European leaders and the head of the International Monetary Fund agreed to intensify talks over Greece’s fate after a top-level meeting in Berlin about ways to avert a default.
The huddle lasted past midnight into Tuesday morning at the German Chancellery with Angela Merkel, IMF chief Christine Lagarde, European Central Bank President Mario Draghi, French President Francois Hollande and European Commission President Jean-Claude Juncker in attendance. The goal was to hammer out an offer that Greece could consider in coming days, according to two people familiar with the plan.
After Merkel left, her office put out a statement saying only that the five leaders “agreed that work must now be continued with greater intensity” and that “they have been in closest contact in recent days and want to remain so in the coming days, both among themselves and naturally also with the Greek government.”
Efforts to end an impasse over funding have become urgent as the nation faces a debt repayment to the IMF on Friday. While Greece says it can make the payment, it’s the smallest of four totaling almost 1.6 billion euros ($1.78 billion) this month. The timing coincides with the expiration of a euro-region bailout by the end of June.
European Union Economic Commissioner Pierre Moscovici said there was “real progress.” He told French radio that the European bailout fund was included in negotiations with the Greek government over releasing aid, raising the prospect that it could play a role in any deal to break the standoff.
Prime Minister Alexis Tsipras hasn’t been in touch with any of the creditor institutions and hasn’t received any draft agreement following the meeting in Berlin, a Greek government official said in an e-mail to reporters.
Greek bonds rose, with the yield on the two-year security falling 48 basis points to 24.4 percent as of 11 a.m. in Athens. The Athens Stock Exchange Index gained 0.5 percent to 830.21. Financial markets in Greece opened after shutting on Monday for the Orthodox Pentecost holiday.
With talks dragging into their fifth month, deadlines have come and gone with meetings, calls and summits yielding little as disagreements over pensions and labor laws persisted.
“Even a mediocre agreement is much better than the alternative for Greece, which is bankruptcy,” said Nicholas Economides, professor of economics at New York University’s Stern School of Business. “Bankruptcy within the euro would be very difficult to manage and would require tremendous support from the ECB, which is unlikely.”
Technical negotiations on economic measures Greece must take were resuming and an agreement is closer, though not ready, a Greek government spokesman said on Monday. The aim is to release about 7 billion euros from its existing bailout before the debate begins over a new package.
Merkel was expected to be more involved as time runs out between this week and a meeting of euro-region finance ministers on June 18 in Luxembourg. According to an international official over the weekend, creditor institutions were working on a common proposal that would be presented to Greece in the next few days.
The joint position may be communicated to Tsipras by European political leaders, the person said, asking not to be named, as he wasn’t authorized to speak publicly on the matter.
Tsipras held a call with Merkel and Hollande on Sunday, with a German government official calling it “constructive.” At the same time, Greece and its creditors traded accusations for the lack of progress in talks, a hallmark of recent months.
Tsipras wrote in French newspaper Le Monde that any intransigence wasn’t the fault of his four-month-old administration. He referred to “absurd proposals” being presented to his government by institutions.
A senior German lawmaker said on Monday it was up to Greece to adhere to reforms agreed to before Tsipras took power. Michael Fuchs, deputy parliamentary leader of Merkel’s Christian Democrat party, told Bloomberg Television Greece is to blame for the crisis and it’s unacceptable for the government to accuse the European Union.