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| Greece No Closer to a Deal as Debt Deadline Approaches | |
| (about 1 hour later) | |
| BRUSSELS — With Greece’s bailout set to expire at the end of the month, it is becoming clear that negotiators mean to go down to the wire — with all the risks that might bring of reaching no agreement at all, or a last-minute deal that might do little to solve Greece’s underlying economic problems. | BRUSSELS — With Greece’s bailout set to expire at the end of the month, it is becoming clear that negotiators mean to go down to the wire — with all the risks that might bring of reaching no agreement at all, or a last-minute deal that might do little to solve Greece’s underlying economic problems. |
| “It looks like both sides are going to walk this to the precipice,” said Mujtaba Rahman, who heads the Europe practice for the Eurasia Group, a political-risk consultant firm. “But any deal that comes out of that, is of course going to be more political and even more economically suboptimal.” | “It looks like both sides are going to walk this to the precipice,” said Mujtaba Rahman, who heads the Europe practice for the Eurasia Group, a political-risk consultant firm. “But any deal that comes out of that, is of course going to be more political and even more economically suboptimal.” |
| On Thursday, for the fourth time in a week, a meeting of the Eurogroup of eurozone finance ministers ended without resolution on a Greek debt package. The group agreed only to meet yet again, on Saturday. That will push things closer to the deadline. | On Thursday, for the fourth time in a week, a meeting of the Eurogroup of eurozone finance ministers ended without resolution on a Greek debt package. The group agreed only to meet yet again, on Saturday. That will push things closer to the deadline. |
| Without the bailout, and a remaining 7.2 billion euros, or about $8.1 billion, loan tranche that Athens is still hoping to receive under it, Greece could soon default on its debt and possibly have to leave the euro currency union. | Without the bailout, and a remaining 7.2 billion euros, or about $8.1 billion, loan tranche that Athens is still hoping to receive under it, Greece could soon default on its debt and possibly have to leave the euro currency union. |
| Because few people in the negotiations want that to happen, there are still widespread expectations that some sort of deal will be struck. | Because few people in the negotiations want that to happen, there are still widespread expectations that some sort of deal will be struck. |
| The possibilities include a messy compromise on Saturday that extends the current bailout for a few more months but with no more aid until the country fulfills certain conditions. If that were the case, Greece might be unable to make a €1.6 billion payment to the International Monetary Fund that is also due on Tuesday. | The possibilities include a messy compromise on Saturday that extends the current bailout for a few more months but with no more aid until the country fulfills certain conditions. If that were the case, Greece might be unable to make a €1.6 billion payment to the International Monetary Fund that is also due on Tuesday. |
| European Union policy makers wanted some form of agreement on Thursday to avoid having the Greek debt crisis overshadow a two-day summit meeting of the bloc’s national leaders, who are in Brussels to discuss migration and other issues, like Britain’s demands to change the way Europe is run. | European Union policy makers wanted some form of agreement on Thursday to avoid having the Greek debt crisis overshadow a two-day summit meeting of the bloc’s national leaders, who are in Brussels to discuss migration and other issues, like Britain’s demands to change the way Europe is run. |
| Before that summit meeting, Prime Minister Alexis Tsipras of Greece told reporters he was confident the sides could reach a compromise. But Chancellor Angela Merkel of Germany, which is one of Greece’s biggest lenders, said it seemed that Athens had backtracked on some issues. | Before that summit meeting, Prime Minister Alexis Tsipras of Greece told reporters he was confident the sides could reach a compromise. But Chancellor Angela Merkel of Germany, which is one of Greece’s biggest lenders, said it seemed that Athens had backtracked on some issues. |
| For days, progress has been hindered by the inability of Mr. Tsipras to reach a compromise on the steps being demanded by the creditors’ deal brokers: Christine Lagarde, managing director of the International Monetary Fund; Mario Draghi, president of the European Central Bank; and Jean-Claude Juncker, president of the European Commission. | For days, progress has been hindered by the inability of Mr. Tsipras to reach a compromise on the steps being demanded by the creditors’ deal brokers: Christine Lagarde, managing director of the International Monetary Fund; Mario Draghi, president of the European Central Bank; and Jean-Claude Juncker, president of the European Commission. |
| Those measures would commit Greece to further tax increases and cuts to pension spending. But while they would help win approval from lawmakers in countries like Germany and Finland, who must sign off on any extension of the Greek bailout, they could also foment a rebellion in the Greek Parliament, threatening Mr. Tsipras’s leadership. | Those measures would commit Greece to further tax increases and cuts to pension spending. But while they would help win approval from lawmakers in countries like Germany and Finland, who must sign off on any extension of the Greek bailout, they could also foment a rebellion in the Greek Parliament, threatening Mr. Tsipras’s leadership. |
