For while there is a still a ways to go before Greece would actually find itself exiting the euro, it is certainly close enough to warrant there being contingency plans in place. Some eurozone countries insist they can’t go further and cancel Greek debt outright.
Italian Prime Minister Matteo Renzi arrives for a meeting of eurozone heads of state at the EU Council building in Brussels on Sunday, July 12, 2015.
But in a sign of division among the leaders, a draft document also included an option for Greece to temporarily leave the euro if no deal was agreed – a potential “time-out”.
Greece is believed to need EUR74 billion in aid over the next three years to stay solvent. But other leaders in Brussels say Greece needs even more than that, and are demanding tough austerity measures in exchange. He spoke on condition of anonymity because he was not authorized to speak publicly. Without more liquidity from the ECB, the banks can’t reopen without collapsing.
Athens faces demands to push through new reform laws next week to win a third bailout since 2010, with the government in a tight corner as the cash-starved country’s banks look set to run dry in days.
Berlin wants Greece to take “time out” from the euro if leftist Prime Minister Alexis Tsipras does not accede to demands that the Greek delegation has said are “very bad” and would rob Athens of control of much its finances.
What is at play here is an attempt to humiliate Greece and Greeks, or to overthrow the Tsipras government.
Eurozone leaders were hunting Sunday for a way to prop up near-bankrupt Greece, but warned that their willingness to help has limits amid scepticism over the zeal for reform in Athens.
“In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area, with possible debt restructuring”, the document obtained by AFP said.
Speaking to the press, German Chanellor Angela Merkel earlier today said coming to an agreement to unlock another bailout (and keep Greece in the currency union) would be “extremely hard”.
For Alexis Tsipras and his left-wing Syriza-led administration, some of the ideas would be little short of humiliation.
Euro zone leaders have reportedly reached an agreement on a Greek bailout after an all-night emergency summit.
After months of negotiations, breakdowns and still more negotiations that repeatedly stalled, European financial leaders are trying to remain optimistic as the Greek financial crisis enters yet another hard week.
However, French President Francois Hollande said he was going to do everything he could to keep Greece in the euro. “And that I do not want”.
They are discussing new proposals put forward by eurozone finance ministers. Traditionally, eurozone ministers agree by mutual consensus, though in exceptional circumstances a unanimous vote may not be needed.
Greece’s proposals for a new bailout, backed by parliament, are aimed at offering to bring in tax rises and spending cuts in return for another loan.
But German Finance Minister Wolfgang Schaeuble, whose country is Greece’s biggest creditor, maintained a hard line.
“There will be a reprofiling of (Greek) debt by extending the maturities and through a negotiation on the interest payments”.
Greek debt stands at around €320bn – a staggering 180% or so of the country’s annual gross domestic product.
Five years have elapsed since the Greek debt drama began, but the latest installment has opened deeper than ever rifts in the European single currency, the heart of the post-war dream of a politically unified Europe.