European, IMF leaders agree to work intensely in Greek debt talks

By Andreas Rinke and Tom Körkemeier BERLIN/BRUSSELS (Reuters) - The leaders of Germany, France and Greece's international creditor institutions agreed late on Monday to work with "real intensity" in the coming days as they try to clinch a deal in debt negotiations with Athens. Athens and its creditors from the euro zone countries and the International Monetary Fund are racing to hammer out a deal that would prevent the country from defaulting on its debt and potentially leaving the euro zone. German Chancellor Angela Merkel hosted France's Francois Hollande, Mario Draghi of the European Central Bank, European Commission chief Jean-Claude Juncker and IMF Managing Director Christine Lagarde for the late night talks in Berlin. The leaders discussed the state of negotiations with Athens. "They agreed that work must continue with real intensity," a German government spokesman said after the talks in Berlin. "The participants in the talks were in close contact in recent days and want this to remain the case in the coming days both among themselves and of course with the Greek government." 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. 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. Monday's unexpected meeting 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. 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. Officials close to the talks between Greece and the Commission, the ECB and IMF earlier dismissed market rumors of the imminent announcement of a deal. One EU official said any offer from Greece's creditors to Athens would not be framed as an ultimatum. 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 programs. 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. 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 labor market reforms. In a potential sign of progress, Die Welt reported that Tsipras was ready to discuss pension 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 installment. One euro zone official said it was less likely that Athens would be able to pay a second installment 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. ($1 = 0.9148 euros) (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, Toni Reinhold)