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Greek debt talks end in failure

AFP / Thierry Monasse I Greek Finance Minister Yanis Varoufakis gives a press conference at the end of a eurozone finance ministers meeting at the European Union Council headquarters in Luxembourg on June 18, 2015

Crunch European talks to end the standoff over Greece's debt ended without a deal on Thursday, as the IMF claimed future discussions required “adults in the room” to yield a breakthrough in an apparent swipe at Greek officials.

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The clock ticked closer to midnight on the crisis after eurozone finance ministers meeting in Luxembourg failed to reach a breakthrough on a reform deal that could avert a catastrophic Greek exit from the euro.

"No deal at Eurogroup," Valdis Dombrovskis, the European Commission vice-president for the euro, said after the talks broke up after 90 minutes of discussion on Greece.

He said it was a "strong signal for Greece to engage seriously in negotiations".

One source described the talks outcome to AFP as "tragic".

EU President Donald Tusk quickly announced an emergency summit of the leaders of the 19 eurozone countries on Monday in Brussels, saying it was "time to urgently discuss the situation of Greece at the highest political level".

The summit comes before a meeting of all 28 EU leaders on Thursday and Friday.

Leftist Prime Minister Alexis Tsipras has refused to make reforms to pensions and VAT rates demanded by the creditors in exchange for extending Greece's huge EU-IMF bailout.

Creditors have refused to pay the remaining 7.2 billion euros of the bailout if there is no reform deal, and the cash will be lost forever if there is no deal for an extension.

Greek 'catastrophe'

Eurogroup chief Jeroen Dijsselbloem told a press conference that time was running out and said the "ball is clearly in the Greek court".

Greece to turn to Russia for help?

Economic Affairs Commissioner Pierre Moscovici meanwhile urged a "reasonable compromise" to avoid a "catastrophe" involving Greece.

Failure to get the bailout cash would leave Greece unable to repay 1.6 billion euros to the IMF on June 30, the same day that the bailout expires.

IMF chief Christine Lagarde, who had earlier warned that there would be “no period of grace” for Greece if it failed to make the repayment, issued a stinging rebuke to the Greek government shortly after news of the failed talks broke.

"For the moment we are short of a dialogue, the key emergency is to restore the dialogue with adults in the room," Lagarde said at a press briefing.

"(Greece's proposals) cannot be about smoke and mirrors, it has to be credible," she added.

"We are waiting and we hope that the next few days will be used by the Greek government to come up with tangible measures."

Europe's most powerful leader, German Chancellor Angela Merkel, weighed in on the issue earlier Thursday when she told German lawmakers she was "still confident" that a deal was possible.

But the mood was darker in an overcast Luxembourg, where ministers were openly broaching scenarios such as a Greek exit from the euro if it defaults on its debts.

"The next step to make the deal credible, also financially sustainable, will have to come from the Greek side," Dijsselbloem said.

Greek Finance Minister Yanis Varoufakis, the motorbike-riding former economist whose relations with his counterparts have been strained, said he wanted to "replace costly discord with effective consensus".

Greece Plan B?

Without the bailout tranche and the IMF deadline missed, Greece would be for the first time in five years financially alone, with its coffers empty and all eyes on what happens next.

"The other option is to prepare the B plan," said Irish finance minister Michael Noonan, adding that he did not fear any "contagion effect" in the case of a "Grexit" -- meaning Greece crashing out of the euro.

Finnish Finance Minister Alex Stubb added: "Option number 1 is extension .... Option B could be default."

Greece's central bank warned for the first time Wednesday that the country could suffer a "painful" exit from the single currency area – and even the European Union – if it fails to reach a deal.

Greece has another 6.7 billion euros due to the European Central Bank in July and August and there have been reports of planning for possible capital controls if Greece's financial system runs dry.

Elected in January on a vow to end five years of bailout-imposed austerity, Tsipras warned Wednesday that an EU "fixation" with pension cuts would scupper a deal and harm Europe as a whole.

In a move that seemed calculated to irk other European leaders amid tensions with Russia over Ukraine, Tsipras visited Saint Petersburg Thursday as the star guest at President Vladimir Putin's investment drive forum.

(FRANCE 24 with AFP)

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