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Emergency Eurozone Summit Set on Greece's Debt Crisis

  • Lisa Bryant

A woman waves a Greek national flag and a European Union flag during a rally outside the Parliament, calling on the government to clinch a deal with its international creditors and secure Greece's future in the Eurozone, in Athens, Greece, June 18, 2015.

A woman waves a Greek national flag and a European Union flag during a rally outside the Parliament, calling on the government to clinch a deal with its international creditors and secure Greece's future in the Eurozone, in Athens, Greece, June 18, 2015.

Leaders of the 19-member eurozone will hold an emergency summit Monday to try to overcome a standoff over Greece’s debt crisis after a meeting of European finance ministers in Luxembourg failed to produce results.

With an Athens payment of about 1.6 billion euros ($1.8 billion) due to the International Monetary fund by June 30, eurozone officials urged Greece to seize a last chance to resolve the crisis.

Eurogroup President Jeroen Dijsselbloem, speaking Thursday at a news conference in Luxembourg after hours of inconclusive talks with the Greek finance minister, said that "we sent a strong signal to Greek authorities that it is really up to them to submit new proposals, additional proposals in the coming days. … As of today, it is still possible to find an agreement to extend the current program before the end of the month, but the ball is clearly in the Greek court to seize that opportunity.”

The same message came from IMF chief Christine Lagarde: "We are waiting. … The institutions have put together some very sensible proposals that are a clear easing from whatever was previously considered."

European officials want further reforms from Athens before they agree to unlock the remaining cash in its bailout fund — about 7.2 billion euros ($8.21 billion) — but the Greek anti-austerity government is rejecting them.

A different view

Greek Finance Minister Yanis Varoufakis offered a different perspective on Thursday's talks.

“Our side sent a strong signal to our partners and to the institutions by presenting a comprehensive proposal that can, in a short space of time, resolve the Greek crisis once and for all,” he said.

Varoufakis said the two sides had come close to an agreement but failed because negotiators on the other side lacked a mandate to strike a deal. He acknowledged that relations had reached a low point. "There is a lack of trust in the eurogroup,'' he said.

With the clock ticking, Lagarde said Greece's debt obligation is not up for negotiation. "There is no period of grace of one or two months, as I have read here and there,'' she said. The payment to the IMF "is due on June 30.''

On Wednesday, Greece’s central bank had predicted there could be a painful exit from the eurozone for Athens — and even from the European Union. Dijsselbloem said the euro currency union was committed to keeping Greece as a member, but was “prepared for all eventualities.”

German Chancellor Angela Merkel, whose country is Greece’s main creditor, told German lawmakers Thursday that she was "still confident" a deal was possible.

But if no solution is found by the end of the month, Greece could be left to its own devices, without even the support of the European Central Bank to prop up the country's banks. Since Greece is effectively broke and relying on outside help, it may have no option other than to introduce a new currency — most likely, the centuries-old drachma — to pay wages, salaries and pensions.

Market reaction

Fears over the country's financial future, whether in the eurozone or not, have been a key driver across financial markets recently, notably in Greece itself. On Thursday, stocks in Europe advanced before the outcome of the talks in Luxembourg was known.

Uncertainty about the future is also having an impact on the day-to-day decisions of the Greeks themselves. There have been signs that people are withdrawing money from banks in increasing amounts, raising fears that the government will be forced to put up controls on the free flow of capital.

Varoufakis wouldn't be drawn on the possibility of capital controls but said the deposit outflow started in December, before the radical left Syriza party came to power following elections in January.

"On the question of capital controls, permit me to say that they are the precise antithesis of a monetary union. A monetary union that contemplates capital controls is one that has failed in its duty,'' he said.

As Thursday's meeting broke up, at least 7,000 people gathered outside Parliament in central Athens in a peaceful rally backing membership in the currency zone and the European Union.

Some information for this report came from AP.

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