Greek Finance Minister Yanis Varoufakis (L) and Euclid Tsakalotos, Chief Economics spokesman of the Greek government attend a Eurozone finance ministers emergency meeting in Brussels, Belgium, June 24, 2015.
Greek Finance Minister Yanis Varoufakis (L) and Euclid Tsakalotos, Chief Economics spokesman of the Greek government attend a Eurozone finance ministers emergency meeting in Brussels, Belgium, June 24, 2015.

BRUSSELS - Greece's international creditors put a final cash-for-reform proposal to eurozone finance ministers on Thursday in a showdown with Athens after lengthy negotiations failed to yield an agreed plan to avert an imminent default.

Defiant Greek ministers said they would stick to their own proposals, based largely on increases in tax and social contributions, which the country's lenders say would not raise enough revenue to plug a gaping budget hole.

"The decision lies exclusively with the Greek authorities. They have, however, rather gone backwards," German Finance Minister Wolfgang Schaeuble said on arrival for the second emergency Eurogroup meeting in less than 24 hours.

Without a deal by the weekend to unlock frozen aid, Greece, which has received two bailouts worth 240 billion euros since 2010, is set to default on a crucial repayment to the International Monetary Fund next Tuesday.

That could trigger a bank run and capital controls, setting the country on an uncharted path out of the 19-nation eurozone and damaging European monetary union.

After five months of acrimonious negotiations, the heads of the European Commission, European Central Bank and IMF gave leftist Prime Minister Alexis Tsipras an ultimatum to offer a credible reform plan by mid-morning on Thursday, saying they would otherwise send their own version to the Eurogroup.

Greece let the deadline slip, saying it stood by proposals it had submitted on Monday with of some modifications. They included restoring an exemption from value added tax for Greek islands, as demanded by Tsipras's coalition partners.

Eurogroup chairman Jeroen Dijsselbloem told reporters: "The only thing we have presented to the Eurogroup is what the institutions have made together. We don't have an agreement from the Greeks on that, so we will have to hear in the Eurogroup meeting what their ideas are."

The dramatic move came hours before European Union leaders meet in Brussels for a summit on migration, the long-term future of the eurozone and renegotiating Britain's membership terms, which has been overshadowed by the Greek debt crisis.

Tsipras left European Commission headquarters smiling and flashing a thumbs-up sign after three hours of meetings but made no comment. Diplomats said the lenders' tactics reflected exasperation at his refusal to compromise on key reforms of pensions, labor markets, wages and taxation, which cross his Syriza party's self-declared "red lines."

His finance minister, Yanis Varoufakis, arrived at the Eurogroup meeting carrying a set of hand-written talking points captured by a Reuters photographer.

They included: "Significant savings in pensions:

-closing early retirement risks

-higher social security contributions

-harmonizing contributions."

Greek officials say the government has already compromised on its red lines by offering to raise taxes and pension deductions. They say the lenders keep revising downwards estimates of how much each measure proposed by Greece could raise, making it difficult to come up with an acceptable offer.

Hardline Austrian Finance Minister Hans Joerg Schelling said the final deadline for a deal was Sunday, a day before a German parliament sitting that would have to approve the release of aid to meet the IMF payment.

His Spanish colleague, Luis De Guindos, said ministers were prepared to meet as often as necessary until there was an agreement.


Greek politicians in Tsipras' party continued to be defiant.

"The lenders' demand to bring annihilating measures back to the table shows that the blackmail against Greece is reaching a climax," Nikos Filis, Syriza's parliamentary spokesman, told Mega TV.

He said the Greek side was maintaining its insistence on debt relief as part of any accord, in comments that were echoed by Labor Minister Panos Skourletis.

"There cannot be a deal without a substantial reference and specific steps on the issue of debt," Skourletis said in an interview with state broadcaster ERT.

Frustration was palpable on both sides, with one euro zone official describing the loss of trust in the Greeks as "extreme" and questioning whether an agreement was realistic given the intransigence from Athens.

In Frankfurt, powerful German Bundesbank chief Jens Weidmann voiced concern in a speech about the continued provision of emergency liquidity assistance to keep Greek banks afloat in the face of massive deposit withdrawals.

ECB policy-setters held the limit on this emergency funding for Greek banks steady for a second day running after weeks of increases, raising pressure on Athens.

A positive mood in Brussels earlier in the week, when Greece submitted its plan built mostly on increased tax and social security deductions, has given way to growing fear that an accord is slipping away.

But seasoned diplomats cautioned that in EU negotiations the situation often looks bleakest before a last-gasp deal.

Among key unresolved issues are Greek demands for debt restructuring, which eurozone governments have said they are not prepared to discuss until Athens implements the reforms.

The more concessions Tsipras makes, the more resistance he will face in parliament within his coalition and on the streets, where recent protests, some organized with Syriza's support, have underlined opposition to yet more belt-tightening.

"The lenders' hard core faction does not want a deal but a rift, Greece's humiliation and the fall of the Tsipras government," Dimitris Papadimoulis, a Syriza lawmaker at the European parliament, tweeted on Thursday morning.

"It won't get its way."