According to Reuters, the Greece debt talks may include direct negotiations between Greek Prime Minister Alex Tsipras and European Commission chief Jean-Claude Juncker this weekend as the deadline approaches. Talks stalled earlier this week as Athens signaled that it may default on their next installment payment of 1.6 Billion Euros to the International Monetary Fund due June 30. Germany, and other EU members, are taking a hard line in requiring the payment before any additional emergency aid be given to the Greek government. Meanwhile, citizens in Greece are pulling cash out of their banks as the country may put more capital controls to prevent a banking meltdown. On Friday, the European Central Bank did raise the ceiling on Greece′s line of credit by 1.8 Billion Euros to keep the Greek banks open.
Talks in Luxembourg ended abruptly on Thursday between Greece and the European Union. There is a strong possibility that Greece may be forced out of the EU should they default on their loan. The IMF, EU and other creditors are insisting on a series of strong economic reforms, including reducing pensions and raising VAT rates. An additional 7.2 Billion Euros has been promised to aid Greece, however, only if they act responsibly. PM Tsipras, a Socialist, won by opposing austerity measures and that does not make the country′s creditors happy. Even if a deal can be struck before June 30, it may be short lived as Greece is obligated to pay back some 6.7 Billion Euros at the end of July.
Tsipras flew to Moscow this week to try obtaining financial assistance from Russia. This does not sit well with EU members due to the conflict between Russia and Ukraine. But Russia may bailout Greece with the price being a new pipeline for natural gas. Should Greece default, Russia could find itself an important ally and help them prop up their economy as Greece would have to create its own currency should the EU kick them out. Tensions are high as many fear that a Greek default could start a chain reaction with other EU members on shaky financial ground, like Spain and Italy. The end result could be the collapse of the EU and its Euro.