June 7, 2015 / 2:30 PM / 2 years ago

EU chief rebukes Greece, demands swift debt plan

European Commission President Jean-Claude Juncker arrives to address an economic seminar organised by the European Political Strategy Centre in Brussels, Belgium, June 4, 2015.Francois Lenoir

KRUEN, Germany (Reuters) - The European Union's exasperation with Greece burst into the open on Sunday when its chief executive rebuked leftist Prime Minister Alexis Tsipras and warned that time was running out to conclude a debt deal to avert a damaging Greek default.

In unusually sharp terms, European Commission President Jean-Claude Juncker accused Tsipras of distorting proposals by international creditors for a cash-for-reform agreement and of dragging his feet in offering an alternative.

He urged Athens to put its own ideas on the table swiftly to enable talks to resume on the sidelines of an EU-Latin America summit on Wednesday in Brussels.

U.S. President Barack Obama discussed the Greek crisis with German Chancellor Angela Merkel in private talks before a Group of Seven industrial nations' summit in Germany and expressed hope that Greece and its partners would chart a course without causing volatility in financial markets, the White House said.

Merkel said she, Juncker and French President Francois Hollande briefed the G7 leaders on the Greek debt talks.

"We could not say that the problem was solved," she told ZDF television, adding there was still a lot of work to do and "we haven't reached the finishing line yet".

Italian Prime Minister Matteo Renzi said G7 leaders agreed that everything must be done to prevent Greece leaving the euro zone but it was up to Athens now to give a positive signal.

In Athens, a government official said Greece wanted to continue to negotiate "at a political level" to find convergence with the lenders. However, the euro zone and the International Monetary Fund have made clear the numbers must first add up in technical negotiations before there can be a political deal.

Tsipras had been expected to return to Brussels last Friday to resume negotiations. But faced with a backlash against the creditors' proposal in his Syriza party, he went to parliament in Athens instead and denounced the offer as "absurd".

Juncker came close to accusing him of duplicity.

"I don't have a personal problem with Alexis Tsipras, quite the contrary. He was my friend, he is my friend. But friendship, in order to maintain it, has to have some minimum rules," he told a news conference at the G7 summit.

Asked when the last chance was for Greece to reach a deal and receive urgently needed funds remaining from a 240 billion euro bailout, Juncker said: "For sure there will be a deadline."

He did not mention a date, but EU officials said agreement was needed this week to allow time for ministerial and parliamentary approval of the disbursement of funds before the bailout program expires at the end of June.

An EU official said the Commission chief had refused to take a phone call from Tsipras on Saturday to show his displeasure. Juncker confirmed that Tsipras had tried to call him but said he first wanted to receive and have time to study a Greek counter-proposal before speaking to him again.

European Council President Donald Tusk, who chairs EU summits, criticized the leftist Greek government's virulent rhetoric against European and IMF lenders.

"If someone says I will lend you money but please give it back to me in the future, that person is not a ruthless robber, and it's not true (that) debtors are always moral and creditors are always immoral," Tusk told reporters.

PENSIONS CUT NEGOTIABLE

Juncker said he had made clear to Tsipras last week that items to which Greece objected, such as a demand to scrap an income supplement for the poorest pensioners, were open to negotiation if Athens put forward alternatives that yielded equivalent savings.

"He didn't tell parliament that we did address that subject already," the EU chief fumed.

There was no immediate reaction from Tsipras' office to the EU leaders' criticism, but Finance Minister Yanis Varoufakis continued the broadside against Greece's creditors in a blog post on Sunday.

"Greater austerity is being demanded from an economy that is on its knees, owing to the heftiest dose of austerity any country has ever had to endure in peacetime," he wrote.

"No offer of debt relief. No plan for boosting investment. And certainly, as of yet, no 'Speech of Hope' for this fallen people," Varoufakis said.

He urged German Chancellor Angela Merkel to address Greeks to signal Europe was ready to end its demands for austerity, just as U.S. Secretary of State James F. Byrnes had given hope to Germans in a celebrated 1946 speech after World War Two.

Opinion polls show three-quarters of Greeks want to stay in the euro zone and a majority want the government to reach a deal with the lenders even if that means more sacrifices.

Juncker said he continued to rule out a Greek exit from the single currency but cautioned that that did not mean he could "pull a rabbit out of a hat" to prevent it if Greece was not willing to make an effort.

Juncker is widely seen as the senior EU official most sympathetic to Greece, and his display of anger showed how far Athens has gone in alienating its few allies in the bloc.

Among hardliners in the euro zone, Slovakian Finance Minister Peter Kazimir said the Greek government had won elections by promising things it could not deliver.

"The euro zone countries are trying to keep them in the euro zone but not at any cost," he said. "They have to surrender, to continue with the program."

Additional reporting by Gavin Jones and Lefteris Papadimas in Athens and Michael Kahn in Bratislava; Writing by Paul Taylor; Editing by Noah Barkin

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