen, southern Germany, on Sunday ahead of the G7 summit (picture: AP)

German Vice-Chancellor Sigmar Gabriel, a member of the Social Democratic party, said on Saturday that a deal “depends solely on the Greek government. Europe has gone to its limits." However, he added that the help will continue as Greece remains part of the EU.

• Greece's endgame: a timeline of events

• Greece crisis live: as it happened on Friday, June 5

Greece told to strike a deal or face 'dramatic consequences' - Telegraph