BRUSSELS/BERLIN - Euro zone
leaders will tell Greece on Thursday that time and patience are running out for its leftist-led government to implement agreed reforms to avert a looming cash crunch that could force it out of the single currency.
Greece has been kept from bankruptcy by two international bailouts but now risks running out of money within weeks if it does not receive more funds. Greek banks reported the largest deposit withdrawals in a month, a sign savers are worried about the outlook for the country's finances and institutions.
Prime Minister Alexis Tsipras has requested a meeting with the leaders of Germany, France and the main EU institutions on the sidelines of a European Union summit to press for Athens to receive short-term funds to keep itself afloat.
"I will repeat to him what I’ve already told him twice: Greece must undertake the necessary reforms, Greece must ensure that the commitments it made to the Eurogroup in 2012 and more recently are followed up on," European Commission President Jean-Claude Juncker told France's Europe 1 radio.
German Chancellor Angela Merkel delivered the same message in a speech to parliament ahead of the late-night Brussels talks and a crucial visit by Tsipras to Berlin next Monday, saying the crisis could only be overcome if Greece stuck to agreements.
No one should expect a solution from Thursday's session or her meeting with Tsipras next week, which offered "time to talk to each other in detail and perhaps also to argue", she said.
A political meeting of a small group of leaders could not be used to circumvent the formal agreement Greece
concluded on Feb. 20 with Eurogroup finance ministers, she told the lawmakers.
"There remains a very tough way ahead," Merkel said. Greece must understand that international aid brought with it an obligation "to reform its budget and work towards one day no longer needing help".
European Council President Donald Tusk, who will chair the summit, said he arranged a side-meeting with Tsipras to take the heat out of exchanges around the main table. It would, however, not be decisive as leaders would go on trying to avoid Greece being inadvertently shut out of the euro -- a "Grexident".
EU chief executive Juncker has been trying to build bridges between Tsipras and Greece's creditors. His tone of exasperation suggested even Athens' friends are angry at his government's mixture of belligerent rhetoric and procrastination.
Another sympathizer, the German Social Democrat speaker of the European Parliament Martin Schulz, warned: "We need to keep our cool. The government in Athens must understand that it is pointless to have an ideological debate."
Two EU/International Monetary Fund bailouts totaling 240 billion euros have kept Greecefrom bankruptcy since 2010 but its economy has shrunk by 25 percent, partly due to austerity measures imposed by the lenders. It risks running out of cash without more aid or permission to issue more short-term debt.
EU sources said Greece had refused to provide any update on public finances or reform plans in a conference call of senior euro zone officials on Tuesday and had denied EU, IMF and European Central Bank experts access to government buildings in Athens, insisting all meetings take place in a hotel.
The discussions had not gone beyond procedural issues of who would be allowed to talk to whom, the sources said.
Asked whether the experts had been kicked out, an EU official said: "The talks in Athens were paused yesterday. This is normal procedure and can be helpful to take stock. There is willingness to talk but the Greeks must deliver."
Deputy Prime Minister Yannis Dragasakis, in a television talk show early on Thursday, accused the creditors' team of exceeding their authority.
"The technical teams came to collect facts, but they then requested things which went beyond their jurisdiction. For example, they wanted to review the government as a whole, every ministry's program and the reforms," he told Alpha TV.
Dragasakis acknowledged Greece faced a liquidity problem and needed the cooperation of its European lenders to keep paying salaries, pensions and debt repayments: "We haven't received any (bailout) tranches since August 2014 but we have been meeting all of our obligations," he said. "This has its limits."
The ECB agreed late on Wednesday to raise the limit on emergency lending to Greek banks by 400 million euros to 69.8 billion, banking sources said. Bankers said savers withdrew about 300 million euros in deposits on Wednesday.
"The uncertainty over the lack of progress in negotiations and the negative news flow has affected sentiment," one banker told Reuters. "It's not a huge amount. But the worry is whether this is the start of a trend that could get worse."
European Parliament President Schulz said Greece's financial situation was "dangerous" and it needed 2-3 billion euros in the short term to avoid bankruptcy
. "Time is short," he told German radio. "So it would be good if Greece fulfils the obligations that it has agreed to -- then further money will flow."
Greece has asked to receive some 1.9 billion euros in ECB profits on Greek bond holdings, which finance ministers have linked to progress in implementing the program. It also wants ECB permission to issue more short-term treasury bills, which only Greek banks are willing to buy.
Tsipras' Syriza party won a general election in January on a platform of scrapping the bailouts, ending austerity and refusing to cooperate with the "troika" of institutions -- EU, ECB and IMF -- supervising its rescue program.
The prime minister lambasted EU "technocrats" on Wednesday for demanding prior consultations on the cost of a "humanitarian bill" adopted by parliament to provide food stamps and free electricity to the poorest Greeks worst hit by austerity.
Athens has made no move in the month since the Brussels agreement to bring forward legislation to meet its commitments under the bailout agreement.
The chairman of the Eurogroup of finance ministers, Jeroen Dijsselbloem of the Netherlands, hinted this week that Greece might have to introduce capital controls restricting cash withdrawals, as Cyprus had done, if financial stress got worse.
German Finance Minister Wolfgang Schaeuble has warned that the risk of an accidental Greek exit from the euro zone is rising, while insisting that Berlin wants to avoid that. - Reuters