European finance chiefs said they were unlikely to strike a deal on the outlines of a third Greek bailout, threatening to delay the cash infusion Prime Minister Alexis Tsipras desperately needs.
While a hardline group led by Germany resisted another rescue, the worst-case outcome was off the table for now. A summit of the 28 European Union leaders scheduled for Sunday evening in Brussels was canceled; most of the procedures to push Greece out of the euro require unanimity. A gathering of the 19 euro-area leaders is still on.
“If this was a negotiation from one to 10, I think we’re still standing somewhere between 3 and 4,” Finnish Finance Minister Alexander Stubb, who has opposed a rescue, said before the Sunday talks. “We’re very far away” from a deal.
Talks in Brussels preceding the summit deadlocked over Greece’s growing debt and the credibility of reforms that some ministers said rely too heavily on taxes. Time is running out for Tsipras, whose banks have been shut for the past two weeks. Bank withdrawals are limited to 60 euros ($67) a day, pensions have been rationed and commerce is grinding to a halt.
“There are many differences between the Eurogroup and Greece,” Austrian Finance Minister Hans Joerg Schelling said. “We have very difficult discussions ahead.”
The standoff came after Tsipras won overwhelming support in the Greek Parliament for a package of spending cuts, pension savings and tax increases intended to win financial aid of at least 74 billion euros. Among its shortcomings, the proposals failed to reflect the economic deterioration since talks collapsed and capital controls were imposed two weeks ago, according to Dutch Finance Minister Jeroen Dijsselbloem, the head of the Eurogroup.
Greece and its creditors are struggling for common ground after Tsipras missed a payment to the International Monetary Fund June 30 and allowed its second rescue package to lapse the same day. A new bailout will be Greece’s third in five years.
Dijsselbloem adjourned last night’s talks as tempers flared, according to the Athens News Agency. At one point, Germany’s Wolfgang Schaeuble snapped, “Don’t take me for a fool.”
While Greek government bonds rallied on Friday on optimism Tsipras’s package would lead to a deal, debt issued by its four largest banks remained below 40 cents on the euro, according to data complied by Bloomberg.
The prices suggest investors expect banks to restructure debt after the country’s economic crisis spurred depositors to withdraw about 40 billion euros between December and June.
The finance chiefs also rebuffed any talk of debt relief, a step that the IMF has backed.
The country’s three creditor institutions — the IMF, the European Commission and the European Central Bank — earlier assessed the program positively as a basis for the bailout, according to a euro-area official who spoke on condition of anonymity.
Tsipras faces political antagonists not just in Berlin and Brussels but within his own party. More than a dozen Syriza members refused to back the plan, with some of them denouncing the harsh measures it prescribes less than a week after Tsipras won an anti-austerity referendum. The prime minister said after the vote that his priority would be to complete negotiations with the creditors on a bailout deal.
“It could have been better,” Spain’s Luis de Guindos said as he left Saturday’s talks. “But it could have been worse.”