Greeks defiant as clock ticks down in debt talks

Greece's ruling Syriza party dismissed reform demands from the country's international creditors as "blackmail" on Thursday as crisis talks to avert a debt default and a euro zone exit entered a critical phase.

A parliamentary spokesman for Greek Prime Minister Alexis Tsipras's left-wing party struck a defiant tone a day after euro zone finance ministers accused Athens of refusing to compromise despite a looming deadline to clinch a deal.

Tsipras was due to resume talks with Greece's lenders at 9 a.m. (0700 GMT) before the ministers reconvene at 1 p.m. and European leaders begin arriving in Brussels later this afternoon.

Without a cash-for-reform deal in the next 48 hours, the chances of Greece averting a default to the International Monetary Fund (IMF) look slim.

Failure to repay 1.6 billion euros owed to the IMF on Tuesday could trigger a bank run and capital controls, followed by a slide out of the single currency area.

"The lenders' demand to bring annihilating measures back to the table shows that the blackmail against Greece is reaching a climax," Nikos Filis, the ruling Syriza party's parliamentary spokesman told Mega TV.

He said the Greek side was maintaining its insistence on debt relief as part of any accord, in comments that were echoed by Labour Minister Panos Skourletis.

"There cannot be a deal without a substantial reference and specific steps on the issue of debt," Skourletis said in an interview with state broadcaster ERT.

On Wednesday, euro zone finance ministers cut short an emergency meeting summoned to approve an agreement after little more than an hour because there was no deal ready for them to discuss.

The frustration was palpable on both sides, with one euro zone official describing the loss of trust in the Greeks as "extreme" and questioning whether an agreement was realistic given the intransigence from Athens.

Tsipras spent the whole afternoon with European Commission President Jean-Claude Juncker, IMF head Christine Lagarde, European Central Bank chief Mario Draghi and Eurogroup chief Jeroen Dijsselbloem without achieving a breakthrough.

Despite positive signs earlier in the week, when the Greek side submitted a new list of reform proposals, negotiators have been unable to produce a draft text due to lingering differences over pension reform, taxation, labour law, public sector wages, the opening of closed professions, and investment.

Officials said the talks could drag on for another two days but without a deal by Saturday, Greece may not get the cash to meet the IMF repayment deadline.

Complicating matters, any deal would have to be endorsed by Greek lawmakers, followed by votes in several European parliaments, including the German Bundestag, where MPs have been told to prepare for a session on Tuesday.

MARKETS ON EDGE

Asian stocks edged down on Thursday as investors, who cheered signs of progress earlier in the week, reverted to cautious mode ahead of a summit of European Union leaders in Brussels starting later in the day.

"Optimism around a Greek deal had been driving price action all week but a stall in the negotiation process has put the brakes on the rally," IG market strategist Stan Shamu wrote. 

Among the most crucial unresolved issues are Greek demands for debt restructuring, differences over reforming Greece's costly pensions system and Athens' focus on tax hikes versus spending cuts.

The Greek proposals featured a series of tax rises on consumption, businesses and the wealthy, as well as higher contributions to pensions to meet budget targets. 

"You can't build a programme just on the promise of improved tax collection, as we have heard for the past five years with very little result," IMF chief Lagarde told French magazine Challenges on Wednesday.

One Greek official said the lenders' five-page document, full of crossings-out and underlining in red ink, rehashed their previous offer and took scant account of Athens' proposals. 

The more concessions Tsipras makes, the more resistance he will face in parliament within his coalition and on the streets, where recent protests, some organised with Syriza's support, have underlined opposition to yet more belt-tightening.

"Lenders are opposing a tax on e-gambling but want a 23% VAT tax on milk. Are they doing this for growth or (to serve) interests?" Dimitris Papadimoulis, a Syriza lawmaker at the European parliament, tweeted on Thursday morning.

"The lenders' hard core faction does not want a deal but a rift, Greece's humiliation and the fall of the Tsipras government. It won't get its way."