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 Italian daily Il Sole 24 Ore quoted the ECB chief, under growing
fire in Germany for keeping Greek banks afloat, as saying he was not
sure a solution would be found for Greece and he did not believe
Russia would come to Athens' rescue.
Asked if a deal to save Greece could be wrapped up, Draghi told the
paper as he was boarding a plane in Brussels on Wednesday: "I don't
know, this time it's really difficult."
The ECB is keeping shuttered Greek banks afloat with emergency
liquidity capped until the weekend as leaders of the 19-nation euro
zone race to find a last-minute third bailout for Athens.
Asked if he expected Russian President Vladimir Putin to help
Greece, Draghi said: "I don't believe so, I don't see it as a real
risk ... and then, they don't have money themselves."
The usually discreet central banker was speaking after an emergency
euro zone summit on Tuesday gave Greece five days to come up with a
credible plan to repair its public finances and reform its economy
or face an economic meltdown and possible exit from Europe's common
currency.
Under that timetable, the leftist Greek government, which formally
applied on Wednesday for a three-year loan from the European
Stability Mechanism bailout fund, has until midnight to present
convincing, detailed reform proposals.
International Monetary Fund chief Christine Lagarde added a
potential complication by insisting that any deal must include a
restructuring to make Greece's massive debt pile sustainable.
Speaking in Washington on Wednesday, Lagarde said that to address
Greece's acute crisis any deal needed to have two legs. One was
structural reforms and fiscal consolidation.
"The other leg is debt restructuring, which we believe is needed in
the case of Greece for it to have debt sustainability," she said.
Germany, Athens' biggest creditor, has said any debt write-off would
be illegal under the EU treaty and has also taken a restrictive
approach to reprofiling Athens' official borrowings to ease the
short-term pressure of debt service.
Even France, Greece's strongest support in the euro zone,
acknowledged on Thursday it was working on scenarios for a Greek
exit from the currency area if weekend efforts to clinch a deal
fail.
"We would be irresponsible if we did not consider this question. So
we are thinking about it because it's our duty to be ready for any
eventuality, but it's not what we want," French Finance Minister
Michel Sapin told LCI television.
TSIPRAS SEEKS CONSENSUS
According to the Athens daily Kathimerini, Greece is planning a
reform package worth 12 billion euros over two years, more than
previously planned to offset a return to recession after months of
difficult negotiations with creditors.
Instead of growing by 0.5 percent this year, months of uncertainty
and almost two weeks of capital controls mean "there are estimates
of a recession of about 3 percent", it said.
"It is estimated that the measures of 8 billion euros that Greece
had presented for 2015 and 2016 will have to be increased by 2
billion euros per year, raising the total to 12 billion euros for
the two years," Kathimerini reported.
There was no immediate official confirmation of the figures.
Greece last year emerged from a deep recession that shrank its gross
domestic product by a quarter over six years.
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A second newspaper, Naftemporiki, detailed what it said were
proposed tax hikes to raise the money - an increase in corporate tax
to 28 percent from 26 percent and in value added tax on luxury goods
from to 13 from 10 percent; on processed foods, restaurants,
transport and some private health services to 23 from 13 percent and
on hotels to 13 percent from 6.5 percent.
The report said Greek islands would continue to enjoy tax breaks
that creditors had sought to scrap. Naftemporiki said the entire
package would be worth 10 to 12 billion euros.
Such measures may face resistance from the hard-left wing of Tsipras'
Syriza party and from his junior coalition partner, the Independent
Greeks, after the government won a resounding 'No' to more austerity
in a referendum on July 5.
DRAGHI UNDER FIRE
Draghi's support for Greek banks came under attack from German
Bundesbank chief Jens Weidmann, a senior ECB policymaker, who said
it was up to governments, not the central bank, to provide any aid
to Athens.
"Central banks need to show where their limits lie," he told an
audience in Frankfurt. "It needs to be crystal clear that
responsibility for further developments in Greece ... lies with the
Greek government and the countries providing assistance – not the
ECB Governing Council."
Weidmann also said capital controls should remain in force in Greece
until there was any deal, and that the ECB should not increase its
liquidity assistance for Greek banks, without which they may
collapse next week.
European officials told Reuters on Wednesday that some large Greek
banks may have to be shut and taken over by stronger rivals as part
of a restructuring of the sector that would follow any bailout of
the country.
One official said Greece's four big banks - National Bank of Greece,
Eurobank, Piraeus and Alpha Bank - could be reduced to just two, a
measure that would doubtless encounter fierce resistance in Athens.
A second person said that although mergers of banks were necessary,
this could happen over the longer term.
"The Greek economy is in ruins. That means the banks need a
restart," said the first person, adding that prompt action was
necessary following any bailout between Athens and the euro zone.
"Cyprus could be a role model."
(Additional reporting by Agnieska Flak in Milan, Deepa Babington,
Michele Kambas in Athens and Laurence Foster in Paris; Writing by
Paul Taylor; editing by Anna Willard)
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