Greece - Hope Powerful Than Exit As No Deal Yet

(RTTNews) - Despite the ongoing brinkmanship and the toxic mix of missed deadlines and myriad proposals, Eurozone is clinging to the hope that Greece will stay in the single currency bloc as a meeting of the region's finance ministers is underway where deal plans from both sides are vying for their attention.

Three creditor institutions have tabled their own final joint proposal for a Greek deal to the Eurogroup on Thursday, after an initial deadline set for 11 am Brussels time for the Greek Prime Minister Alexis Tsipras to respond with a plan passed uneventfully.

Greek Finance Minister Yanis Varoufakis has also sent Greece's proposal to the euro area finance ministers, reports suggest. The disagreement remains mainly on debt relief sought by the country, a demand that is likely to face harsh opposition within the Eurogroup.

Earlier in the day, Tsipras met the chiefs of the country's creditors - the European Commission, the European Central Bank and the International Monetary Fund, earlier known as the troika, at the commission's headquarters in Brussels.

Greece apparently stuck to its revised plan that was submitted on Monday and which was initially welcomed positively by the creditors who said it shall form the basis for further discussions. However, crucial talks between both sides on Wednesday failed to reach an agreement.

Lingering differences were confirmed by Eurogroup President Jeroen Dijsselbloem, who said on Thursday that Greece did not consent to the proposal being put to finance ministers' consideration.

"We don't have an agreement from the Greeks on that," Dijsselbloem said as he arrived for the Eurogroup meeting. German Finance Minister Wolfgang Schaeuble also said there was no progress in talks.

As tight meetings between Greece and creditors went on, the Eurogroup session was delayed until 13.30 hrs Brussels time. Finance ministers were reportedly given a deadline of 4 pm to reach a conclusion on Greece.

Despite the disagreement, both Greek and EU officials reportedly said that differences have narrowed and a deal is still possible.

On Wednesday, Tsipras kindled 'Grexit' fears as he left for Brussels. He told lawmakers in Athens that creditors rejected some of the reform proposals submitted on Monday.

Apparently, failing an agreement in the Eurogroup the talks will spill-over to the two-day EU leaders' summit which has migration as the top agenda. The summit is set to begin later on Thursday, where the anti-austerity Tsipras is likely to come under intense pressure to relax his stance.

Austrian Finance Minister Joerg Schelling mentioned considering 'alternatives' if there was no deal on Thursday, though he did not mention the specifics. Reports suggest negotiations could go on until Sunday.

Meanwhile, conflicting reports emerged on Thursday with regard to the ECB's emergency funding to Greek banks. While some media outlets reported that the central bank accepted a Bank of Greece request to raise the amount, Reuters reported that there was no such request for a second consecutive day and the bank chose to maintain status quo.

After the two increases this week, the emergency support cap stands around EUR 89 billion. Reuters also reported that the German Bundesbank was having strong opposition to extending more funds to Greek banks under the ECB's emergency liquidity assistance, or ELA. Media outlets rely on sources for news on ECB ELA as the decisions are not made public.

The ECB has shown remarkable patience with Greece by extending emergency liquidity support, now on a daily basis, observers say. The bank also said this week that it stands ready to provide further support whenever required.

Extra emergency assistance was extended after deposit withdrawals at the country's banks rapidly climbed on increasing fears of an exit from the euro. However, if no deal materializes this week, Greek banks risk losing this crucial lifeline and the country would be faced to implement capital controls and the situation could deteriorate paving the way to bank runs, analysts warn.

The country needs to clinch a deal as soon as possible that could unlock EUR 7.2 billion aid as soon as next week.

Greece faces a EUR 1.6 billion payment to the IMF on June 30, after the government decided not to make a payment due to the lender on June 5 and sought to bundle the four payments this month into a single payment. Greek government officials have suggested that the country cannot make the payment without further aid.

It was the first time during the five-year long crisis that the country delayed a payment to the IMF. If Athens fails to strike a deal with its creditors, Greece cannot honor the payment due to the lender, leading to a default that could pave the way for the country's exit from Eurozone and even from the EU.

Many economists and observers suggest any deal this week will only be a short-term relief for Greece, which needs more financial support over the coming years, leading to speculation of a third bailout for the country in future.

Failing a deal, the bailout would expire at the end of this month. Greece was the first euro area country to be bailed-out by the EU & IMF in 2010.

Even if a deal is secured in Brussels, Tsipras is set to face an angry parliament in Athens as lawmakers from both the ruling Syriza party and the opposition voiced objection to higher taxes and pension contributions. This has raised concern that the new proposal may fail to get approval from the Greek parliament, which has to vote on the proposal before June 30.