![The [Greek] European Tragedy](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWKI5s90SFm1wWTk6bs4p7CgslaC2SnYPsrZhb-B-smOufNNCSxCvpBLI9hOB-LsXZjir_PNmEiMk2-E62F3xkg96IoC6QFAaZAnPRTVH340IN9WBRmWJqPkjWlgyRj3zpALp7h6hvA58/s920/GkBack_new.jpg)
By Isabelle Fraser, and Peter Dominiczak 18 Jun 2015
No deal struck at Euro group meeting - senior Government figures now believe a Grexit is inevitable
Christine Lagarde, managing director of International Monetary Fund Photo: AFP
The head of the International Monetary Fund said Greece cannot delay paying its debt after a crucial meeting of Eurozone finance ministers ended without a rescue deal being struck.
Christine Lagarde, the IMF’s managing director, issued the threat as Eurozone finance ministers gathered in Luxembourg to find an 11th hour solution in what was seen as Greece’s last chance to strike a deal with creditors to release bail-out cash and save its Eurozone future.
“There is no grace period or two-month delay, as I have seen here and there,” said Ms Lagarde, as she confirmed that the June 30 deadline for Greece’s repayment of €1.6bn to the IMF remains definitive.
Donald Tusk, president of the European Council, has called a summit of European leaders for Monday evening, June 22, to discuss a co-ordinated way forward.
Ms Lagarde's comments came as a crunch meeting of Euro group finance ministers ended in disappointment, despite rumours of a €10bn rescue deal for the Greek economy. Jeroen Dijsselbloem, the Dutch finance minister who chairs the Euro group, said “too little measures have been put forward that have been assessed to be credible or serious.”
However he added that he believed it is still possible to strike a deal before the end of June.
Jeroen Dijsselbloem, chairman of the Euro group of finance ministers
Yanis Varoufakis, the Greek finance minister, said an "accident" is now "dangerously close." However, he denied reports that Greek banks, which have been suffering large daily deposit outflows, might not be able to open on Monday.
Benoit Coeure, an ECB board member, was asked at the Euro group meeting whether or not Greek banks would be able to open tomorrow. According to a Reuters source, he replied: "Tomorrow, yes. Monday, I don't know."
Stock markets around the world rallied on Thursday, partly on hopes that the US Federal Reserve will raise interest rates more slowly than expected, following a statement on Wednesday night. The Dow Jones industrial average rose 1.17 per cent, to 18,145.67, the S&P 500 gained 1.07 per cent to 2,122.84 while London's FTSE 100 recovered from a five-month low to close up 0.4 per cent at 6,707.88.
In Britain, several senior Government figures now believe it is inevitable that Greece will now leave Eurozone.
One senior figure with knowledge of Cabinet-level discussions said: “It is now a question of when and not if. The current situation is only a sticking plaster. Grexit is now looking inevitable.”
Pierre Moscovici, a European Commissioner, last night suggested that unless Greece comes forward with “serious” proposals it will lead to a “catastrophic scenario”.
Prior to the Euro group meeting ending, German newspaper Die Zeit had reported that a deal of €10bn in assistance was on the table which would tide Greece over until the end of the year, without the participation of the IMF. However German chancellor Angela Merkel denied the report, which sent currency markets into free-fall.
With 12 days before Greece’s bail-out programme expires, the country needs to secure a deal to pay its debt after admitting earlier in the week that it has run out of cash.
Greece’s chief negotiator Euclid Tsakalotos warned that “If Greece goes out, the euro might break down.”
“Once one country has left, you change a monetary union into a fixed exchange rate system, where it’s a cost-benefit analysis whether another country leaves,” said minister Euclid Tsakalotos.
Mrs Merkel told the Bundestag that her government’s efforts were directed to avoiding Grexit.
In a pointed remark which underlined the tension between Greece and the other Eurozone countries, she said that Greece’s government in February “committed itself to comprehensive structural reforms. These must now be tackled with determination”.
The German premier went on to say that “Greece has enjoyed an unprecedented amount of European solidarity in the last five years.”
In a refrain that was used throughout the day by many European leaders, she reiterated that “where there’s a will, there’s a way - if the political leaders in Greece show this will, an agreement with the three institutions is still possible”.
The Greek stock market ended the day up 0.37pc despite the lack of news, having lost 18pc of its value week to date.
Alexis Tsipras (left) with Russian president Vladimir Putin
Meanwhile, Greek prime minister Alexis Tsipras arrived in St Petersburg to meet with Russian president Vladimir Putin to discuss Russia’s planned extension of the 'Turk Stream’ gas pipeline and a BRICs bank.
Russian Deputy Finance Minister Sergei Storchak said that despite speculation “there have been no requests [for help from Greece]”. He added that “there are no resources [in our budget to provide money].”
In another sign that the Greek banking system is heading for ruin, Reuters reported that Greek savers have pulled about €2bn out of banks over the past three days, outstripping ECB liquidity injection.
This represents about 1.5 pc of the total household and corporate deposits of €133.6bn held by Greek banks at the end of April.
Prior to this week, withdrawals had been running at €200-300m euros per day.
Betting firm William Hill is now offering odds of 9-to-4 that Greece will leave the Eurozone.