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 With its banks closed, cash withdrawals rationed and the economy
in freefall, Greece has never been closer to a total state
bankruptcy that would probably force it to print an alternative
currency and leave the euro.
Yet the leftist premier seemed relaxed and confident, with a note of
humility, when he appeared before EU lawmakers in Strasbourg to
cheers and scattered boos.
Speaking hours after euro zone peers, at another emergency summit in
Brussels, set Greece a deadline of the end of the week to come up
with convincing reform proposals, Tsipras said Greeks had no choice
but to demand a way out of "this impasse".
"We are determined not to have a clash with Europe but to tackle
head on the establishment in our own country and to change the
mindset which will take us and the euro zone down," he said to
applause from the left.
He promised to deliver detailed reform proposals in the next 48
hours and mostly eschewed the angry rhetoric that has alienated many
European partners, although he criticized attempts to "terrorize"
Greeks into voting for "never-ending austerity".
Speaking before him, European Council President Donald Tusk repeated
that the final deadline for Greece to submit convincing reform plans
and start implementing them was this week.
 "Our inability to find an agreement may lead to the bankruptcy of
Greece and the insolvency of its banking system," Tusk said. "And
for sure it will be most painful for the Greek people.
"I have no doubt that this will affect Europe, also in the
geopolitical sense. If someone has any illusion that it will not,
they are naive," he said.
Some EU lawmakers held up "Oxi" (No) signs to back Greek voters'
rejection of more austerity.
Under a timetable agreed at Wednesday's second emergency euro zone
summit in less than two weeks, Greece will submit a formal
application for a medium-term loan program from the European
Stability Mechanism bailout fund on Wednesday, along with a first
reform program, to be detailed on Thursday.
If experts from the European Commission, European Central Bank and
International Monetary Fund deem the proposals viable, euro zone
finance ministers would meet on Saturday to recommend opening
negotiations with Athens, and a special summit of the 28-nation EU
would meet on Sunday to approve an aid plan.
Before then, Greece is supposed to rush a first wave of reform
measures through parliament, euro zone sources said, and German
Chancellor Angela Merkel has said she would ask parliament in Berlin
to authorize the opening of loan negotiations provided the Greek
measures are deemed satisfactory.
NUMBERS IN DOUBT
Euro zone sources said the key question is whether the Greek reform
package will be more ambitious than the spending cuts, tax increases
and modest reforms that Greek voters rejected on Sunday in a
referendum on a previous bailout plan.
"The numbers have to add up, and the numbers have become vastly more
unfavorable since the banks were shut and the economy seized up in
the last 10 days," one euro zone finance official said.
Tsipras acknowledged his radical government's share of
responsibility for what had gone wrong in its 5-1/2 months in office
but said the bulk of Greece's problems lay in a failed austerity
policy imposed over the last 5-1/2 years of crisis.
 He was also strongly critical of Greece's failings as a society,
citing a history of clientelism, corruption, chronic tax evasion
that had "run riot", inequality and "the nexus of political and
economic power".
While Athens has made strides since 2010 in turning around its
public finances to post a budget surplus before debt service, it has
lagged on implementing structural reforms.
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In particular, it has fallen far short of targets on privatizing
state assets and struggled to improve tax collection and reform
labor laws and a costly, fragmented pension system.
The IMF in the past has demanded that Greece quickly implement a law
allowing for collective dismissals since no such layoffs have been
approved for 30 years. It also wants strike rules that cement union
power changed and says Greece is an outlier in the EU in prohibiting
lockouts.
Creditors have also pushed to end anti-competitive restrictions in
product markets that have kept prices high, such as preventing the
sale of bread in convenience stores.
"NOT EXAGGERATEDLY OPTIMISTIC"
Merkel made clear at a midnight news conference that she was "not
exaggeratedly optimistic" that a deal could be found to save Greece
by Sunday. But she also said euro zone leaders were aware of their
joint responsibility for the common currency.
While European shares have lost nearly five percent in the last two
days largely on concerns about a Greek collapse, sovereign bonds of
the other weaker euro zone governments have held remarkably steady,
buoyed partly by ECB bond-buying.
A chorus of second-ranking politicians in Germany demanded that
Greece finally be ejected from the euro zone, but its supporters in
France and Italy saw a glimmer of hope.
Peter Ramsauer, deputy leader of Merkel's Bavarian CSU conservative
allies, said Greece should leave and accused the Greek government of
leading its partners by the nose "like dancing bears round the
ring". It was incomprehensible how the country kept being given last
chances, he complained.
France's finance minister urged the Greek government to use the big
mandate it won in Sunday's referendum to convince the population of
the need for compromise with creditors.
"Greek society maybe needed this renewed pride to reach the
necessary compromises," Michel Sapin told reporters.
Several euro zone leaders and finance ministers voiced frustration
that once again Tsipras and his new finance minister turned up at
emergency meetings without any proposals on paper.
But a senior EU official said it made sense for them to gauge the
mood of their European partners and work out with the creditors what
measures would be expected before putting a plan on the table.
Having secured a referendum victory and the unprecedented support of
the five main parties in parliament, Tsipras also made clear he
wanted to act fast to pre-empt any possible revolt against the
painful concessions he will need to make.
"The process will be extremely fast. It starts in the coming hours,
with the aim to conclude by the end of the week at the latest," he
said before leaving Brussels early on Wednesday.
(Additional reporting by Renee Maltezou, Foo Yun Chee, Robert-Jan
Bartunek, Alastair Macdonald and Tom Koerkemeier in Brussels,
Susanna Twidale in Strasbourg, Deepa Babington in Athens and
Madeline Chambers in Berlin; Writing by Paul Taylor; Editing by
Giles Elgood)
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