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Déjà vu? Greece crisis talks but nothing's changed


With Greece's debt crisis and bailout at the top of the agenda of a European Union (EU) summit in Brussels, analysts said there was a strange sense of "deja vu" and warned that progress in Greece was going nowhere fast.

One of the hot topics at the two-day summit of EU leaders, which began in Brussels yesterday, is the ongoing crisis in Greece over its bailout program, which was extended by those overseeing its progress -- the European Central Bank, European Commission and International Monetary Fund – by four months in February.

On the sidelines of the summit, Greek Prime Minister Alexis Tsipras reportedly held late-night crisis talks with top European policymakers, including German Chancellor Angela Merkel, European Central Bank President Mario Draghi, French President Francois Hollande, and European Commission President Jean-Claude Juncker.

Italy's Prime minister Matteo Renzi, Greece's Prime minister Alexis Tsipras, European Parliament President Martin Schulz and Germany's Chancellor Angela Merkel talk.
ALAIN JOCARD | AFP | Getty Images)

At the meeting, Tsipras tried to assure them that his left-wing government would soon present a full set of economic reforms – a condition of the bailout extension -- in order to unlock cash to stave off bankruptcy.

He said he was optimistic after the talks, but German leader Merkel insisted that no money would be released before Athens implements budget measures and other reforms.

Déjà Vu

Analysts were not so impressed, however, saying they'd seen and heard it all before.

"One cannot escape a sense of 'déjà vu' pervading the outcome of the meeting," Robert Kuenzel, director of euro area economic research at Daiwa Capital Markets, said in a note Friday. "Perhaps the only change compared to a month ago is that one month less remains for Greece to ensure a sea-change in the reform process."

Another analyst, Carsten Brzeski, noted that the talks showed that "nothing has changed on the details" and that the meeting had not delivered "any new results."

"The tone after the meeting was friendly, cooperative and hopeful, but on the details nothing has changed. In fact, the terms of the 20 February deal have not changed and it is still unclear what the exact Greek plans are," the ING chief economist said in a note Friday.

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Slow progress over Greece's reforms is a bugbear for its euro zone neigbors and creditors, with the head of the Eurogroup of finance ministers, Jeroen Dijsselbloem, making his frustration with Greece clear when he said the country was "wasting time."

Time is of the essence as Greece's coffers run low and it has to service its debt. On Friday, Greece is due to make a loan repayment of 335 million euros ($357 million) to the IMF, just one of a number of upcoming debt deadlines putting pressure on the government.

'Lunatics or Strategists'?

Greece's new left-wing government had asked for a haircut to its debt – which currently stands at around 175 percent of GDP – but it was refused by countries like Germany, the main driver of unpopular austerity measures in Greece.

This has caused relations between Greece and its creditors to deteriorate further, with a number of public spats between Greek Finance Minister, Yanis Varoufakis, and his German counterpart, Wolfgang Schaeuble.

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With Greece's apparent reluctance to implement reforms and cut spending irksome to its creditors, Daiwa's Kuenzel speculated that ECB President Mario Draghi may have put added pressure on Greece at the crisis talks overnight.

"It is possible that Draghi managed to drive home to Tsipras exactly how severe the consequences of a Greek payment default would be on financial stability and the economy, a point the government has so far shown no apparent awareness of," Kuenzel said.

ING's Brezski was left scratching his head over whether the lack of progress in Greece was part of a larger game plan.

"Incompetent lunatics or masterly strategists? In the first weeks after the Greek elections, this question kept many market participants busy. Almost two months after the elections, many questions are still unanswered," he said.

What is certain, he said, is that "time is still running out for Greece" and that it needed to decide whether it wants another bailout – something sure to anger the Greek government and people.

But it might not have much of a choice, given the looming repayment deadlines.

"(These) will be hard to fulfill without external help. Of course, the Greek government can (and will) try to fulfill its financial obligations with stopgap measures. However, this hardly looks like a sustainable strategy," Brezski said.

"Consequently, further down the road, Greece will need to make up its mind whether it wants a new bailout program."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld