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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Greek crisis: Deal in doubt as Eurogroup meeting breaks up - as it happened

Greek Finance Minister Yanis Varoufakis and colleagues at the start of the Eurogroup meeting at the European Council in Brussels, Belgium, 24 June 2015. A crisis meeting of eurozone finance ministers on Greece could start later than expected, sources say, as separate negotiations between the country and its creditors drag on into the evening. Greek Prime Minister Alexis Tsipras and top representatives from the European Commission, the European Central Bank and the International Monetary Fund met earlier. EPA/JULIEN WARNAND
Greek Finance Minister Yanis Varoufakis and colleagues at the start of the Eurogroup meeting tonight. Photograph: Julien Warnand/EPA

A quick update: tonight’s talks started a little late. But Tsipras has now arrived:

Another update: And later, they left, ready for another dramatic day on Thursday....

Updated

Those top-level negotiations should be starting again anytime now, in the hope of making progress by morning....

And here’s confirmation that the eurogroup will convene again at 1pm local time on Thursday.

Oh, I can’t resist a couple more photos -- here’s Greece’s finance minister Yanis Varoufakis and chief economics spokesman Euclid Tsakalotos departing tonight’s unusually short eurogroup meeting....

Greek Finance Minister Yanis Varoufakis (C) and Chief Economics Spokesman of the Government of Greece Euclid Tsakalotos leave a Eurozone finance ministers emergency meeting in Brussels, Belgium, June 24, 2015. Greek Prime Minister Alexis Tsipras wrestled with creditors demanding changes to his proposed tax and reform plans on Wednesday in a last-minute race to clinch a deal to which euro zone finance ministers could late agree. REUTERS/Philippe Wojazer
Photograph: Philippe Wojazer/Reuters
Greek Finance Minister Yanis Varoufakis leaves a Eurozone finance ministers emergency meeting in Brussels, Belgium June 24, 2015. Greek Prime Minister Alexis Tsipras wrestled with creditors demanding changes to his proposed tax and reform plans on Wednesday in a last-minute race to clinch a deal to which euro zone finance ministers could agree. REUTERS/Yves Herman
Deep in thought? Photograph: Yves Herman/Reuters

And here’s Christine Lagarde too:

International Monetary Fund Managing Director Christine Lagarde leaves a Eurozone finance ministers emergency meeting in Brussels, Belgium, June 24, 2015. Greek Prime Minister Alexis Tsipras wrestled with creditors demanding changes to his proposed tax and reform plans on Wednesday in a last-minute race to clinch a deal to which euro zone finance ministers could late agree. REUTERS/Philippe Wojazer

I’m going to take a break now -- as Thursday is going to be extremely busy.

So here’s Ian Traynor’s full report on events from another dramatic day:

I’ll try to pop back in if there are major developments in Brussels overnight, from the talks between Greece and her creditors:

Otherwise, see you again in the morning.... GW

Alexis Tsipras now has just 90 minutes grace, before another tussle with the IMF, ECB and EC at 10pm BST (midnight if you’re reading in Athens).

Snap summary: Eurozone ministers see no deal tonight

Spanish Economy minister Cristobal Montoro Romero (L) and Greek Finance Minister Yanis Varoufakis (C) attend a Eurogroup Council meeting on June 24, 2015 at the EU Headquarters in Brussels. AFP PHOTO / JOHN THYSJOHN THYS/AFP/Getty Images
Photograph: John Thys/AFP/Getty Images

So to quickly recap.... Eurozone finance ministers have decided there’s no point talking late into the night about Greece, as an agreement is still some distance away.

Tonight’s meeting in Brussels quickly showed that there are still fundamental differences between Athens and its creditors over its bailout reform programme, with less than a week until it expires.

A meeting that was meant to go into the night and actually deliver a deal actually ended after barely an hour, once ministers had been briefed.

The Eurogroup swiftly concluded that it isn’t in any position to draw up the staff-level agreement needed to unlock aid for Greece.

Instead, they will meet again at 1pm CEST in Brussels on Thursday, for another crack at it:

Alex Stubb, Finland’s finance minister, is telling reporters outside the building that the work will continue, but time is running out.

Top-level talks will continue tonight - with the two sides still divided over what reforms Greece should implement.

At 11pm Brussels time (10pm BST) the Greek PM will meet the leaders of Greece’s creditors again in another attempt to crank out an agreement by the morning....

So what’s the situation?

Athens is refusing to accept the pension reforms demanded by the IMF, including raising the effective retirement age faster and phasing out the “solidarity grant” paid to the poorest pensioners.

The IMF, though, is insistent that Greece’s proposal needs to be reworked, putting less of a burden on businesses and accelerating the reform process. In short, it wants more spending cuts and less tax rises, and simply doesn’t believe Greece’s maths.

As my colleague Larry Elliott puts it:

In the unlikely event that the extra revenues were collected in full, the IMF believes the one-off levy on bigger businesses coupled with the increases in corporation tax would hinder growth.

It thinks the Greek plan will only add up if there are immediate cuts in pensions and higher VAT on restaurants and medical supplies.

Today’s leaked documents showed that creditors have taken a red pen to Tsipras’s precious red lines.

Updated

Are we closer to a deal? Bloomberg economist Maximu Sbaihi fears we’re further away!

Leaving the meeting, Eurogroup president Jeroen Dijsselbleom tells reporters that ministers are “determined to continue work during the night if necessary,”.

We had feared that ministers wouldn’t emerge until dawn tomorrow, but actually they’re hitting the road before the sun sets.

NO DEAL: Eurogroup ends early

NEWSFLASH: The eurogroup has broken up without a deal, according to Finland’s finance minister.

And talks are going to restart at noon BST tomorrow.

There are dramatic scenes too, as the French delegation sprint through the room.

Updated

The Greek government has just released a statement slamming the new proposal tabled by creditors.

They say:

  • The Greek government delegation came to today’s negotiation based on the text of the proposal which institutions had accepted as a base of discussion on Monday.
  • The institutions, for their part, tabled a new proposal which transfers the burden [of austerity] to wage earners and pensioners in a way which is socially unfair while at the same time suggesting measures to avoid the increase of burden on those who have (to give).”
  • The Greek side cannot agree with such a [change of] direction. Negotiations are continuing at all levels.”

