LUXEMBOURG -- European Union leaders and Greece's creditors headed into a flurry of behind-the-scenes weekend diplomacy before high-level meetings to unlock aid for the nation flirting with default.
With markets closed, the weekend gave negotiators trying to avert a Greek exit from the euro some room to lay out a road map for what will be a high-stakes week with an emergency summit of EU chiefs Monday. The clock is running down on a June 30 deadline to make payments and work out a new deal amid disagreements on pensions, sales tax and a deficit target.
German Chancellor Angela Merkel and her French counterpart, Francois Hollande, spoke by phone Friday. As leaders of the two biggest economies in the 19-nation euro bloc, they've presented a united front against Greek Prime Minister Alexis Tsipras, who has spent his five months in power trying to roll back the austerity policies underpinning the country's bailout.
"I want to say very clearly on expectations, that the summit meeting on Monday can only be a decision-making summit if a basis for making decisions is there," Merkel said at a Christian Democratic party event in Berlin.
The euro-area bailout of Greece expires at the end of the month and that's when about $1.7 billion is owed to the International Monetary Fund.
Greece's negotiating team met on Saturday to discuss the bailout talks and the country's Cabinet will gather in the prime minister's residence this morning. Tsipras on Saturday canceled a planned trip to Strasbourg on Tuesday, the day after the summit. No reason was given.
Minister of State Nikos Pappas told Ethnos newspaper that the government "was working toward a solution." He said Greece's so called red lines include no cuts to pension plans or wages, an end to austerity and a "comprehensive" response to the onerous debt load.
European Union President Donald Tusk discussed what awaits Greece with European Central Bank chief Mario Draghi, IMF head Christine Lagarde and EU Commission President Jean-Claude Juncker. Those institutions control the purse strings.
Flying back from a visit to Russian President Vladimir Putin, Tsipras will hunker down in Athens with his closest advisers to come up with a game plan. His country was given a few more days of financial breathing space from the European Central Bank, which Friday increased again the maximum amount of emergency funding Greek banks can access.
On Monday, the central bank will revisit that emergency funding as deposits continue to flee Greek banks at dizzying rates. About $2.1 billion was withdrawn in the past two days alone, according to a person familiar with the matter.
The 40-year-old Tsipras, contending with hard-liners in his Syriza party who don't want him to capitulate to creditors' demands, has escalated the rhetoric in search of a better deal. He is expected to speak by phone with Juncker.
After their meeting Thursday ended in frustration, European finance ministers will convene again Monday, before the summit of leaders that could determine the future of the eurozone and Greece's place in it.
U.S. Treasury Secretary Jacob Lew said in an interview on CNN's Fareed Zakaria GPS that will air today a Greek exit from the euro would have a major impact on the country's citizens and economy.
"Within Greece, the consequence of a failure here would mean a terrible, terrible decline in their economic performance," Lew said. "They will bear the first brunt of a failure."
While all parties in the negotiations must be flexible, "the burden is on Greece," Lew said, according to a copy of the transcript of the interview provided Saturday. "The best solution is for Greece to make some tough decisions."
Greek Finance Minister Yanis Varoufakis, in an opinion piece published Saturday by The Irish Times, blamed his European counterparts for showing no willingness Thursday to consider his "well thought-out" proposals.
"Regrettably, my presentation was met with deafening silence," Varoufakis wrote.
In an interview published in Brussels-based L'Echo newspaper, Varoufakis said he doesn't want Greece to abandon the euro and is optimistic differences will be overcome.
He also warned that the ruling Syriza party would be replaced by neo-Nazis if Greece ends up defaulting and leaving the euro.
It's not yet clear if Tsipras will come to Brussels armed with a new plan, a Greek government official said. Near the end of the week, the same leaders will reconvene again for a scheduled two-day summit.
Information for this article was contributed by Rainer Buergin, Richard Bravo, Kevin Costelloe, Mark Deen, Jonathan Stearns, Corina Ruhe, Stephanie Bodoni, Karl Stagno Navarra, Scott Lanman, Andrew Mayeda, Hans Nichols, David Tweed, Nikos Chrysoloras, Marcus Bensasson, Alessandro Speciale, Eleni Chrepa and Elizabeth Dexheimer of Bloomberg News.
A Section on 06/21/2015