The N.Y. Times : E.U. Urged to Plan for Greece to Default

By JAMES KANTER, ALISON SMALE and NIKI KITSANTONISJUNE

A chorus of voices on Monday called on European Union authorities to plan for Greece to default on its huge pile of debt after bailout talks between Athens and its creditors deteriorated over the weekend.Some senior politicians and policy makers from Germany were among the most outspoken, with one warning of the need for a “state of emergency” to handle the potential fallout from a failure to reach a deal with the Greek government.


The impasse over the debt talks exposed the wide gap between Greece and its creditors, other eurozone countries, the European Central Bank and the International Monetary Fund. The two sides are deadlocked over what steps Greece must take to overhaul its economy, particularly regarding its pension system and setting the size of the country’s primary budget surplus.

Unless they work out a deal, the creditors will not unlock aid payments from Greece’s international bailout, raising the likelihood that Athens would be forced to default. The strapped country owes 1.6 billion euros, or $1.8 billion, to the International Monetary Fund on June 30.

The sides were hardening their positions in advance of Thursday’s meeting of euro-area finance ministers, whose approval is required for any resolution to take effect. . But the increasingly acrimonious talks are adding to the worries that Greece will become the first country to leave the 19-nation currency bloc.

Greece’s stock market fell sharply on Monday, opening 6.5 percent lower, as interest rates on European government bonds rose. European markets also slumped, with the Euro Stoxx 50 index 1.4 percent lower in midday trading in London.

Weekend discussions between senior Greek government officials and representatives of creditor groups broke down on Sunday evening, as the two sides refused to soften their long-held bargaining positions.

But Gavriil Sakellaridis, a spokesman for the Greek government, said on Monday that for Athens, the “only plan, basic plan, is to reach a deal.” He added that “efforts will continue for a mutually beneficial agreement.”

The country became the epicenter of Europe’s debt crisis after Wall Street imploded in 2008. Now, it is struggling to pay its debt, and its people and creditors are growing restive.

Alexis Tsipras, left, prime minister of Greece, and his finance minister, Yanis Varoufakis, in Athens on Saturday. By the end of this month, Greece has to come up with 1.2 billion euros in cash to make pension and salary payments to public-sector workers.Fears of Greek Default Rise as Weekend Talks on Debt Payment Break Down

Alexis Tsipras, the prime minister of Greece, met with European Union officials in Brussels on Thursday.I.M.F. Recalls Negotiators as Deadline Looms for Greek DealJUNE 11, 2015
Vasiliki Meliou retired at 53 after the state-owned bank she worked for was sold.Pensions in Greece

Mr. Sakellaridis repeated, however, that Greece would not cut pensions or raise the valued add tax on basic goods, steps that, according to the government, the creditors have insisted Athens must take to unlock desperately needed bailout funds. Asked whether Greece would submit new ideas to creditors, he said the government had “to a great extent reached its limit on proposals.”

The sense of urgency appeared greatest in Germany, where Jens Weidmann, the president of the Bundesbank, Germany’s central bank, warned of the increasing danger that Greece would have to declare bankruptcy.

“Time is running out. The likelihood that no solution can be found is growing day by day,” he told a symposium in Frankfurt on Monday. “There seems to be a lack of will to reach agreement,” he said.

“The ball is quite clearly in the Greek government’s court,” added Mr. Weidmann, who argued for something more than a stopgap solution so that “Greece can stand on its own two legs” without continually turning to partners for help.




Alison Smale reported from Berlin, and Niki Kitsantonis from Athens.