|
 With Greek lenders down to their last few days of cash and the
European Central Bank tightening the noose on their funding, Tsipras
must persuade the bloc's other 18 leaders, many of whom are
exasperated with five years of crisis, to open negotiations fast on
a new loan to rescue Greece.
The leaders of Germany and France, the currency area's two main
powers, said after conferring on Monday that the door was still open
to a deal to save Greece from plunging into economic turmoil and
ditching the euro.
But Chancellor Angela Merkel, under pressure in Germany to cut
Greece loose, made clear it was up to Tsipras to come up with
convincing proposals after Athens spurned the tax rises, spending
cuts and pension and labor reforms that were on the table before its
240 billion euro bailout expired last week.
European Commission President Jean-Claude Juncker, under suspicion
from both sides for trying to broker a last-minute deal, told the
European Parliament: "There are some in the European Union who
openly or secretly are working to exclude Greece from the euro
zone."
He did not name names but may have been referring to German Finance
Minister Wolfgang Schaeuble, who has made no secret of his
scepticism about Greece's fitness to stay in the euro.
 From the Greek side, the key to making any deal politically
acceptable will be to win a stronger commitment from Merkel and
other lenders to reschedule Greece's giant debt burden, which the
International Monetary Fund says is unsustainable.
Without some firmer pledge of debt relief, neither Greece nor the
IMF is likely to accept a deal. But that may be more than Germany
and its northern allies can swallow.
"The door is open to negotiations, but there isn't much time left
and the situation is urgent both for Greece and for Europe," French
President Francois Hollande said in a joint media appearance with
Merkel in Paris.
At stake at the emergency summit beginning at 6 p.m. (2.00 p.m. EDT)
in Brussels is more than just the future of Greece, a nation of 11
million that makes up just 2 percent of the euro zone's economic
output and population.
If Greek banks run out of money and the country has to print its own
currency, it could mean a state leaving the euro for the first time
since it was launched in 1999, creating a precedent and fuelling
doubts about the long-term viability of an incomplete European
monetary union.
"Even if it did not trigger a short-term domino effect, the
integrity of the euro zone would come under fresh threat with each
episode of political uncertainty within member countries," said
Thibault Mercier, an analyst at BNP Paribas.
CONCESSIONS UNCLEAR
Strengthened by the overwhelming 61.3 percent 'No' vote in Sunday's
referendum, the leftist Tsipras won the unprecedented support of all
other Greek party leaders on Monday and replaced his abrasive
Finance Minister Yanis Varoufakis with the soft-spoken negotiator
Euclid Tsakalotos.
"They (creditors) wanted a 'Yes' to prevail so they could humiliate
the Greek prime minister, to go weakened, under these conditions of
funding asphyxiation, and be a pushover. That didn't happen," Labour
Minister Panos Skourletis told Antenna TV.
In an intensive round of telephone diplomacy, Tsipras spoke to the
heads of the ECB, the IMF and the European Commission, as well as
Merkel, Russian President Vladimir Putin and U.S. Treasury Secretary
Jack Lew.
 But he gave little clue of what reform concessions he would make to
try to convince deeply sceptical European leaders to lend Athens
more money after five months of acrimonious and fruitless
negotiations with his leftist administration.
His proposals were not expected to go much beyond a letter he sent
to euro zone partners last week, accepting most of the terms of a
creditors' offer that was no longer on the table, but still seeking
some loopholes for social or coalition reasons.
[to top of second column] |
The United States, China and Japan all called for a solution in
which Greece stays in the euro zone.
Juncker told EU lawmakers in Strasbourg he was working night and day
to get negotiations reopened but he chided the Greeks for their
confrontational approach, saying it was unacceptable to accuse the
EU of behaving like "terrorists", as Varoufakis did last week.
"Throwing Greece out of the monetary union or indeed the European
Union is not something we want or indeed should want," said the EU's
chief executive, who was heckled by leftists and Eurosceptics when
he said Greeks hadn't been properly informed about what they were
voting on.
European Central Bank policymaker Ewald Nowotny suggested the bank
might be able to provide some sort of bridge funding while Greece
negotiated a longer-term conditional loan to see it over a crucial
July 20 bond redemption to the ECB.
Greek newspapers dramatized the make-or-break nature of the Brussels
showdown.
Centrist daily Ethnos headlined: "Time has run out for a solution
before catastrophe," while the center-right Eleftheros Typos said: "Tsipras’
games finish at today's council: Time of crisis: deal or Grexit."
Greek newspapers said the proposals would be based on ideas that
Juncker put forward at the end of June with a few tweaks and would
not differ much from the last plans presented by Athens itself last
week.
Euro zone national officials were irritated that Juncker had gone
beyond the agreed negotiating mandate of the three creditor
institutions in his last-ditch diplomacy, and it is not clear that
they will be more receptive to his ideas now.
A clear majority of Greece's 18 partners favor a hard line at the
summit, arguing that they too are democracies and that Greeks should
not get easier money because they had rejected the austerity terms,
casting further doubt on whether they would implement any reforms
agreed now.
The ECB left unchanged its emergency liquidity lifeline for Greek
banks but raised the discount it charges on collateral they have to
present for funds - a measure banking sources said was largely
symbolic since the total they could borrow was capped.
A bank closure in force since the talks collapsed was prolonged
until Thursday at least, and cash withdrawals remain limited to 60
euros a day, with 20 euro notes running out.
The Athens stock exchange was also ordered closed for two days in
Tuesday and Wednesday to throttle speculation.
Even with the country on the brink of economic collapse, Greek
newspapers reported the government was still seeking exceptions from
its reform pledges for special interests.
Athens wants to keep a 30 percent discount on value added tax on
Greek islands and protect defense spending from cuts, which rightist
junior coalition partners the Independent Greeks have called "red
lines".
(Additional reporting by Renee Maltezou, Angeliki Koutantou and
George Georgiopoulos in Athens, John O'Donnell in Frankfurt and Mark
John in Paris; Writing by Paul Taylor; editing by John Stonestreet
and Giles Elgood)
[© 2015 Thomson Reuters. All rights
reserved.]
Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
