Eurozone warns Greece 'time is running out' to avoid catastrophe

European creditors warn Greece that 'time is running out' to avert catastrophic exit from Eurozone

European Union finance ministers and major lenders warned Greece on Thursday that catastrophe looms within days for the heavily indebted country unless it brings a credible plan for reforming the economy to eleventh-hour negotiations now at an impasse.

Top officials of the 28-nation European Union political and economic bloc and its 19-nation subset that uses the euro common currency put the blame squarely on Greece's new far-left political leaders for failing to bring any new proposals to the talks on averting a default on its bailout repayments at the end of this month.

When the talks in Luxembourg broke down after just an hour, European Council chief Donald Tusk called an emergency summit in Brussels for Monday to “urgently discuss the situation of Greece at the highest political level.”

Thursday's meeting of the Eurozone finance officials was earlier billed as a "make-or-break" attempt to resolve the standoff between Greek leaders and the country's creditors after talks last week left the two sides accusing each other of inflexibility and unreasonable demands. But Greek Finance Minister Yanis Varoufakis failed to propose any credible plans for tackling his nation's staggering debt or balancing its budget, the creditors said.

"We are waiting. The institutions have put together some very sensible proposals that are a clear easing from whatever was previously considered, and we are waiting" for counter-proposals from the Greek side, said Christine Lagarde, managing director of the International Monetary Fund.

"This can't be about smoke and mirrors, it has to be tangible proposals," Lagarde said, noting that the IMF lends money on behalf of 188 member countries and will be forced to cut off Greece if it fails to pay already late debt payments of $1.8 billion by June 30.

Athens has received $270 billion in bailout funds since 2010 from the IMF, the European Central Bank and the European Commission in exchange for promises to make deep budget cuts, raise taxes and increase collections, among other reforms.

Over the five years of painful austerity measures, the Greek economy contracted by 25% and the unemployment rate climbed to 26%. Greeks have grown increasingly angry about the hardships imposed by their creditors, and that discontent led to election success for the far-left Syriza party in January after its politicians promised to secure an easier repayment plan.

Varoufakis told reporters after the latest meeting that he had warned the creditors that “we are dangerously close to a state of mind that accepts an accident.” He appeared to be alluding to reports that Greeks have begun withdrawing euros from their bank accounts, worrying that a default will lead to their savings being converted to a new national currency that would quickly lose value.

The Greek central bank issued a dire warning Wednesday that failure to secure an extension of the bailout program beyond June would "snowball into an uncontrollable crisis," with a run on bank deposits already gaining dangerous momentum amid the uncertainty of Athens' future in the Eurozone.

Lagarde said the only hope for a new bailout agreement to replace the one expiring in 12 days is for the Greek side to return to the negotiating table and ensure that there are "adults in the room."

Pierre Moscovici, the European Union economic affairs commissioner, urged Greece to resume talks with its Eurozone colleagues and creditors to avert an even more dire blow to Greek living standards.

"On behalf of the commission I want to make an appeal to the Greek government to get back to the negotiating table, to make a commitment to the reasonable compromises that have to be made to avoid a fate that would be catastrophic," Moscovici said at a news conference after the closed-door talks with Greek officials.

Time is running out to reach a deal, Eurogroup leader Jeroen Dijsselbloem told reporters.

"The ball is clearly in the Greek court to seize that opportunity," Dijsselbloem said of the narrowing window for negotiation.

Asked what measures were being taken to protect the European Union and  the currency union member states from damage in the event Greece defaults on its loans and is forced out of the Eurozone, Dijsselbloem said that the lenders' priority was to keep Greece in the alliances but that preparations were underway for all potential "alternatives."

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