Obama tries to break the dead-lock at the G7 Summit. Tsipras rejected Troika’s offer, scheduled to meet Merkel – Hollande on Wednesday.

Athens.- Reuters, AMNA, Greek News

Greek Prime Minister Alexis Tsipras will hold talks with German Chancellor Angela Merkel and French President Francois Hollande on the sidelines of a summit in Brussels on Wednesday, a Greek government official said on Saturday.

The three leaders held a teleconference on Saturday, which the official said was held in a “good climate”, without giving details on the content of the call.

German Chancellor Angela Merkel, French President Francois Hollande and Greek Prime Minister Alexis Tsipras spoke by phone Saturday to discuss Greece’s debt crisis as time runs out to reach a deal, a French diplomatic source said.

“They took stock of the situation to help move forward the negotiations between Greece and the three (creditor) institutions,” the source said.

The three-way talks came on the eve of a G7 summit in Germany that looks set to be overshadowed by the Greek drama, even though Tsipras himself is not attending the high-level gathering.

With no deal on the table yet and billions of euros in loan repayments due at the end of the month, fears are rising of a possible Greek debt default that could see the country crashing out of the eurozone.

Greece will undoubtedly be a major topic of conversation at the G7 Summit in Germany and U.S. President Barack Obama is fully prepared to press his interlocutors, including Chancellor Merkel and IMF’s Christine Lagarde to be pragmatic about closing a deal as soon as possible and stop engaging in brinkmanship.

U.S. Administration believes it’s in everyone’s interest to have a deal that returns Greece to growth and preserves the integrity of the Eurozone. The message Washington send to alla parties involved is to find a balance between pursuing the real reforms that Greece needs to do, to set its economy to a sustainable path towards economic growth and flexibility on the part of its creditors to ensure that those reforms are politically and socially sustainable.

Besides the concerns about the effects of a Grexit to the European, U.S. and World economy, the Obama Administration sees major geostrategic interests at play that require active engagement.

GIVE AND TAKE

France’s finance minister said on Saturday a cash-for-reform proposal from international creditors rejected by Greece was negotiable and Athens should offer an alternative to a proposed cut in pension benefits that it has denounced.

“No one ever said – neither the (lending) institutions nor the (euro zone) countries – that it was take-it-or-leave-it, that it was an ultimatum,” Michel Sapin told Reuters on the sidelines of a ruling Socialist Party congress.

Asked if the long-running negotiations could fail over the pensions issue, he said: “Yes, but the Greek side has arguments which are not without legitimacy. They should make different proposals to try to achieve the same overall economic balance.”

His conciliatory comments contrasted with angry statements from other European Union officials warning Greece that Europe had gone as far as it could to help Athens.

Meanwhile German Vice Chancellor Sigmar Gabriel warned Greece in a newspaper interview on Saturday there was no more wiggle room in negotiations on a cash-for-reforms deal.

Asked if he was expecting an agreement soon, Gabriel told German daily Stuttgarter Nachrichten: “That depends solely on the Greek government. Europe has gone up to its limits.”

Tsipras has indicated that he is unwilling to make further concessions to creditors but sources suggested the Greek side could cede some ground on fiscal targets and on an overhaul of the value-added tax system. It remains unclear, however, whether Athens is prepared to offer the bold reforms, particularly in the thorny areas of pensions and the labor sector, that creditors have been pushing for.

Speculation has intensified over a possible “interim” solution, another bailout extension with a moderate cash injection that would allow Greece to fulfill its obligations at home and to international creditors, and ward off the specter of default and a possible Greek eurozone exit. Such a stopgap solution would likely put off contentious issues such as pension and labor sector reform until the fall, when talks on further support for Greece, probably a third loan program, would be able to take place.

But even as money runs out and the economy tanks, Tsipras faces fierce opposition to concessions from within leftist SYRIZA but also from members of his cabinet. The unrest has fueled speculation about the possibility of early elections even as Tsipras insists he wants a deal with creditors, albeit on Greece’s terms.

On Saturday key ministers played down the prospect of snap polls. “There is no reason for elections,” Health Minister Panayiotis Kouroublis said, adding that he “strongly believed” Athens would reach a deal with creditors. Energy Minister Panayiotis Lafazanis, who heads SYRIZA’s radical Left Platform, also appeared to play down speculation, saying the government already has a full mandate to enforce its program.