Veteran political commentator Alexis Papachelas predicated that the tough bargaining could continue all the way through to Tuesday when Athens must meet a debt repayment of €1.6bn euro to the IMF.

“I don’t think anything will happen tonight. There is a very negative climate ... we should not be surprised by anything, this tough bargaining could continue all the way through to 11:45 on Tuesday,” he told Skai TV’s flagship news program.

“What worries me is not so much the drachma lobby in Greece but the drachma lobby that appears to be developing abroad.”

If in doubt....

OK, there’s now talk that Alexis Tsipras and Jean-Claude Juncker will meet again at 11pm Brussels time tonight for another session.

Updated

Eleni Varvitsiotis of Greek newspaper Kathimerini has also heard that the eurogroup meeting may be suspended.

Finance ministers, it appears, aren’t best pleased to be meeting *again* without a deal to sign off.

Today’s meeting between the Greek PM and the heads of the IMF, ECB and EU sounds like a gruelling affair:

Rumours are swirling that Alexis Tsipras, the Greek PM, will hold another meeting with Jean-Claude Junker tonight, once the Eurogroup has ended.

In which case..... there may not be much point in the finance ministers talking until dawn.

And indeed, Suzanne Lynch of the Irish Times has heard that ministers might break (at some point) and meet again in the morning...

Picture of the day?

Greek Finance Minister Yanis Varoufakis, right, and Managing Director of the International Monetary Fund Christine Lagarde walk into a meeting of eurogroup finance ministers at the EU Lex building in Brussels on Wednesday, June 24, 2015. Eurozone finance ministers meet Wednesday to discuss the Greek bailout. (AP Photo/Thierry Monasse)

Bloomberg has also flagged up that rumour that another emergency eurozone summit might be needed on Friday....

With no breakthrough between Tsipras, Lagarde, Draghi and Juncker earlier, it’s hard to see how the finance ministers can really get anything done tonight.

Rumours were swirling earlier that this could mean the meeting is quite short -- and that another emergency meeting called on Friday.

That would mean the issue is bumped back up to the EU leaders at their summit tomorrow night. No decision on that yet, though.

Updated

Photos: Inside the eurogroup

The ministers are all assembled, and ready to hear the state of play regarding Greece’s bailout programme following today’s intense talks between Alexis Tsipras and the creditors.

Here’s some photos from inside the room:

Greek Finance Minister Yanis Varoufakis (L) gestures as he talks with his advisors before a Eurogroup Council meeting on June 24, 2015 at the EU Headquarters in Brussels. AFP PHOTO / JOHN THYSJOHN THYS/AFP/Getty Images
Greek Finance Minister Yanis Varoufakis talks to his advisors before the session begins Photograph: John Thys/AFP/Getty Images
Luxembourg’s Finance Minister Pierre Gramegna (L) talks with Greek Finance Minister Yanis Varoufakis (R) before a Eurogroup Council meeting on June 24, 2015 at the EU Headquarters in Brussels. AFP PHOTO/JOHN THYSJOHN THYS/AFP/Getty Images
Are you pumped, Yanis? Oh yes....(that’s Luxembourg’s Finance Minister Pierre Gramegna) Photograph: John Thys/AFP/Getty Images
epa04817151 Spanish Economy Minister Luis de Guindos (L) and Greek Finance Minister Yanis Varoufakis (R) at the start of the Eurogroup meeting at the European Council in Brussels, Belgium, 24 June 2015. A crisis meeting of eurozone finance ministers on Greece could start later than expected, sources say, as separate negotiations between the country and its creditors drag on into the evening. Greek Prime Minister Alexis Tsipras and top representatives from the European Commission, the European Central Bank and the International Monetary Fund met earlier. EPA/JULIEN WARNAND
Serious faces around the table. Photograph: Julien Warnand/EPA
French Economy, Finance Trade Minister Michel Sapin (C) speaks with Greek Finance Minister Yanis Varoufakis (L) before a Eurogroup Council meeting on June 24, 2015 at the EU Headquarters in Brussels. AFP PHOTO/JOHN THYSJOHN THYS/AFP/Getty Images
France’s Michel Sapins says hello to Euclid Tsakalotos, who heads up Greece’s negotiating team. Photograph: John Thys/AFP/Getty Images
Dutch Finance Minister and President of the Eurogroup, Jeroen Dijsselbloem prepares for action
Dutch Finance Minister and President of the Eurogroup, Jeroen Dijsselbloem prepares to hear from Greece’s creditors.... Photograph: Julien Warnand/EPA
epa04817161 International Monetary Fund (IMF) Managing Director Christine Lagarde at the start of the Eurogroup meeting at the European Council in Brussels, Belgium, 24 June 2015. A crisis meeting of eurozone finance ministers on Greece could start later than expected, sources say, as separate negotiations between the country and its creditors drag on into the evening. Greek Prime Minister Alexis Tsipras and top representatives from the European Commission, the European Central Bank and the International Monetary Fund met earlier. EPA/JULIEN WARNAND
Christine Lagarde is ready too. Photograph: Julien Warnand/EPA

Is there any cause for optimism? Well, it’s not raining....

Germany’s finance minister, Wolfgang Schäuble, has also joined the chorus of ministers saying a deal is unlikely tonight....

Hans Jörg Schelling, Austria’s finance minister, also plays down hopes of a deal tonight. Still lots of work to do, he says.

Alex Stubb of Finland has arrived, and says:

I would be very positively surprised if there was a deal tonight.

There has been a lot of back of forth between the technical level and the political level, and we haven’t seen a concrete proposal yet, and we have to deal with it very carefully based on our parliamentary mandates....

We don’t take these issues lightly, he adds.

Her’s a clip of Pierre Moscovici, telling reporters that the fight to reach a deal continues:

Vladis Dombrovskis, European Commissioner for the euro, does speak to the press.

He says that “We are in a process of very intensive negotiations”. Progress is being made, but we’re not there yet.

Will it be a late night?

Dombrovskis: It is likely that we are going to have a long night, but I cannot add any more at this stage.