| Greece has sought to ease the four-month deadlock with its creditors with offers to do far more to prune spending and raise revenue. But there are doubts among negotiators that the proposals do enough to ensure the economic dynamism that would enable Greece to recover and pay off its loans. | Greece has sought to ease the four-month deadlock with its creditors with offers to do far more to prune spending and raise revenue. But there are doubts among negotiators that the proposals do enough to ensure the economic dynamism that would enable Greece to recover and pay off its loans. |
| A large proportion of the budget savings in Greece’s offer would come from tax rises, including some on higher earners and companies that could squeeze growth. But there is little faith in the ability of Greece to revamp its tax system to ensure adequate collection. | A large proportion of the budget savings in Greece’s offer would come from tax rises, including some on higher earners and companies that could squeeze growth. But there is little faith in the ability of Greece to revamp its tax system to ensure adequate collection. |
| Creditors also have been wary that pension savings plans do not do enough to discourage early retirement. | Creditors also have been wary that pension savings plans do not do enough to discourage early retirement. |
| Even so, the creditors made some concessions in their latest proposals to Greece, suggesting for instance that a grant for low-income retirees be phased out by the end of 2019, two years later than their previous offer. | Even so, the creditors made some concessions in their latest proposals to Greece, suggesting for instance that a grant for low-income retirees be phased out by the end of 2019, two years later than their previous offer. |
| The creditors have shown less flexibility in the area of taxation, by insisting that Greece revokes its discount on the value-added tax charged by businesses on the Greek islands. And they have shown few signs of making an immediate offer to reduce the size of Greece’s overall debts, as Mr. Tsipras has demanded. | The creditors have shown less flexibility in the area of taxation, by insisting that Greece revokes its discount on the value-added tax charged by businesses on the Greek islands. And they have shown few signs of making an immediate offer to reduce the size of Greece’s overall debts, as Mr. Tsipras has demanded. |
| “Either Greece needs more debt relief, or more growth, for any deal to be credible,” said Megan Greene, the chief asset management economist for Manulife, a financial firm that she said had limited indirect exposure to Greek assets. | “Either Greece needs more debt relief, or more growth, for any deal to be credible,” said Megan Greene, the chief asset management economist for Manulife, a financial firm that she said had limited indirect exposure to Greek assets. |
| “But debt relief is anathema to the eurozone lenders before the country implements reforms, while creditors’ proposals to improve government finances are toxic for Mr. Tsipras, who has such a divided government,” she said. | “But debt relief is anathema to the eurozone lenders before the country implements reforms, while creditors’ proposals to improve government finances are toxic for Mr. Tsipras, who has such a divided government,” she said. |
| Some Greek opposition leaders were also in Brussels, propelling speculation among supporters of the government that they were trying to capitalize on any eventual failure by Mr. Tsipras. | Some Greek opposition leaders were also in Brussels, propelling speculation among supporters of the government that they were trying to capitalize on any eventual failure by Mr. Tsipras. |
| As the standoff looked set to drag on through the weekend, Ms. Greene said Mr. Tsipras could be forced by the creditors to choose between saving his country’s banks and saving his government if the rest of Europe and lenders like the I.M.F. finally lose patience. | As the standoff looked set to drag on through the weekend, Ms. Greene said Mr. Tsipras could be forced by the creditors to choose between saving his country’s banks and saving his government if the rest of Europe and lenders like the I.M.F. finally lose patience. |
| The European Central Bank could threaten to cut off emergency assistance, as happened to the Cypriot leadership in early 2013 during its painfully protracted bailout negotiations. | The European Central Bank could threaten to cut off emergency assistance, as happened to the Cypriot leadership in early 2013 during its painfully protracted bailout negotiations. |
| “It could be a case of Mr. Tsipras being told, ‘Pick up pen and sign or we blow up your banking sector,”’ Ms. Greene said. | “It could be a case of Mr. Tsipras being told, ‘Pick up pen and sign or we blow up your banking sector,”’ Ms. Greene said. |
| In that case, the Cypriots relented. Whether Europe wants to take the same chances with Mr. Tsipras remains to be seen. | In that case, the Cypriots relented. Whether Europe wants to take the same chances with Mr. Tsipras remains to be seen. |