Greece Crisis: PM Accuses Lenders Of Blackmail

The Greek Prime Minister has accused his country's creditors of "blackmail" - and has vowed to fight for mutual respect from the European Union.

Speaking in Brussels, Alexis Tsipras told reporters: "The European Union founding principles were democracy, solidarity, equality and mutual respect. It was not based on blackmail and ultimatums."

Creditors have offered Greece a five-month, €12bn extension of the country’s current bailout programme, on the condition that a raft of reforms are implemented.

Speaking briefly at the EU summit, German Chancellor Angela Merkel urged Greece to accept the deal, describing it as "extraordinarily generous".

But according to German Finance Minister Wolfgang Schaeuble, the chances of a settlement happening “are about 50-50”.

Mr Tsipras met with Mrs Merkel, along with French President Francois Hollande, ahead of crunch talks to try and reach a deal on his country’s debt crisis.

He told them that Greece was frustrated with the “harsh measures” creditors are demanding in exchange for the €7.2bn its economy badly needs, according to a Greek government official.

A discussion between Mr Tsipras, the International Monetary Fund and the European Central Bank ended at an impasse on Thursday evening, after both sides failed to agree on the economic reforms that Greece needs to make.

The country had unveiled plans to make €8bn in savings through VAT increases, taxes on the wealthy and a cut in defence spending, but the IMF has claimed these proposals are insufficient, as further cuts to salaries and pensions are needed.

Greece’s Finance Minister, Yanis Varoufakis, has told RTE that his country has “bent over backwards to accommodate some rather strange demands of creditors” – and warned there was a “moral duty” for an agreement to be made.

But if his fellow finance ministers – collectively known as the Eurogroup – do not reach a settlement on Saturday, Greece faces a potential debt default on Tuesday, as it needs to make a €1.5bn payment to the IMF.

Jeroen Dijsselbloem, head of the Eurogroup, has said any bailout deal must be reached on Saturday, or else there will not be enough time for it to receive parliamentary approval in Greece and other EU member states.

Even though figures suggest cash is being withdrawn from the Greek banking system at the rate of about €1bn a day, there is little sign of panic in Athens, according to Sky’s Europe Correspondent Robert Nisbet.

He said: “Queues at ATMs around the Greek parliament were normal for a Friday lunchtime, while inside, business was steady with no suggestion of saver after saver withdrawing their life savings.

“However, anecdotal evidence suggests Greek businesses have started to stockpile hard currency in vaults of security firms.

“It takes 24 hours in Greece to complete transactions of €5,000 and over, so large movements of money have increased leading up to Tuesday’s deadline.

“If the talks break up without agreement this weekend, there is speculation that capital controls may be in place on Monday morning before the banks open.

“That could take the form of limiting cash withdrawals, restricting the amount of money being moved abroad, and taxing those who take their money out of banks to buy ‘safe haven’ investments like houses and luxury cars.”

Even if an agreement is thrashed out with the EU and the IMF, Mr Tsipras would still need to convince his anti-austerity Syriza party to approve concessions needed to unblock the desperately needed bailout funds.

He only has a slim majority within the Greek parliament and opposition within his own party to proposed concessions means ratification in Greece is by no means assured.