They’re closely followed by Pierre Moscovici, who tells the media (in French) that a deal is both ‘necessary and possible’.

Here comes Christine Lagarde....and the IMF chief just waves to the media and walks in.

Yanis Varoufakis has also just arrived, but the Greek finance minister also declines to speak to the press.

Updated

Slovakia: What will eurozone look like tomorrow?

You can always rely on Slovakia’s finance minister, Peter Kazimir, for a decent quote or two.

Three eurogroup meetings and two summits should be enough to reach a solution for Greece, he says pointedly ( he’s even clutching a book in case things get boring).

I’m curious to know what the eurozone will look like when this meeting is over, Kazimir adds - a hint that Greece might be closer to the exit door?

Ahha - Mario Draghi has slipped into the meeting, fresh from his talks with Alexis Tsipras.

#awkward....

Belgium: We have a moral obligation to the Greek people

Belgium finance minister Johan Van Overtveldt
Photograph: EbS

Belgium’s Johan Van Overtveldt then insists that the eurogroup must put the needs of the Greek people first.

We have a very big responsibility towards the Greek population, I think their suffering is immense. Can you imagine an economy that diminishes by 25% in a few years? That’s horrendous.

We have to stop that...We have a moral obligation here.

But surely the pension cuts and tax rises being pushed by the Institutions will make this worse?

Van Overtveldt argues that it’s wrong to say that Greece’s bailout programme has been very bad for the country; the problem is that it’s never been properly implemented.

Belgian finance minister Johan Van Overtveldt does speak to the press (good man!).

Can we still reach a deal?

First we must see what the institutions bring to the table. They have been negotiating very hard for the last 48 hours...

Is it time for give Greece a ‘take-it-or-leave-it” ultimatum?

Overtveldt: I don’t like these kind of deadlines. We need to reach a good deal for the Greek economy....that’s important for every Greek citizen. We also need a deal that is good for monetary union.

So if we can’t reach a deal today, we’ll see if we can get somewhere tomorrow, Overtveldt adds.

Eurozone finance ministers arrive....

Well, that worked! Michel Sapin, France’s finance minister, just arrived. Don’t think he said anything to the press though.

Michel Sapin, eurogroup, june 24
Photograph: EbS

Updated

There is also no sign of eurozone finance ministers arriving for tonight’s crunch meeting:

Eurogroup arrivals, June 24 2015
Waiting for Dijsselbloem, and Schäuble, and Varoufakis.... Photograph: EbS

The Euro Working Group, which does the prep work for the Eurogroup, has ended its own meeting a few minutes ago - but otherwise, the wait continues.

Still no signs of a breakthrough in today’s top-level talks.

There’s a certain amount of healthy competition among journalists in Brussels as they scramble for a desk to work at tonight.

Politico’s own liveblog has the details:

OVERBOOKED:While we’re all waiting for the Eurogroup ministers to arrive for their doorstop interviews at the Lex building, the Brussels press corps was waiting too … to be let into the building.

“People weren’t showing their best side,” according to Zeke Turner (@zekeft), “clambering for the limited number of workplaces provided by the Council.”

Perhaps seats could be assigned according to each media outlet’s web traffic? ;)

Updated

Finland’s finance minister (and social media natural) Alexander Stubb has arrived in Brussels, and headed off for talks with fellow centre-right politicians.

Another sign that the eurogroup meeting will start late.

Updated

Back in Brussels, a Greek official has just warned that tonight’s eurogroup meeting might start late, as talks between prime minister Alexis Tsipras and its lenders continue....

It was due to begin at 7pm local time, or in just under an hour’s time.

Markets hit by Greek worries

Most European stock markets ended the day in the red, as traders fretted about Greece’s bailout talks.

The Athens market fared badly; bank shares dropped up 10%, pulling the main ATG index down 1.8%.

Greek bank shares, June 24
Photograph: Thomson Reuters

But it’s not a full-blown rout:

European stock markets, June 24, close
European stock markets, June 24, close Photograph: Thomson Reuters

Joshua Mahony of IG says the City is “thoroughly confused” by the Greek situation. Many investors expect a deal eventually, but also foresee more drama ahead.

Unfortunately, beyond this month’s €1.6bn repayment due to the IMF, the €7.2bn currently on the line will not cover both July and August’s ECB payments. Thus unless we see an extension to the current bailout programme, we could see both sides back to the negotiation table this time next month.

Eurozone finance ministers should be arriving in Brussels soonish, for tonight’s Eurogroup meeting.

There’s a live video feed here -- currently showing an empty driveway and a few trees swaying gently in the late afternoon. Quite soothing really.

Today’s flurry of proposals, counter-proposals, leaks and verbal attacks are all terribly dramatic, but they may not mean negotiations will definitely fail.

As a senior official from one of the creditors put it to Reuters:

“Of course we want changes and they don’t, and this is part of the bargaining process, albeit less effective when done publicly.”

Updated

A Syriza government official has slammed the latest proposals from creditors as ‘absurd’, at a meeting of the coalition’s political committee.

The pints of red ink spilled over the proposals submitted by Greece’s (democratically elected) government are a clear sign of how IMF bailouts really work, tweets economics professor Daniela Gabor.

Updated

Afternoon summary: Deal in doubt

Greece’s Prime Minister Alexis Tsipras is welcomed by European Commission President Jean-Claude Juncker (R) ahead of a meeting on Greece, at the European Commission in Brussels, on June 24, 2015, as eurozone finance ministers try to finalise a debt deal and avoid a default by Athens.
Greece’s Prime Minister Alexis Tsipras is welcomed by European Commission President Jean-Claude Juncker in Brussels today. Photograph: Julien Warnand/AFP/Getty Images

It’s all gone eerily quiet in Brussels, so let’s quickly recap:

Alexis Tsipras is locked in talks with Greece’s creditors that could help determine whether Athens receives the bailout funds it needs to avoid bankruptcy.

Insiders say that the outcome of today’s negotiations with Christine Lagarde, Mario Draghi and Jean-Claude Juncker is highly uncertain, with no guarantee of a breakthrough.

