EU-Greece Talks on Bailout Break Down, Setting Up Showdown

At WSJ, "Greek Prime Minister Tsipras bets on securing better deal directly from eurozone leaders":

BRUSSELS—Talks between Greece and its European creditors collapsed over the weekend, setting up a high-stakes showdown in which the country’s prime minister is gambling he can wrest a softer bailout deal directly from eurozone leaders.

The swiftness with which European officials dismissed the Greek government’s latest proposals on Sunday—calling them “vague and repetitive”—suggests Prime Minister Alexis Tsipras is placing all of his bets on appealing for better terms to German Chancellor Angela Merkel and the 17 other eurozone leaders at a Brussels summit on June 25. If he fails, a default on the country’s debt and a possible exit from the currency bloc loom.

Ahead of the summit and a big debt payment due on June 30, Mr. Tsipras also risks triggering a run on banks by panicked depositors and being forced to restrict withdrawals and transfers of euros within and out of Greece. That could quickly create a situation beyond Mr. Tsipras’s and the government’s control, officials from the country’s creditors fear.

After a flurry of meetings aimed at mending Greece’s moribund €245 billion ($275 billion) international bailout, the European Commission, which has been leading the negotiations, sent out a brief statement Sunday, saying the gap between the two sides over what spending cuts and other concessions Greece would have to make was still as high as €2 billion of budget revenues annually.

“There remains a significant gap between the plans of the Greek authorities and the [creditors’] requirements,” it said.

The breakdown in talks marked the end of a tumultuous week for Athens and its creditors, which include the European Commission, the European Central Bank and the International Monetary Fund.

On Monday, Greece sent new proposals on how to break an impasse that stepped away from budget targets its creditors thought it had already agreed. On Thursday, the IMF pulled out of the bailout talks, citing lack of progress. Later that day, senior officials from eurozone countries for the first time jointly discussed a “Plan B” to the negotiations—that no deal will be found and Greece defaults on June 30.

That is when the eurozone portion of the rescue program expires and the government faces a €1.54 billion payment to the IMF, which it won’t be able to make without a new bailout transfer...

Greece won't default. There won't be a "Grexit." The EU states don't wont a collapse of the EMU and they'll find a way to save monetary union, even if they don't like bailing out Greece.

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