EU rejects Greek plan as Tsipras-Merkel meeting in doubt

The EU scathingly rejected Athens's new bailout reform plan Wednesday, throwing into doubt a crunch meeting between Greek Prime Minister Alexis Tsipras and the leaders of Germany and France aimed at ending the crisis.

Brussels took just a day to dismiss the proposals that Greece submitted on Tuesday to its EU-IMF creditors, which have demanded tough reforms in exchange for giving Athens the rest of its international rescue package.

The mood darkened further as officials refused to confirm that an expected meeting between Tsipras, Angela Merkel and Francois Hollande on the sidelines of an EU-Latin American summit in Brussels would now take place.

European Commission President Jean-Claude Juncker's spokesman said that the "ball is clearly in the court of the Greek government" if the radical Syriza administration wants to end the five-month stand-off with its creditors.

"Their latest suggestions do not reflect the state of discussions between President Juncker and Prime Minister Tsipras Wednesday night" and further talks in Brussels this week, spokesman Margaritis Schinas told reporters.

He declined to say whether the EU was insisting on higher budget surplus targets than those proposed by the Greek government, a key sticking point along with reforms to Greek pensions.

- 'Nothing confirmed' -

Radical leftist Tsipras's government was elected in January on the back of its promises to end the "humanitarian crisis" caused by five years of devastating austerity imposed under two international bailouts.

But its creditors have refused to pay out the final 7.2 billion euros ($8.1 billion) of its bailout, which is due to expire at the end of the month after two previous extensions from last year.

Without external help Athens could default on huge payments due to the IMF and European Central Bank over the summer, leaving it at risk of a possible messy exit from Europe's 19-country single currency area.

There had been hopes of a breakthrough on the sidelines of Wednesday's Brussels summit but officials said it was not sure that Tsipras would meet the German chancellor and French president.

"Nothing has been confirmed for the moment on a Merkel-Hollande-Tsipras trilateral," a European diplomatic source told AFP. "The question remains open."

However, Juncker looks almost certain not to be involved, having told fellow European commissioners on Tuesday that a new Tsipras meeting would be a "waste of time" and that it would be "better to meet with the Latin Americans", an EU source said.

Juncker has been a key broker in the Greek talks but his own head-to-head with Tsipras last week in Brussels ended disastrously with the Greek premier dismissing the EU president's "absurd proposal".

- Euro strengthens -

Nevertheless, the euro strengthened Wednesday as investors bet Greece was nearing a bailout deal with its international creditors. The 19-nation currency rose to $1.1297 and 140.51 yen in Tokyo trade from $1.1280 and 140.23 yen in New York.

Valdis Dombrovskis, the EU's vice president responsible for the euro, said Tuesday a deal was possible "within coming days" but urged "less tactical manoeuvring and more work on substance" from the Greeks.

Tsipras will use the EU-Latin American summit to have his first meeting with like-minded leaders including Bolivia's anti-capitalist Evo Morales and Dilma Roussef of Brazil.

The Greek prime minister issued a dire warning on Tuesday that the fate of the eurozone, the central plank of a European project formed in the ashes of World War II, was at stake if the negotiations fail.

Yet Tsipras is also under fire from the most radical elements of his ruling Syriza party, and urged party members during closed door meeting on Tuesday to "back the efforts of the government", warning the moment was crucial.

Any agreement will still require the approval of the eurozone's finance ministers, the Eurogroup, which is due to meet in Luxembourg next week.

They have grown impatient with the unwillingness of leftist-led Athens to deliver on reforms for cash.

Last week Greece bundled up a 300-million-euro payment to the US-based IMF until the end of June, when a total of 1.6 billion euros will be due, making it the first country since Zambia in the 1980s to choose that option.