Hopes of a deal tonight were badly dented this morning, after it emerged that Greece’s latest proposals have not been accepted by its creditors, putting the whole deal in doubt

Instead, the IMF is pushing Athens to make deeper cuts to pension spending, raise more from VAT, and also row back on its corporation tax hikes. See the five-page counter-proposal here.

Tsipras has blasted the creditors as he headed to Brussels, suggesting they were trying to back ‘special interests’.

This dramatic collapse in relations comes as eurozone finance ministers head to Brussels for their third Eurogroup meeting in six days. They should be arriving soon, and the talks could last late into the night.

In short, the long Greek crisis is heading to the wire.

If the eurogroup cannot reach a deal, then EU leaders will be unable to rubber-stamp it at Thursday’s EU summit. That means Greece won’t be in a position to pass measures and access bailout funds before the whole package expires on 30 June, which means it almost certainly can’t avoid defaulting on the IMF that day.

Analysts fear that Tsipras will find it very hard to get political support for a bailout deal, especially if he is forced into fresh concessions today.

And anger is rising in Athens, which has seen protests in recent days.

One government insider told us:

“It is as if they don’t want to reach a deal with a government of the left....

“What the hell are they doing insisting that the vulnerable carry the weight of measures once again? It hasn’t worked before and it is not going to work now.”

Updated

Greece’s opposition centrist party, To Potami, has announced that the country should cut ‘excessive’ spending rather than hiking taxes.

Their leader, Stavros Theodorakis, met with commissioner Pierre Moscovici in Brussels today. And speaking afterwards, Theodorakis’ message chimed rather more closely with Greece’s creditors than with Alexis Tsipras’s position today.

Theodorakis said his party would back a deal, but also wants to add more pro-growth measures:

“This was a meeting in a very crucial moment, a very difficult day. Mr Moscovici reiterated the need to reach a deal today. He unequivocally insisted on this need. He said that he wants and that there should be a deal for Greece today.

He asked us whether there will be a European majority in the country. I reassured him that Potami has committed itself to support a deal, and I also told him that, I think, that the majority of the Hellenic Parliament will support a deal signed by the government and our European partners. He also wanted to know the stance of the Greek society.

I told him that what the Greek society really wants right now is for this torture to come to an end and the beginning of an era, without the of uncertainty that we experience today.

Updated

Our Europe Editor, Ian Traynor, sees days of frenzied negotiations and activity ahead:

Hopes of an early deal have been further dashed by the sight of the leaked counted-proposals from Greece’s creditors:

I’ve not seen so much red ink and crossings-out since my last college essay:

Leaked: Greece's creditors' demands.

The five-page counter-proposal made by Greece’s creditors has just leaked - in several places.

And it confirms that Athens has been pushed to raise more from VAT and also make sweeping changes to its pensions system, including raising the retirement age faster and eliminating benefits for the poorest pensioners.

The red crossings out show items which are being rejected by creditors, and the underlined red sections show the new proposals.

Greek creditors demands
Greek creditors demands Photograph: .

The pensions section is a wholesale rewrite:

Greek bailout: counter proposals
Greek bailout: counter proposals Photograph: .

Swallowing all this will be very hard for the Greek PM, let alone his party.

You can see all five pages here on Skai.GR.

Updated

Bad news: There still isn’t a deal. Good news: they’re still talking......

  • 15:07:07 - OUTCOME OF TALKS BETWEEN GREECE AND CREDITORS IN BRUSSELS STILL VERY UNCERTAIN, NO DEAL YET - OFFICIAL CLOSE TO CREDITOR

Even if a deal is reached tonight in Brussels (or on Thursday morning), Alexis Tsipras will face a real fight to get it through the Athens parliament.

And German MPs will also be asked to vote, possibly at an emergency session.

Nina Schick of Open Europe, the think tank, explains:

If Greece and the creditors agree something by tomorrow (still not a given), the immediate challenge for Tsipras will be at home, where he’ll have to get the Greek parliament to back it. Despite Syriza’s election promises, what’s on the table now means that Tsipras has more or less capitulated completely to the demands of the creditors. It’s not likely to go down well.

With a majority of only 11 MPs, Tsipras will seek approval from the 200 MPs that form the Central Committee of Syriza. According to Greek press reports, 10-40 Syriza MPs are likely to revolt. Syriza’s junior coalition partner, the Independent Greeks, have also indicated that they could withdraw from the government. Tsipras could be left having to rely on the support of the opposition New Democracy. This in turn would open up the question of a referendum or new elections. Vassilis Primikiris, a senior member of Syriza’s hard-line Left Platform told Italy’s La Repubblica today:

“I doubt [Tsipras] can afford to pass the deal [in the Greek parliament] without our votes and with the opposition’s votes. That would mean there’s no longer a majority and that we should go to elections.” -Vassilis Primikiris, La Repubblica, 24 June 2015

As Greece’s largest creditor nation, the vote in the German Bundestag will also be key. With the Bundestag breaking for summer recess next Friday July 3rd, the vote will either have to be taken on the 29th or 30th of June – not allowing German MPs much time to consider the measures. A Bild report today suggests that a number of MPs from Angela Merkel’s CDU/CSU party are opposed a rushed vote on any new agreement with Greece. CDU MP Olav Gutting is quoted as saying, “I don’t consider it possible to approve anything on Monday or Tuesday.”

There is a possibility, then, that an emergency sitting of the Bundestag may have to be called. And while any deal backed by Chancellor Angela Merkel is likely to get through the Bundestag – it’s worth noting that with frustration towards Athens climaxing during the past five months, the breakdown in trust will surely come back to haunt Athens sooner or later – most likely when the discussion returns to an (inevitable) third bailout for Greece.

More here:

Updated

If you’re just joining us, check out my colleague Jennifer Rankin’s latest news story on the crisis:

Marcus Walker of the Wall Street Journal sums up the situation in the negotiating room in Brussels.

(DSA= debt sustainability analysis. IE: If Greece ramps up taxes, growth will slow and the debt/GDP ratio will spiral even more)

The Curse of the Awards Ceremony:

Updated

We’re keeping track of the state of play in Greece’s debt negotiations here:

International Monetary Fund (IMF) Chief Christine Lagarde talks to the media at the end of a Special EU Euro Summit about the Greek crisis held at the EU Council building in Brussels on June 23, 2015. AFP Photo / Thierry CharlierTHIERRY CHARLIER/AFP/Getty Images

Speaking of the IMF, Politico have published a great feature today on how it became entangled in such a mess in Greece.

