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Greece - Noise, Chaos, Progress

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The protracted negotiations between Greece and its creditors seemingly shifted into top gear this week as the cash-strapped country teeters on the verge of a default with a loan repayment to the International Monetary Fund due at the end of the week.

Following a late-night summit in Berlin on Monday, German Chancellor Angela Merkel, French President Francois Hollande, IMF Managing Director Christine Lagarde, European Central Bank President Mario Draghi and European Commission President Jean-Claude Juncker agreed to intensify the talks to reach a deal with Greece, a German government spokesman said in a statement.

Attendance by the top leaders and officials at the mini-summit reflected the gravity of the situation. The meeting was reportedly aimed to draft an offer to be presented to Greece in the coming days.

European Commissioner for Economic and Monetary Affairs Pierre Moscovici told France Inter radio in an interview on Tuesday that serious progress was being made at last in the negotiations between Greece and its creditors to find a solution before a June 5th deadline. The EU official also acknowledged that more efforts were needed on both sides.

Elsewhere, Greece's state-backed ANA/MPA news agency cited a statement from the government denying the receipt of any draft agreement from the creditors or having any recent contact with them. That was in response to German media reports that claimed a draft of a final proposal had been sent to Athens.

Greek Prime Minister Alexis Tsipras, meanwhile, revealed that Greece has submitted specific proposals to creditors to make an exit from the crisis.

"Greece has tabled proposals, we have made concessions - a normal practice in a negotiation - but we have submitted a realistic plan for the country to get out of the crisis," Tsipras said.

He added, "The outcome of the negotiations will mark the end of the division of Europe. It is now clear that the decision about whether they wish to adapt to realism and exit the crisis without Europe's division belongs to the leadership of Europe."

If Greece and its creditors fail to reach a deal this month, it could trigger a Greek default that may invite the imposition of capital controls and pave the way for the exit of the country from the Eurozone.

Greek officials have reportedly said that the country can pay the 300 million euros due on June 5th, but it faces more repayments this month.

If the government and creditors reach a deal, it would release funds of about 7 billion euros from the existing bailout package. 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.

Observers and officials warn that the impact of any adverse Greek event on the euro and the region's political landscape as well as financial markets would be severe and the fallout will not be limited to Europe but could spread across the globe.

German Vice Chancellor Sigmar Gabriel said on Tuesday that the consequences of a Greek insolvency would be "gigantic" for Europe. He expressed hope that the efforts of European leaders and the Greek government would result in an agreement soon to avoid a drastic scenario.

"Overall, we retain our working assumption that some form of an agreement is cobbled together in the coming days which allows Greece to meet its near-term obligations and stay inside the euro-zone, for now at least," said Capital Economics Chief European Economist Jonathan Loynes. "But it may go right down to the wire and the risks of failure are high"

He added, "And we would stress again that the much bigger challenge of addressing Greece's ever-growing debt mountain will probably still lie ahead. In short, the end of the crisis is still nowhere in sight."

It remains unclear whether Greece has presented any new pension proposals, a crucial point of contention in earlier talks.

Greece's Vice-President Yiannis Dragasakis said Tuesday that the government does not send or accepts ultimatums.

"The government does not send or accepts ultimatums. It is not blackmailed and it does not blackmail anyone," Dragasakis said, according to the ANA/MPA. "We are ready to make compromises, make proposals, we do not accept ultimatums."

Meanwhile, Greek media reports suggest speculation is rife in Athens of a snap election as early as next month once the deal with creditors is sorted out.

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