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Draghi and Lagarde head to Berlin for talks on Greek debt

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Reuters BRUSSELS

By Tom Körkemeier and Jan Strupczewski

BRUSSELS (Reuters) - The chiefs of the European Central Bank and the International Monetary Funded headed to Berlin for talks late on Monday with the leaders of France and Germany on how to proceed with Greek debt negotiations.

EU officials said ECB chief Mario Draghi and Christine Lagarde of the IMF were joining the German and French leaders, and the president of the European Commission, with the aim of reaching a joint position on how to negotiate with Greece.

The unexpected development came after Greek Prime Minister Alexis Tsipras fired a broadside at international creditors that officials said bore little resemblance to his private talks with EU leaders.

 

The euro zone has set a deadline of Friday to conclude the slow-moving talks to allow time for institutions and ministers to approve a deal and secure parliamentary backing to disburse frozen aid before Greece's bailout expires at the end of June.

In an article in the French daily Le Monde which European diplomats said appeared intended to show Greek voters how hard he was fighting, Tsipras accused the lenders of making "absurd proposals" and disregarding Greek democracy.

"The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance. It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people," he wrote.

Athens is due to make a 300-million-euro ($327.93 million) repayment to the IMF on Friday amid growing doubts about its ability to meet all this month's financial obligations.

Officials close to the talks between Greece and the Commission, the ECB and IMF earlier dismissed market rumours of the imminent announcement of a deal.

On Monday evening, German Chancellor Angela Merkel, French President Francois Hollande and Commission President Jean-Claude Juncker gave brief statements before meeting in Berlin to discuss the digital economy.

They made no mention of Greece.

GREEK IN-FIGHTING

In a sign of in-fighting in Tsipras' government as the negotiations near a crunch point, Greece's nominee to represent it at the IMF was forced to withdraw on Monday following a backlash against her within the ruling leftist Syriza party.

Hard leftists in Syriza objected to the choice of Elena Panaritis, a former Socialist lawmaker and World Bank analyst, who they said had supported past Greek bailout programmes.

Tsipras' article in Le Monde was posted on the newspaper's website before the leftist Greek leader held an hour-long telephone conference with Merkel and Hollande on Sunday, which a German spokesman said took place in a constructive atmosphere.

Referring to creditors' demands for further pension cuts and rejection of restoring collective wage bargaining, Tsipras said they amounted to "the complete abolition of democracy in Europe" and the creation of a "technocratic monstrosity".

Asked about the sharp contrast between the article's defiant tone and his second teleconference with the EU's senior leaders in four days, European diplomats said the public show of anger should not be taken too seriously.

"There is a negotiation going on which isn't easy but is making progress," said a diplomat familiar with the exchanges. "It's quite natural that when it comes to the most politically sensitive issues that remain to be settled, some try to speak out politically."

German EU Commissioner Guenter Oettinger told Die Welt newspaper there was still a chance of a deal this week, saying Greece had stopped paying suppliers and contractors weeks ago as cash runs out.

Commission chief Juncker has been trying to build bridges with Greece on the key outstanding issues of a primary budget surplus and pension and labour market reforms.

Investors shed low-rated euro zone bonds on Monday due to uncertainties about the debt talks and Greece's ability to make the IMF payment, although two euro zone sources said they expect Athens to pay the instalment.

One euro zone official said it was less likely that Athens would be able to pay a second instalment of 340 million euros on June 12 without a new injection of cash or a delay. It then owes 556 million euros on June 16 and another 340 million on June 19.

(Additional reporting by Lefteris Papadimas and Renee Maltezou in Athens, Elizabeth Pineau in Paris and Andreas Rinke in Berlin; Writing by Paul Taylor and Paul Carrel; Editing by Angus MacSwan)

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First Published: Jun 02 2015 | 1:14 AM IST

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