It explains how Christine Lagarde is left with a mess created by her predecessor, Dominique Strauss-Kahn, as she struggles to ensure the Fund gets its money back.

Here’s a flavour:

Because Greece was in a monetary union, and couldn’t devalue its currency, the IMF introduced a “systemic exemption” that waived any condition related to debt, says Jean-Pierre Landau, who was then a deputy governor of the French central bank and now teaches at Sciences Po in Paris.

That was “a code word for the risk of contagion inside the euro area,” he notes. The IMF board, right from the beginning, found it hard to accept and “it created resentment and a lot of skepticism” within the institution, adds Landau, who knows the IMF well, having been its French board member in the early nineties.

The Greek bailout also created a precedent in terms of size. It was the largest ever implemented by the IMF, as a percentage of a given country’s stake in the Fund. Between the first and second bailout in 2012, the IMF ended up loaning about €30 billion to Greece. Some €23 billion is still owed, to be paid back until the end of 2030, starting with €5.5 billion due by the end of this year.

Then there were the forecasting mistakes. Sterne notes for example that the IMF revised down its estimate for Greece’s 2014 gross domestic product by some 22 percent in the space of 18 months. “In U.S. terms, that is the equivalent of revising away the combined output of the whole of California, New York and Florida,” he writes.

Why the IMF’s so hard on Greece

A senior German official has told Reuters that any aid-for-reforms deal with Greece must include the support of the International Monetary Fund:

The official said that it was important for Berlin to have the IMF at the table, both for its expertise and its role in financing Greece.

Of course, the IMF’s “expertise” means it believes Greece needs debt relief - an issue Germany isn’t terribly happy about confronting at this stage.

The Athens stock market was deep in the red as Alexis Tsipras’s meeting with creditors began - down around 4.5%. Bank shares are down 10%.

Greece’s Esfyn newspaper has confirmed that the IMF presented Greece with new counter-proposals.

And they do indeed insisting on tougher pension and VAT reforms -- to yield a full 1% of GDP, and a smaller rise in corporation tax.

The IMF also wants early retirement rules to be tightened up faster, and ending lower VAT rates in Greek islands (a red line for Tsipras’s coalition partners, ANEL).

Updated

Here's why talks between Greece and creditors are in crisis again

Greece and its creditors are still deeply divided over three key areas -- corporate taxation, the overhaul of Greece’s pension system and value-added taxes.

That’s according to the latest counter-proposal from the Institutions, which the Wall Street Journal has seen. And which Greece has rejected.

According to the WSJ, Greece’s creditors won’t accept some of the tax rises on businesses, which they want toned down.

But they also want more money clawed from consumers through VAT hikes.

And Greece’s plan to raise pension contributions while protecting payments to existing pensioners is also being challenged. Creditors want more frontline cuts.

Divisions Remain as Eurozone Finance Ministers Meet Over Greece Deal

Finally, here’s some footage of Alexis Tsipras arriving at the Commission. He resisted saying anything to the media, beyond a polite “Hi”.

Alexis Tsipras
Alexis Tsipras Photograph: EbS
Alexis Tsipras
Alexis Tsipras Photograph: EbS

And then he vanished to meet Greece’s creditors, for some very serious talks.

Updated

Oh sorry, the photo in that last tweet isn’t from today (now deleted).

Updated

Looks like Commissioner Pierre Moscovici took out his frustrations on a biscuit at this lunchtime’s crisis meeting:

International Monetary Fund (IMF) Managing Director Christine Lagarde (back facing), European Commission President Jean-Claude Juncker (L), European Economic Commissioner Pierre Moscovici (seated C) and Eurogroup President Jeroen Dijsselbloem (standing) attend a meeting before the arrival of Greek Prime Minister Alexis Tsipras in Brussels, Belgium, June 24, 2015
Photograph: POOL/Reuters

Updated

Oh sorry, they’ve turned off the video feed from the EC. Apparently Alexis Tsipras has arrived, but didn’t speak to the press.

Alexis Tsipras is arriving at the European Commission to meet president Jean-Claude Juncker imminently. It will be streamed live here.

Two days ago, Tsipras got a jokey slap from Juncker, so I shudder to think how he’ll be greeted this time....

Sky’s Ed Conway is hearing that all isn’t lost between Greece and its lenders.....

Fascinated by the latest twists and turns in the Greek crisis? Well, come along to the Guardian’s panel discussion in London tomorrow night...and have your say too:

The midday briefing in Brussels didn’t yield much information on the escalating Greek crisis.

After a fascinating discussion about senior management changes at the European Commission, the Brussels press pack were only told that:

The [Greek] proposals are a step in the direction to finding common ground for an agreement, and they are being discussed as we speak....at the highest level.

The leaders of Greece’s creditors are sitting down in Brussels now to discuss the situation.

They must digest Alexis Tsipras’s dramatic attack on the IMF this morning, before the Greek PM joins them.

There are some very serious-looking faces around the table:

Managing Director of the International Monetary Fund Christine Lagarde, second left, speaks with European Commissioner for the Economy Pierre Moscovici, left, during a meeting at EU headquarters in Brussels on Wednesday, June 24, 2015. Eurozone finance ministers meet Wednesday to discuss the Greek bailout. At right is Chair of the European Financial Stability Facility Klaus Regling. (AP Photo/Virginia Mayo, Pool)
Managing Director of the IMF Christine Lagarde, second left, speaks with European Commissioner for the Economy Pierre Moscovici. Photograph: Virginia Mayo/AP
epa04816414 European Commissioner for Economic and Financial Affairs Pierre Moscovici (L) and International Monetary Fund (IMF) Managing Director Christine Lagarde (R) at the start of a meeting on Greece at the European Commission in Brussels, Belgium, 24 June 2015. Greek Prime Minister Alexis Tsipras is set to conduct yet another round of crisis talks with representatives of the country’s creditors, ahead of a crucial meeting of eurozone finance ministers where all sides hope a solution can be found to save the country from bankruptcy. EPA/VIRGINIA MAYO / POOL
Photograph: VIRGINIA MAYO / POOL/EPA

EU officials are briefing that talks with Greece have not broken down -- which I guess is meant to sound reassuring.

