Greek Crisis: German Commissioner Warns Of 'State Of Emergency,' Athens Said To Consider Default

Germany’s European Union Commissioner Guenther Oettinger warned on Monday that a continued deadlock in Greek debt negotiations could yet again raise the specter of a possible Greek exit from the euro zone.

"We should work out an emergency plan because Greece would fall into a state of emergency," Oettinger said, according to Reuters, calling on the European Commission to reach a debt deal with Athens before a June 30 deadline. "I think that the Commission needs to work out a plan that could avert a worsening of the situation in the event that Greece leaves the euro zone, in the event of a bankruptcy."

Greece’s current bailout program expires at the start of the next month, and if it does not reach an agreement with its creditors before then, it could find itself cut off from desperately needed funds at a time when government coffers are critically low. Athens and its European debtors have been locked in disagreement for weeks over proposed reforms to the Greek economy.

"The offer is still valid to hold Greece in the Euro zone. But for that to happen Greece will have to move its positions on pensions and its general budget consolidation," Oettinger said, calling on the ruling Syriza party to put forward new proposals for pension reform.

On Sunday, another round of talks between the two sides failed to move forward after Greece defied demands from its creditors to make cuts worth 2 billion euros ($2.2 billion) in order to satisfy them. After a meeting that lasted only 45 minutes, the commission said Greece’s proposals were “incomplete.”

Greek Prime Minister Alexis Tsipras also warned that Athens was prepared to do what is necessary, but warned: "If Europe wants the division and the perpetuation of servitude, we will take the plunge and issue a 'big no'," according to the Express.

Over the weekend, former Greek prime minister George Papandreou also warned that Greece was at the “brink of a disaster.” In an interview with CNBC, he said that its battered economy had yet to show signs of improvement and called on all parties in the negotiations to make compromises.

“So I think we really need out of both sides to climb down from their high horses and really work on a compromise, on an honorable compromise to find a solution and move forward in a sustainable way,” he reportedly said.

Meanwhile, unnamed Syriza sources told the Telegraph that the party will propose an “Icelandic” default, calling for the nationalization of Greece’s banking system and instituting capital controls, a move that would strongly imply a return to the drachma.

"We are all horrified by the idea of surrender, and we will not allow ourselves to be throttled to death by European monetary union," the source reportedly said.