Euro summit to be held after failure to make Greece deal

Euro zone finance ministers failed to reach a deal on Greece after meetings in Luxembourg, European Commission vice-president Valdis Dombrovskis said.

After four hours of deliberations, Greece and its creditors continued their stalemate over the steps prime minister Alexis Tsipras needs to take to unlock aid.

Creditors said Greece must keep to the terms of its bailout agreement, a deal that Mr Tsipras has so far rejected.

Euro zone ministers sent a “strong signal for Greece to engage seriously in negotiations,” Mr Dombrovskis said on Twitter. “The eurogroup stands ready to reconvene at any moment.”

President of the European Council Donald Tusk made a statement announcing there will be a summit on Monday about the Greek situation. “It is time to urgently discuss the situation of Greece at the highest political level,” he said.

Contingency plans

Ireland has consulted the European Central Bank on contingency plans for a potential Greek exit from the euro zone, Minister for Finance Michael Noonan has said, as he warned that preparations for “the B plan” are under way for Greece.

Speaking on his way into Thursday’s meeting, Mr Noonan said the Department of Finance has had conversations “at a high level” with the NTMA and the Irish Central Bank about a possible Greek exit.

“We’re watching the situation and we’re taking advice from the European Central Bank in Frankfurt and elsewhere,” he said.

Noting the possibility of a Grexit was a “European” rather than Irish issue, he said he does not believe there would be a contagion effect in the event Greece defaults from its debts.

Amid fears Greece is moving closer to default as the standoff between the Greek government and the troika of lenders continues, Mr Noonan had said earlier that he did not expect a “positive outcome” from Thursday’s meeting.

“I wouldn’t have any great expectations of a positive outcome from today’s meeting. I think that it will be discussed but it will be a preliminary discussion, to longer political discussion at the heads of states and government meeting.

“There’s some time left but there’s no optimism among the group of people I’ve met already today,” referring to a meeting of the eight finance ministers from the centre-right European People’s Party (EPP) group of which Mr Noonan is part.

The finance ministers of Germany, the Netherlands and Finland also attended the pre-eurogroup meeting.

Significant concessions

Mr Noonan warned that lenders had gone “about as far as they can go” on concessions for Greece, noting significant concessions had been made in the proposal agreed at a key meeting in Berlin three weeks ago, at which the German and French prime ministers and the heads of the ECB, IMF and European Commission drew up a revised plan for Greece.

“That was very significant movement,” the Minister said, adding “a lot of people are conscious that a bad deal could be worse than no deal”.

Referring to the Berlin agreement, he said “I don’t see movement beyond that point,” adding that “the option is to prepare the B Plan”.

Speaking ahead of the meeting, IMF managing director Christine Lagarde, ruled out a delay in the IMF repayment due on June 30th.

“There will be no period of grace,” Ms Lagarde told reporters in Luxembourg. “I have a term of June 30th - if it’s not paid by July 1st, it’s not paid.”

Greece is due to repay the Washington-based fund about €1.5 billion at the end of June, the same day as its bailout - which has already been extended by four months - expires.

Mr Varoufakis said on arrival that Greece wants to “replace costly discord with effective consensus”, though it is not known if he will present a new proposal to lenders.

European stock markets have fallen again amid the growing fears about Greece.

Greece’s main negotiator Euclid Tsakalotos said on Wednesday that Greece did not have the cash to make a €1.5 billion repayment to the IMF due at the end of the month.

EU Commissioner Pierre Moscovici insisted ahead of the meeting that the ball was now in Greece’s court.

Discussions between the Greek government and the three institutions have halted in the last few days.

Emergency funding

Mario Draghi, who did not speak to reporters on his way into the meeting, said on Monday the ECB would continue to support the Greek banks with emergency funding as long as the banks were solvent.

In a highly unusual move, the Greek Central Bank warned in a paper on Wednesday that failure to reach an agreement could lead to a Greek exit from the euro area and even the 28-member European Union.

“Failure to reach an agreement would...mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and, most likely, from the European Union,” the Bank of Greece said.

Earlier, German chancellor Angela Merkel said a deal with Greece is still possible provided the Greek government follows through on the economic-reform pledges made to creditors.

Ms Merkel offered no concessions to Greece in her speech to lower-house lawmakers in Berlin on Thursday.

Reading from the agreement signed by Mr Tsipras’s government and euro-area creditors on February 20th, she said Greece had committed to “comprehensive structural reform”, much of which remained to be carried out.

“Over the last five years Greece has received unprecedented solidarity,” the chancellor said. “The basic principle still applies: help in return for reforms.”

Ms Merkel said that she would leave finance ministers to work on the detail of any deal to resolve the standoff.

She made the point that efforts by fellow aid recipients Ireland, Portugal, Spain and Cyprus had led to them “standing on their own two feet”.

“These countries took their chance,” she said, while in Greece “unfortunately some necessary structural reforms have been repeatedly put off”.

“Germany’s efforts are directed at keeping Greece in the euro. I remain firmly convinced that where there’s a will there’s a way.”

Additional reporting: Bloomberg