Reuters has the story:

Talks with Greece on a financing for reforms package are still going on and a meeting between international creditors and Greek Prime Minister Alexis Tsipras in Brussels will take place as planned, an EU official said on Wednesday.

Markets reacted nervously to a statement out of Athens by a Greek government official quoting Tsipras as saying that creditors have rejected certain proposals from Greece in last-ditch talks in Brussels.

An EU official close to the talks said.

“Nothing has broken down, negotiations are going on and the meeting with Tsipras will go ahead as planned.”

And here’s those nervous markets:

European stock markets, 11.15am BST, June 24
Photograph: Thomson Reuters

Updated

epa04816372 Dutch Finance Minister and President of the Eurogroup Jeroen Dijsselbloem arrives at the EU Commisison ahead of a meeting on Greece at the European Commission in Brussels, Belgium, 24 June 2015. Greek Prime Minister Alexis Tsipras is set to conduct yet another round of crisis talks with representatives of the country’s creditors, ahead of a crucial meeting of eurozone finance ministers where all sides hope a solution can be found to save the country from bankruptcy. EPA/JULIEN WARNAND
Jeroen Dijsselbloem arriving at the EU Commission this morning. Photograph: Julien Warnand/EPA

Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, has confirmed that a Greek deal still hangs in the balance ahead of tonight’s meeting.

  • EUROGROUP HEAD DIJSSELBLOEM ON GREECE TALKS SAYS “WE ARE NOT THERE YET, STILL A LOT OF WORK TO BE DONE”

Updated

Alexis Tsipras has also tweeted his criticism of the International Monetary Fund, meaning the gloves are well and truly off.

(That’s Poul Thomsen, the IMF’s top man in Europe)

And the “equivalent measures” are the new policies that Greece has proposed, to change its old bailout programme.

In short, Greece is unhappy that the IMF won’t support its plan to raise €8bn from taxes on businesses, shoppers, income tax payers and pensioners.

Updated

Tsipras: Creditors may be serving 'specific interests'

My colleague Helena Smith has got hold of the statement just released by the Greek government.

And it shows that prime minister Alexis Tsipras says the refusal of creditors to accept Athens’ latest proposals is not only unprecedented but has “never happened either in Italy, Portugal. Nowhere!”

Before departing for Brussels, Alexis Tsipras told his colleagues:

“This strange stance may hide two possibilities. Either they don’t want an agreement or they are serving specific interests in Greece.”

This would chime with what insiders told us earlier: that inside the governing far left Syriza party there are now many who are openly questioning whether the EU, ECB and IMF really want to cut a deal with the Tsipras administration.

Updated

The German, French, Spanish and Italian stock markets all tumbled by 1% as investors reacted to the news that Greek negotiations are faltering:

It’s not looking good at all.

According to FT Brussels bureau chief Peter Spiegel, Greece’s creditors are unhappy that Athens is backtracking on parts of the deal submitted early on Monday.

Prior actions are the measures that Greece must take before it receives any bailout funds.

Tsipras: Creditors won't accept our proposals

The wheels may be coming off.....

The Greek government has just criticised the country’s lenders for not accepting its latest proposals.

And that has knocked shares across Europe, sending the Athens market down over 4%.

Eurozone government bonds are being hit too, driving up the yields (or interest rates) on Spanish and Italian debt.

Updated

Greek opposition leaders also heading to Brussels

Over in Athens the political opposition has stepped up criticism of the government’s proposed reforms, and are also heading to Brussels to rally for a deal:

Helena Smith reports:

It is not only Alexis Tsipras who is making his way from Athens to Brussels today.

Former prime minister Antonis Samaras and Stavros Theodorakis, leader of the centrist To Potami party, are both also departing for the Belgian capital today ahead of tomorrow’s EU summit.

Both say they want to make the case for Greece. Samaras, whose conservative-led government was ousted by Tsipras’ Syriza in January - is aiming to have a quiet word with German chancellor Merkel on the sidelines of the summit.

At €8bn – eight times more than savings outlined by his conservative government in December – Samaras says Greece has been forced to choose “between catastrophe and a very bad solution.”

Five months of drawn out negotiations and putting up a robust defence had been a fiasco, Samaras’s centre-right New Democracy party said.

Criticism of prime minister Alexis Tsipras’ finance minister Yanis Varoufakis is on the rise with Yannis Vroutsis, the former minister of labour, accusing the academic-turned politician of “getting a certificate in inaccuracy and lies.”
“If there any Greek who now believes Mr Varoufakis?” he asked this morning.

Varoufakis, though, was quite upbeat this morning, telling reporters that:

“We are entering the final stage of the negotiation which we hope, we strive, to be the last.”

Updated

And here’s confirmation that eurozone finance ministers could work all night to get a deal:

  • 10:32:01 - EU LEADERS WON’T NEGOTIATE ON GREECE AT SUMMIT ON THURSDAY, WANT DEAL AT EUROGROUP ON WED EVEN IF IT MEANS WORK THROUGH THE NIGHT - SENIOR EU OFFICIAL

Here’s further confirmation that Greece’s bailout deal remains up in the air, from Reuters:

  • 10:14:30 - POSITIONS OF CREDITORS AND GREECE STILL APART BEFORE EU/IMF/ECB MEETING WITH TSIPRAS TODAY, NOT MUCH PROGRESS MADE ON TUESDAY - EU OFFICIAL
  • 10:16:14 - VAT, PENSIONS, COMPANY TAXATION MAIN STICKING POINTS WITH GREECE AT THIS STAGE, DEBT RESTRUCTURING NOT DISCUSSED - EU OFFICIAL

The head of the Eurogroup has been told in no uncertain terms that finance ministers must agree a deal with Greece today, Brussels insiders say. However long it takes.

