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Brussels - Greece and its creditors moved closer to the brink on Wednesday with the leaders of Germany, France and the European Commission holding back planned meetings with Prime Minister Alexis Tsipras to press for more concessions from the Greek side.
Athens said it was waiting for the lenders to respond to ideas it put forward on Monday. Eurozone officials said those proposals were inadequate to plug holes in the Greek budget and dodged key reforms meant to make the economy more competitive.
Without a deal to unlock more aid money by the end of this month, Greece is heading for a default, with severe consequences for its economy and the risk of sliding out of the euro area.
Merkel said she and French President Hollande were willing to meet Tsipras, if he requested it, on the sidelines of an EU-Latin America summit in Brussels, which all three are attending, but no appointment had been made so far.
"The message will be: you've got to continue negotiations with the three institutions (representing the lenders)," she said. "The goal is we want to keep Greece in the eurozone."
The European Commission said its chief, Jean-Claude Juncker, who accused Tsipras on Sunday of misrepresenting the creditors' proposals and misleading his parliament, had no plans as yet to meet the Greek premier either.
"For this final push, the Commission is of the view that the ball is now clearly in the court of the Greek government," spokesman Margaritis Schinas told a news conference.
Merkel and Tsipras shook hands, smiled and made small talk just before the leaders sat down for the first summit session.
Tsipras did have a private meeting with the president of the European Council, summit chairman Donald Tusk, to discuss the state of the unfinished debt negotiations.
A Greek government official said there had been no reply to the proposal and two annexes that Athens submitted on Monday. Schinas said EU Economics Commissioner Pierre Moscovici had told Greek representatives on Tuesday that the documents "do not reflect the state of discussions".
Tsipras has denounced creditors' demands to scrap an income top-up for the poorest pensioners and to refrain from unilateral moves to reintroduce collective bargaining or raise the minimum wage - policies that are anathema for his leftist Syriza party.
Brussels says he is free to put forward alternative measures provided the numbers add up to deliver a small primary budget surplus before debt service payments.
Default
Athens is likely to default on a €1.6bn repayment due to the International Monetary Fund at the end of June unless it receives fresh funds from its frozen bailout or the European Central Bank lets it sell more short-term debt to Greek banks.
That will only happen if the two sides can agree in the coming days on a cash-for-reform deal that has been the focus of acrimonious negotiations for the last four months.
A default could lead to the imposition of capital controls and possibly put Greece on a path to becoming the first country to leave the 19-nation single currency area, undermining the euro's avowed irreversibility.
An EU official said the Greek document did not address pension or labour market reforms sought by the creditors.
For its part, Greece appears to be insisting it will not sign any deal unless it contains a commitment to official debt relief, while the creditors say they will only start discussing debt rescheduling once a deal is signed and implemented.
One of the Greek documents discussed options for debt restructuring, which the creditors say is irrelevant now because debt sustainability can only be assessed once Athens implements reforms promised in exchange for aid it has already received.
While more talks between Athens and the institutions could take place on Wednesday, the creditors say it is now impossible to disburse the remainder of the money available to Greece under the existing bailout -- €7.2bn - without a formal extension of the bailout beyond its June 30 expiry date.
Financial markets have taken the Greek debt impasse in their stride, with little impact on eurozone bonds and stocks other than Greek financial instruments, even in a stressful period for government bonds globally.
In the past two months, as bond yields jumped worldwide due to improving inflation and growth expectations, the gap between benchmark German Bund yields and Italian, Spanish or Portuguese borrowing costs over 10 years has widened only slightly.
EU officials say the eurozone has put in place institutions since the start of the Greek crisis in 2010 with a financial rescue fund, a single banking supervisor and resolution system and better enforce fiscal rules that would prevent contagion to other peripheral states if Athens were to leave the euro.
Some market specialists are less certain.
"If Greece does exit then it is possible that all hell breaks loose and that risk assets and peripheral government bonds suffer," said Gary Jenkins, chief credit strategist at LNG Capital.
"However the least likely outcome is that Greece leaves and that the Eurozone takes no measures to stop speculation that it might fall apart."
