Greece gets until Sunday for proposals to stave off collapse

Last updated: 6.45pm – Prime Minister Joseph Muscat said this evening that tonight’s meeting of eurozone leaders started on the wrong footing after Greece failed to present fresh proposals. Failure to reach a deal would make it more likely Greece will drop out of the euro.

Advertisement

Speaking after the summit French President Francois Hollande added: “It is impossible to lose time”.

“The prime minister is … committed to starting a fundamental debate on dealing with the problem of sustainability of the Greek national debt”, a Monday statement signed by the government and three pro-European opposition parties said.

The losses were not as great as some had feared, however, suggesting investors think that a possible Greek exit from the euro would be manageable for the global economy, though devastating for Greece and destabilizing in Europe.

Short-term finance could also be made available if the Greek government came up with satisfactory proposals and took “prior actions” in passing laws to convince creditors of its intent.

Greek premier says his government has submitted its global creditors a proposal for an agreement on a bailout deal, while expressing hope to reach the deal on the Sunday deadline with his country’s creditors. A full summit of leaders will then follow. Greece has been in a downward spiral since 2010, and the past 10 days have been the most hard for the country since its debt crisis began.

“You know, there was a promise for today”.

“Party time at the expense of others in Greece has come to an end”, Lithuanian President Dalia Grybauskaite said. The result is that they have created a meat grinder that kills every politician trying to pass the reforms demanded by the troika, paving the way for more radical politicians to take center stage.

Greek officials said the leftist government broadly repeated a reform plan Tsipras sent to the euro zone last week before Greek voters, in a referendum on Sunday, overwhelmingly rejected the austerity terms previously on offer for a bailout.

Banks have been shut since last week and will not reopen before Thursday, cash withdrawals have been limited for just as long, and daily business throughout the country has come to a near standstill. “Although there is volatility in the short term and discussion will be rough, I still expect a solution to be found to avoid a very nasty situation in the end”, said Alain Bokobza, Paris-based head of global asset allocation at Societe Generale.

Despite celebrations on the streets after Sunday’s referendum, three-quarters of Greeks say they want to stay in the euro. The Greek government is taking a large risk with the interests of the Greek people.

“It’s not a matter of weeks, we have only a few days”, Merkel told reporters.

Greece is set to make a formal request for a new bailout programme as early as Wednesday, Eurogroup chief Jeroen Dijsselbloem said after eurozone finance ministers met to discuss the next steps after the Greek referendum. The new Greek Finance Minister Euclid Tsakalotos did give a verbal presentation.

The meetings were unlikely to be decisive, though, after officials said Tsakalotos had not brought written proposals with him.

“The stark reality is that we only have five days to find the ultimate agreement”, said a visibly irritated Donald Tusk, the European Council president.

Greece on June 30 became the first advanced economy to default on an worldwide Monetary Fund loan, on the same day its EU-IMF bailout expired.

European officials remain split on Greece’s demand for easier debt repayment – with lead eurozone lender Germany still reluctant.

Yesterday, as Greece’s debt negotiations entered a new hard-core round of brinkmanship mistaken by many observers for conciliatory gestures to Europe, observers warned that if Greece ultimately succeeds in squeezing more money out of its European creditors without making the necessary “austerity” concessions, their triumphant irresponsibility could go viral.

Advertisement

Chancellor Merkel insisted it was up to Greece to act. Influenced by internal political considerations, they seem to be ignoring the serious consequences of a Greek collapse for the eurozone as a whole and the European Union as such. Small businesses, lacking use of credit cards or money from bank accounts, were left to rely on cash coming from diminishing purchases from customers.

Greece's new Finance Minister attends a swearing in ceremony in Athens- REUTERS