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 European shares surged and the Greek stock market jumped nearly 7
percent on hopes that the government could finally end months of
wrangling that have left the country on the verge of bankruptcy and
possibly being pushed out of the euro bloc.
In a sign of the more positive mood music, EU Economic Commissioner
Pierre Moscovici said he was "convinced" that euro zone leaders
would find a resolution on the basis of the latest proposal by Greek
Prime Minister Alexis Tsipras.
The contents of the new offer have not yet been officially divulged,
but Greek officials say it acquiesces to some of the demands from
Greece's EU and IMF lenders for tax hikes, curbing early retirement
and other spending cuts to ensure Athens hits budget targets.
In Brussels, European Union officials said Greece is offering to
raise the retirement age gradually to 67 and make value-added tax
reforms. A final deal was unlikely on Monday, but this could be a
step toward an agreement in the coming days, they added.
Greece must repay a 1.6 billion euro loan to the International
Monetary Fund next week but is likely to default without a deal with
its creditors.
 Tsipras heads into a series of talks with figures including European
Central Bank President Mario Draghi and IMF head Christine Lagarde
before the summit in Brussels of euro zone government heads at 7 pm.
Underlining the urgent need for a deal on Monday, Greece's central
bank last week warned lenders to brace for a "difficult day" on
Tuesday if the summit ended without a breakthrough, banking sources
have told Reuters.
The country could be forced to impose capital controls within days
to stem the outflow of billions of euros from banks by savers
fearing they could be stuck with a sharply devalued new currency
should Greece be forced out of the euro.
"We are moving in the right direction, we have solid ground for a
deal, we just have to consolidate that today," Moscovici told Europe
1 radio, adding Monday would be "decisive". "I think that the
political will of everyone to preserve the euro, this common good,
to ensure that this single currency is irreversible, will win the
day."
There were no immediate long queues or signs of panic outside Greek
banks in the capital on Monday. The ECB, which has kept local
lenders afloat with infusions of liquidity, raised its emergency
funding once more.
"I believe there will be a deal today. This is a normal visit to the
bank," said one Greek saver outside a bank branch.
An exit from the euro would create economic dislocation in Greece
and severe consequences for its banks' liquidity and solvency, which
could lead to the banking system being nationalized, credit ratings
agency Moody’s warned in a report on Monday.
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TAX-EVADING BILLIONAIRES
Comments by Greek Deputy Labor Minister Dimitris Stratoulis on a
morning news show underscored the tightrope Tsipras must walk to
reach an agreement that will win over both the creditors and his own
leftist Syriza party.
"We are not afraid of blackmail, and our priority is the public
interest," Stratoulis, a Syriza hardliner, told Antenna television.
"Let's see if there will be a deal tonight."
Syriza stormed to power in January promising to roll back years of
austerity it says has worsened Greece's plight. Thousands gathered
in central Athens on Sunday to protest against a new round of cuts,
which is expected to be countered by a demonstration in favor of
staying in the euro later on Monday.
The mood had also hardened among the creditors in recent weeks.
Chancellor Angela Merkel of Germany, which has spent more money
bailing out Greece than any other country, is under pressure from
taxpayers, business leaders and within her own ranks not to go soft
on Greece.
"The Greek government needs to finally do something," German Economy
Minister Sigmar Gabriel told the mass-selling German newspaper Bild.
He added he was sure Merkel would "not sign anything which allows
Greek billionaires to continue evading taxes and mean that workers
and pensioners in Germany have to pay even more as a result".
The chief-of-staff of European Commission President
Jean-Claude Juncker had spoken of a "forceps delivery" as officials
worked late into the night on Sunday to produce a deal before the
emergency summit.
European ministers had earlier played down the prospect of a final
agreement on Monday but hope a political understanding can be
reached in time for a full deal by the end of June.
"Lithuania's position is quite strict ... we see a state which wants
to be able to feast, and it wants for all others to pay for that
feast," Lithuania's president Dalia Grybauskaite told public radio.
"Greece is trying to make others help them, but they don't expect to
take any responsibility at all."
(Reporting by Karolina Tagaris, Angeliki Koutantou, George
Georgiopoulos, Michelle Martin, Alastair Macdonald, Astrid
Wendlandt, Jan Strupczewski; Lefteris Karagiannopoulos, Andrius
Sytas, writing by Matthias Williams)
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