Greece crisis: Five days to avoid Grexit after European leaders openly warn that eurozone exit is now looming
* Euro zone leaders hold emergency summit on Greek debt crisis
* Italian PM says final summit planned for Sunday
* France, Germany urge Tsipras to put forward credible proposal
* Finance ministers complain Greeks arrived empty-handed
* Banks have only few days cash left, stock exchange closed
* Market analysts see "Grexit" beckoning if no breakthrough
Published 07/07/2015 | 21:49
GREEK Prime Minister Alexis Tsipras won a commitment to seek a last-minute rescue at an emergency euro zone summit tonight, before his country's banks run out of money.
Italian Prime Minister Matteo Renzi told reporters that EU leaders would hold a further summit on Sunday to approve a plan to aid Greece if creditor institutions are satisfied in the meantime with a Greek loan application and reform commitments.
"The ball is in Greece's court," Renzi said. "Next Sunday the final meeting will take place on Greece."
German Chancellor Angela Merkel, who arrived saying there was still no basis for reopening negotiations with Athens, changed her tune in the room and was actively involved in efforts to find a last-ditch solution, euro zone sources said.
Merkel said she expected a formal loan request from Athens on Wednesday and more detail on how Greece would cooperate to make its economy more competitive on Thursday, in order to seek the approval of the German parliament to start negotiations.
"We all share responsibility for the euro," she said of the decision to invite all EU leaders on Sunday - a timetable she said reflected the danger of the situation and the urgent need for a solution.
Short-term finance could also be made available if the Greek government came up with satisfactory proposals and took "prior actions" in passing laws to convince creditors of its intent.
Austrian Chancellor Werner Faymann warned, however, that if there were no deal on Sunday, euro zone governments would have to prepare "Plan B" -- code for Greece losing all access to euros and so finding itself excluded from the currency area.
Irish finance minister Michael Noonan said on RTE News this evening that he expects Greece to make a formal application for a third bailout tomorrow through the European Stability Mechanism.
He said there's a general sense that a re-profiling of debt would be acceptable - but added there was no mention of a debt write-down.
Taoiseach Enda Kenny has warned “time is now of the essence” to secure a new bailout deal for Greece.
Mr Kenny welcomed the outcome of the meeting in Brussels and said there is now a “clear strategy and process” in place which he hopes will result in a successful conclusion by this weekend
He said Greek Prime Minister Alexis Tsipras would apply for a new bailout programme tomorrow and would put “detailed proposals on the table” by Thursday at the latest.
He said the new deal was discussed in a “very frank manner” but there was a strong commitment among all European leaders to keep Greece in the eurozone.
“Everybody around table wants this resolved quickly but time is now of the essence. The situation is more complex now and more difficult now than it was before the referendum,” Mr Kenny said as he left the meeting.
Mr Tsipras told the meeting that all of Greece’s political parties, apart from the fascist party Golden Dawn, agreed there is a need to redefine the relationship between the country and the rest of the EU, according to Mr Kenny.
“Everyone is of the hope that this matter can be discussed, negotiated and resolved by the weekend. It is very necessary to deal with the consequences of instability that are now affecting the ordinary people of Greece,” the Taoiseach said.
With Greek banks down to their last few days of cash and the European Central Bank tightening the noose on their funding, Tsipras tried to convince the euro zone's other 18 leaders to authorise a new loan swiftly.
People familiar with Greece's financial system said the banks could start running out of money within two days unless there was an international rescue.
However, euro zone sources in Brussels said ECB President Mario Draghi had assured finance ministers that the central bank would keep Greek lenders afloat this week as long as negotiations were under way.
Merkel and French President Francois Hollande worked together on a plan to save Greece from plunging into economic turmoil and possibly having to ditch the euro. This involved a medium-term conditional programme and a short-term interim financing deal for a few months, the sources said.
However, a solution still depends on Tsipras putting forward convincing reform proposals and rushing key measures through parliament by the weekend to make Greece's public finances sustainable.
If he does, bridge financing could be provided by "Greece's friends" and by releasing past ECB profits on Greek bonds, to prevent Athens from missing a crucial 3.5 billion euro bond redemption to the ECB on July 20, the sources said.
Some of Athens' 18 partners in Europe's common currency vented exasperation at five years of crisis wrangling with Greece. Lithuanian President Dalia Grybauskaite complained: "With the Greek government it is every time manana."
Merkel, under pressure in Germany to cut Greece loose, made clear it was up to Tsipras to present convincing proposals after Athens spurned tax rises, spending cuts and pension and labour reforms that were on the table before its 240 billion euro ($262.7 billion) bailout expired last week.
Euro zone finance ministers complained that their new Greek colleague Euclid Tsakalotos, while more courteous than his abrasive predecessor Yanis Varoufakis, had brought no new proposals to a preparatory meeting before the summit.
"I have the strong impression there were 18 ... ministers of finance who felt the urgency of the situation and there is one ... who doesn't feel the urgency of the situation," Belgian Finance Minister Johan Van Overtveldt said.
Greek officials said the leftist government broadly repeated a reform plan Tsipras sent to the euro zone last week before Greek voters, in a referendum on Sunday, overwhelmingly rejected the austerity terms previously on offer for a bailout.
Jeroen Dijsselbloem, chairman of the Eurogroup of currency zone finance ministers, said the ministers would hold a conference call on Wednesday to review a Greek request for a medium-term assistance programme from the European Stability Mechanism bailout fund, due to be submitted within hours.
Tsipras met privately with the leaders of Germany and France, the currency area's main powers, and European Commission president Jean-Claude Juncker just before the summit began.
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