Intense talks between Greece and its creditors have continued to stall as both sides prepare to submit proposals on how to close the country’s $268bn bailout programme.
The proposals to the European Union’s finance ministers will be discussed in a meeting in Brussels later on Thursday.
Greek Prime Minister Alexis Tsipras met the heads of the European Commission, the EU’s executive branch, the International Monetary Fund (IMF) and the European Central Bank (ECB) on Thursday morning after a previous session of negotiations had stretched well into the night.
Again, the talks ended without an accord.
The impasse highlights the difficulty eurozone countries have in keeping Greece afloat, with billions of euros having flown out of the country’s beleaguered banking sector in recent days and the ECB having to inject emergency liquidity just to prevent the nation from going bankrupt.
“I expect these talks to drag on because they are holding Tsipras hostage to the other parties,” said a well-placed Greek official, who spoke on the condition of anonymity as he is not cleared to speak publicly about the negotiations.
“They are saying if you don’t agree, we are simply going to force you until you do.”
On Monday, Greece proposed a new list of reform proposals to its partners in Europe that claimed to balance this year’s budget by implementing a mix of policies that included increasing taxes on corporates.
However, the proposal from Athens did not agree to making further cuts to its pension system, which other countries in the eurozone and the IMF deem as being too bloated and unsustainable in the long run.
According to an EU official with knowledge of Thursday’s unsuccessful talks, which took place inside the European Commission, the institutions in charge of Greece’s bailout programme will submit their own paper on Greece’s reforms to finance ministers later on Thursday.
“We’re sending proposals agreed by institutions to the Eurogroup,” the official said referring to the meeting where finance ministers in the eurozone gather.
A separate Greek official in Brussels said the ruling Syriza party would also submit its proposals to finance ministers, setting up yet another standoff in the talks, which have been ongoing since January 26 when Syriza was elected.
Thursday’s meeting of finance ministers will be the fourth time they have convened in one week.
Greece now has until Monday at the latest to reach a deal with its partners or risk defaulting on $1.7bn owed to the International Monetary Fund the following day on June 30.
If Greece was to default on its payment to the IMF next week it could potentially intensify the run on the country’s banks and make it much harder for the ECB to continue supplying the country with emergency liquidity, as internal rules at the central bank require banks to be solvent in order to have access to its funding.
Analysts say that a failure in talks taking place at the technical level will oblige Europe’s leaders, and particularly German Chancellor Angela Merkel, to get involved at a two-day summit due to commence in the Belgian capital on Thursday night and Friday.
“I am not really surprised that we don’t reach an agreement or have any progress at the technical level. An agreement will only happen at the latest possible minute and the agreement will come from the heads of state,” said Guntram Wolff, director of Bruegel, an influential think-tank based in Brussels.
“All eyes will look towards Merkel.”