Updated

Tsipras in last-ditch bid to salvage deal

Greece’s Prime Minister Alexis Tsipras waves to the media in Athens yesterday.
Greece’s Prime Minister Alexis Tsipras waves to the media in Athens yesterday. Photograph: Thanassis Stavrakis/AP

Alexis Tsipras’s trip to Brussels today is a “last ditch” bid to salvage his bailout agreement, says the Financial Times.

Echoing Ian Traynor’s warning that the deal could soon unravel, the FT says the Greek PM will be pushed to revise his reform plan at the meeting with Lagarde, Draghi and Juncker.

From Brussels, the FT’s Peter Spiegel writes:

According to a senior eurozone official, talks between Athens and negotiators from the bailout monitors — the International Monetary Fund, European Commission, and European Central Bank — have barely progressed since Mr Tsipras’ proposal was met with an outpouring of relief at a summit of eurozone leaders on Monday night.

That has raised concerns over whether a deal can be finalised this evening at a meeting of eurozone finance ministers in Brussels.

And crucially, Greece’s creditors aren’t on the same page.

Two officials involved in the talks said the IMF and the commission are at loggerheads over how many revisions are required, with the IMF concerned the proposal relies almost exclusively on increased employee contributions — essentially a new 3.9 per cent tax on labour — to make up shortfalls in the pension system.

The IMF has pushed for benefit cuts in the system to make it more sustainable in the long term. EU officials have termed the Greek public pension system one of the most generous in the 28-country bloc.

More here: Tsipras flies to Brussels to salvage bailout deal

And if that wasn’t bad enough, negotiations over the issue of debt relief aren’t getting anywhere.

Tsipras needs to be able to present some progress on that issue to keep his MPs onside, but creditors won’t budge until the current bailout programme is resolved.

Updated

This is not the best day for the president of the ECB to be cooling his heels on the Heathrow tarmac:

Updated

Brussels insiders are warning that today’s meeting of finance ministers could last until dawn....

Updated

Greek insiders question if deal can be reached

Over in Athens, the view this morning is that a deal with creditors has never been “so near or so far away,”

Our correspondent Helena Smith reports:

Senior government officials are saying openly this morning that divergence rather than convergence is now dominating talks. Outstanding differences are such that insiders have begun to question whether creditors want an agreement at all.

The International Monetary Fund’s apparent insistence that proposed taxes on businesses be withdrawn, putting a greater burden on wage earners and pensioners, has ignited fury.

“It is as if they don’t want to reach a deal with a government of the left,” said one well-placed source.

“What the hell are they doing insisting that the vulnerable carry the weight of measures once again? It hasn’t worked before and it is not going to work now.”

The front page headline of the Ta Nea newspaper today is indicative of the mood.

“They are demanding another €700m to close the deal,” the authoritative daily screamed from its front page.

Prime minister Alexis Tsipras has not been helped by the signs of mounting dissent within his own Syriza party over his leftist-led government’s proposed reforms.

At least ten MPS have indicated they will not support a deal as the proposals currently stand; at least ten more are wavering and it remains unclear what hardliners, gathered under the Left Platform faction led by energy minister Panagiotis Lafazanis will do. The minister, so far, has been uncharacteristically coy about what stance he - or his followers - will take saying he will only decide once a final deal is on the table. Those who advocate a return to the drachma have, if anything, been emboldened by the growing outcry over measures that at €8bn will do a great deal to further impoverish Greeks.

“Approval of the agreement or elections, the dilemma of the government,” declared another daily, Ethnos, from its front page.

“The ball is now with Syriza MPs.”

Ethnos, June 24 2015

The small right-wing Independent Greeks party (ANEL) has added to mounting concerns (some are beginning to call it realisation) that the cash-for-reform deal in its current form will not get through parliament with MPS insisting that “red lines” are more important than inflicting needless pain on Greeks.
The only way out of the conundrum would perhaps be some kind of commitment by creditors to write down Greece’s debt load in the future.

More than ever, it is clear that Tsipras needs to be cut some leeway by creditors so that he can convince wavering MPs that the deal is workable and has to be passed.

So, this lunchtime’s meeting is absolutely crucial....

Updated

Assuming Mario Draghi’s flight isn’t badly delayed, he’s expected at the Justus Lipsius building in Brussels at 11am BST (1pm Athens time).

Tsipras arrives an hour later, to face his creditors’ concerns over the Greek bailout plan.

Our spies at Heathrow report that Mario Draghi might be late landing in Brussels:

Updated

Greek stock market dips ahead of crucial meeting

The Greek stock market has fallen almost 2.5% at the start of trading, ahead of today’s emergency talks between prime minister Alexis Tsipras and creditors.

Bank shares (which soared on Monday and Tuesday this week), fell by almost 5%, as traders begin to fret that a breakthrough deal may not come tonight.

Athens stock market, early trading, June 24
The biggest fallers on the Athens stock market this morning. Photograph: Thomson Reuters

Tsipras’s emergency meeting with IMF chief Christine Lagarde and ECB chief Mario Draghi is a sign that the deal could yet unravel, as my colleague Ian Traynor reported from Brussels overnight:

Greece’s prime minister, Alexis Tsipras, arrives in Brussels on Wednesday for critical talks with the country’s creditors as the outlines of the latest proposed deal to avoid bankruptcy threatens to unravel, worsening the crisis.....

The other European markets are fairly flat, as investors await developments....

European stock markets, early trading, June 24
Photograph: Thomson Reuters

Updated

Here’s our analysis of the latest Greek proposal:

Updated

Wonkblog’s Matt O’Brien has taken a nailgun to Greece’s proposed reforms, and blasted the creditors for forcing Athens to cave in and propose new tax rises to satisfy their taste for budget surpluses.

He writes:

There’s only one reason to make Greece do more austerity, and it makes no sense at all.

That’s to try to make it pay back what it owes. Indeed, one European official said that the entire point of this was that they “want to get our money back some day.” The problem, though, is everybody knows Greece will never do that. Its debt should have been written down in 2010, but it wasn’t because it was “bailed out” to the extent that it was given money to then give to French and German banks. The longer Europe pretends this new debt will be paid back, the longer Greece’s depression will go on. Now, it’s true that Europe has lowered the interest rates and extended the maturities on Greece’s debt so far out that, for now at least, it’s like a lot of it doesn’t exist. But eventually it will, and at that point they’ll either need to extend-and-pretend some more or hope that Greece has returned to growth.

