Greece crisis: Alexis Tsipras lashes out as tempers fray ahead of Tuesday deadline

The Greek PM accused creditors of blackmail and ultimatums

A worker walks in the empty industrial zone of central Athens, 26 June 2015 (EPA)

The Greek Prime Minister, Alexis Tsipras, has lashed out at his country’s creditors, accusing them of blackmail and ultimatums ahead of Saturdays’s last-ditch meeting in Brussels to keep Greece from going bust. The outburst came after an ill-tempered EU summit in Brussels, overshadowed by tensions over Greece’s looming Tuesday night deadline for debt default.

With officials scurrying to reach a compromise, Greece’s main creditors – the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – offered a five-month, €15.5bn (£11bn) extension of the country’s current bailout programme, but only if Athens agrees to a package of Herculean reforms designed to clean the Augean stables of the Greek economy.

The bailout extension is at the heart of Saturday’s meeting of the Eurogroup, ministers of the 19 countries that use the euro, gathering for the fifth time in 10 days to resolve a drama that has stretched patience to almost breaking point. Mr Tsipras met the German Chancellor Angela Merkel and French President François Hollande, seeking a breakthrough in the talks. Ms Merkel urged Greece to accept the “extraordinarily generous” deal.

Seen and heard: Alexis Tsipras and Angela Merkel met in Berlin (AFP/Getty)

But a defiant Mr Tsipras launched a broadside against his EU partners. “The European Union founding principles were democracy, solidarity, equality and mutual respect. It was not based on blackmail and ultimatums,” he said.

The German Finance Minister, Wolfgang Schäuble, warned that the chances of a settlement were still only “about 50-50”, as his Greek sparring partner, Finance Minister Yanis Varoufakis, pledged an “absolute” commitment to remain in the euro, despite demands that he said would “destroy our chances of growth and make it much harder for us to repay our debt”.

Brussels officials indicated that behind the fiery rhetoric the two sides were slowly inching closer to a compromise. In a second set of concessions, Greece has now agreed to cut its contribution to pensions by up to 0.5 per cent of GDP this year, and by 1 per cent next year.

Mr Tsipras has also accepted IMF demands on VAT, agreeing that most goods should be charged at a higher 23 per cent rate, and scrapping a special discount for Aegean islanders. In turn, the creditors have designed a bailout package that would include €8.7bn from the European Financial Stability Facility, €3.5bn from the IMF and €3.3bn in ECB profits on bond purchases.

Even if there is an agreement, Mr Tsipras still has to secure parliamentary approval, a tricky task given the anti-austerity stance of his Syriza party.