Hollande Says Greek Deal Possible as Merkel Sees No Progress

French President Francois Hollande held out the prospect of a deal for Greece even as German Chancellor Angela Merkel said negotiations looked to be going backward.

The contrast in tone from the heads of Europe’s two biggest economies reflected the frustration among leaders and finance ministers after days of talks in Brussels failed to yield a breakthrough. Finance chiefs will reconvene on Saturday for their fifth session on Greece in just over a week.

 “We don’t yet have the necessary progress,” Merkel told reporters as she arrived for a two-day summit of European Union leaders on Thursday.

 “One even has the impression that we’ve regressed a bit.” Differences over pensions, sales-tax rates, debt relief and corporate taxes have left Prime Minister Alexis Tsipras’s government and his country’s creditors grappling for common ground before the June 30 expiry of Greece’s euro-area bailout.

With no follow-on financing in place, Greece may struggle to make a payment due that day to the International Monetary Fund.

Tsipras Confidence

“European history is full of disagreements, negotiations and then compromises,” Tsipras said in Brussels.“So after the comprehensive Greek proposals, I’m confident that we will reach a compromise that will help the euro zone and Greece to overcome the crisis.”

 The Athens Stock Exchange Index closed little changed, gaining 0.1 percent after whipsawing through most of the day.

 The index is still nearly 14 percent up this week, having rallied on hopes of a deal earlier. Prices in the government bond market, where liquidity is thin, were mixed: the yield on the two-year bond fell 88 basis points to 21.5 percent from more than 30 percent a week ago as some investors remain hopeful an accord will be reached.

Merkel said that EU leaders won’t “interfere” in the negotiations, leaving it to finance ministers and Greece’s three creditor institutions -- the European Central Bank, the IMF and the European Commission -- to resolve the impasse.

 ‘Worlds Apart’

Heading into Saturday’s meeting, the two sides are “worlds apart,” Maltese Finance Minister Edward Scicluna said in an interview. “We either have an agreed document or we haven’t, in which case we will start looking at what’s next,” he said. “In other words, Plan B.”

 A separate EU official said that without a deal by Saturday, ministers would turn their attention to managing the potential consequences of a default for Greece and the wider euro region. Hollande, speaking as he arrived in Brussels, said an agreement was “possible and is necessary,” and urged Greece and creditors to work for a conclusion.

“Let me say this: the earlier the better,” Hollande said. “Not just because it’s useful, but because there is nothing to gain in taking much more time. Greece doesn’t have any left.”

bloomberg.com