Until then, Greece will be stuck in its economic Groundhog Day. It keeps trying to resist these pointless budget cuts that just keep it in a perpetual state of high unemployment, but then gives in at the last minute. On second thought, history is just repeating itself as tragedy over and over again.

More here: Europe is destroying Greece’s economy for no reason at all

Updated

Larry Elliott: Greek plan doomed to fail

In case you missed it, our economics editor Larry Elliott has explained why the latest Greek proposal falls short:

The troika plan for the Greek economy has already failed twice, and it will fail for a third time if the economically illiterate plan being foisted on Athens is adopted. Greece requires growth and debt relief, but the proposals currently being discussed provide neither......

Greece has a number of severe economic problems. It suffers from a lack of demand, and a five-year slump has pushed it into deflation. Falling prices have added to the real, inflation-adjusted burden of the government’s debt, which currently stands at 175% of GDP. A fresh dose of austerity will make all these problems worse.

And as this chart shows, Greece has already been imposing a very significant fiscal tightening.

Updated

EU officials are cagey about the chances of a breakthrough finally coming tonight, reports The Economist’s Tom Nuttall.

Don’t make any plans for the weekend.

Assuming a deal is reached soon, Greek MPs could hold a three-day debate on the package, starting on Saturday.

According to the Financial Times, Germany is insisting that the Greek parliament approves the new reform plan by Monday, before any aid is handed over

People briefed on Berlin’s thinking said months of fraught negotiations since the radical anti-austerity government came to power have undermined trust in Greece’s ability to fuflill its promises. German officials want Greek parliamentary approval before an extension of its bailout programme is presented to the Bundestag before it expires on Tuesday

More here: Berlin insists Greek parliament approves all reforms by Monday

Austria: Need real solution by Sunday

Austrian Finance Minister Hans Joerg Schelling arrives for a cabinet meeting in Vienna, Austria, June 23, 2015. REUTERS/Heinz-Peter Bader

Austria’s finance minister has warned that Greece must produce a full timetable for implementing economic reforms, in order to get a deal.

Hans Jörg Schelling also warned Austrian radio station that a cut-and-dried solution must be found by Sunday:

“I expect that this will be offered by this evening ... If there is no real solution by Sunday this week, it is not foreseeable what the next step will be.”

The EC is also seeking a list of ‘prior actions’ from Greece; perhaps concerned that Athens will struggle to implement reforms.

Introduction: Tsipras summoned to Brussels for emergency talks

Good morning.

Greece’s future is in the balance today as Europe’s top politicians head back to Brussels for another series of top-level meetings.

At 7pm CEST (6pm BST) eurozone finance ministers will hold their third Eurogroup meeting in a week, in a bid to end months of tortuous negotiations. If they actually agree to the list of Greek reforms, then we could be a crucial step closer to a deal.

But several hurdles lie ahead. Last night it emerged that Greece’s creditors are split over the details of the latest proposal from Athens – with the International Monetary Fund not sharing the European Commissions optimistic view of the situation.

As we wrote last night:

The mild euphoria that characterised frantic diplomacy and another eurozone summit in Brussels on Monday dissolved swiftly on Tuesday as it became clear that Lagarde found the proposed temporary resolution inadequate and that German chancellor Angela Merkel was also having second thoughts....

Lagarde, who kept a low profile at Monday’s emergency summit, was said to have strong reservations about the proposed agreement on ideological terms opposed to the hard-left Tsipras government, but also because she does not think the putative agreement will put Greece on the road to recovery.

Sources familiar with Merkel’s thinking said the German leader faced a potential party revolt over extending a further lifeline to Greece without confidence it would succeed.

EU Observer has a good take too:

The IMF “thinks that the numbers are too soft,” an EU source said, referring to the fiscal targets, pensions and VAT levels under discussion.

More here: Greece’s creditors differ on bailout agreement

And that’s why Greek PM Alexis Tsipras is being hauled back to Belgium to meet the heads of the IMF, ECB, European Commission and the Eurogroup. They will attempt to resolve the remaining issues, so that EU leaders can sign the deal off on Thursday night.

As we covered in yesterday’s liveblog, many experts fear that the €8bn squeeze on pensioners, consumers and firms contained in the proposals will wreck further harm on an already-weakened economy.

This is simply not what Tsipras was elected to deliver.

As Syriza MP Costas Lapavitsas put it:

“Many MPs, be them on the left or not, are very sceptical about accepting such a programme.

“How will they explain it to their voters? How will they return to their electoral constituencies and explain this agreement to them?”

That means getting this deal through the Athens parliament will not be easy. The possibility of fresh elections or a referendum hasn’t evaporated, if Tsipras cannot get his own party onside.

And the sight of protesters on the streets of the capital last night has shown that public anger over the prospect of fresh austerity is building.

Image: 37795201 (150623) -- ATHENS, June 23, 2015 (Xinhua) -- People protest in central Athens against the plans submitted by Greek government to the country’s international creditors to avert looming default, in Greece, June 23, 2015. PHOTOGRAPH BY Xinhua /Landov / Barcroft Media UK Office, London. T +44 845 370 2233 W www.barcroftmedia.com USA Office, New York City. T +1 212 796 2458 W www.barcroftusa.com Indian Office, Delhi. T +91 11 4053 2429 W www.barcroftindia.com
Photograph: Xinhua /Landov / Barcroft Media/Xinhua /Landov / Barcroft Media
Members of the Communist-affiliated PAME labor union pass in front of the Bank of Greece during an anti-austerity protest in Athens on Tuesday, June 23, 2015. Greece’s government defended Tuesday the billions worth of “harsh” new budget savings it has offered in talks with creditors, as some of the governing party’s own lawmakers spoke out against them. (AP Photo/Daniel Ochoa de Olza)
Photograph: Daniel Ochoa de Olza/AP

And here’s very little time left - Greece’s bailout programme expires in less than a week.

There’s still optimism in the financial markets that a deal will be reached. But this story has a few twists and turns in it yet.

We’ll be tracking all the main events through another crunch day in the crisis.....

Updated

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