Thursday 29 June 2017

Greece crisis: Greeks fail to deliver deal plan, 'maybe' tomorrow

Pensioners wait outside a branch of the National Bank to receive part of their pension in Athens, Greece, July 7, 2015. Greece faces a last chance to stay in the euro zone on Tuesday when Prime Minister Alexis Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. REUTERS/Yannis Behrakis
Pensioners wait outside a branch of the National Bank to receive part of their pension in Athens, Greece, July 7, 2015. Greece faces a last chance to stay in the euro zone on Tuesday when Prime Minister Alexis Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. REUTERS/Yannis Behrakis
Newly-appointed Finance Minister Euclid Tsakalotos (R) and outgoing Yannis Varoufakis embrace at the Finance Ministry after a handover ceremony in Athens
Greek Finance Minister Yanis Varoufakis (3rd L) and head negotiator with Greece's lenders Euclid Tsakalotos (L) make their way past parliament as they head to Prime Minister Alexis Tsipras' office in Athens, Greece June 28, 2015. Greek banks and the stock exchange will be shut on Monday after creditors refused to extend the country's bailout and savers queued to withdraw cash, taking Athens' standoff with the European Union and the International Monetary Fund to a dangerous new level. REUTERS/Alkis Konstantinidis
A vendor reads a newspaper as he sits in front of his used books shop at Monastiraki area in central Athens, Greece, July 7, 2015. Greece faces a last chance to stay in the euro zone on Tuesday when Prime Minister Alexis Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. REUTERS/Christian Hartmann
Greece’s maverick finance minister Yanis Varoufakis dodges photographers as he leaves the Ministry of Finance in Athens after announcing his surprise resignation yesterday with his wife Danai on the back of his motorbike
A pensioner waits outside a branch of the National Bank to receive part of his pension in Athens, Greece, July 7, 2015. Greece faces a last chance to stay in the euro zone on Tuesday when Prime Minister Alexis Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. REUTERS/Yannis Behrakis
Donations of cash are counted following a collection for the Greek Solidarity Campaign, during a rally in support of Greece at the TUC's Congress House, in London, Britain, July 6, 2015. REUTERS/Peter Nicholls
French President Francois Hollande and German Chancellor Angela Merkel leave after a joint statement at the Elysee Palace in Paris, France, July 6, 2015 following the Greek people's resounding 'No' to a European cash-for-reform deal in a referendum in Greece. REUTERS/Philippe Wojazer TPX IMAGES OF THE DAY
Pensioners argue with bank staff as they wait outside a National Bank of Greece SA office to collect their pensions on Kotzia square in Athens, Greece, on Monday, July 6, 2015. European stocks dropped and the euro weakened as Greek voters' rejection of austerity sent investors to the relative safety of Treasuries, German bunds and the yen. Photographer: Chris Ratcliffe/Bloomberg
Badges on the counter during a rally - organised by the Greece Solidarity Campaign - in support of Greece after its historic No vote, at the TUC's Congress House in London. PRESS ASSOCIATION Photo. Picture date: Monday July 6, 2015. Photo credit should read: Yui Mok/PA Wire
A ballot box is emptied by a voting official at the closing of polling stations in Athens yesterday
Newly-appointed Finance Minister Euclid Tsakalotos (right) and outgoing minister Yannis Varoufakis arrive at the Finance Ministry for a handover ceremony in Athens last night
No voters embrace as they celebrate the results of the first exit polls in front of the Greek parliament in Syntagma Square in Athens last night
Greece's future in the eurozone is uncertain (AP)
Huge challenge ahead: German Chancellor Angela Merkel
A woman holds a placard with a Greek national flag next to a message in Greek reading, "No" during a rally. Photo: REUTERS/Javier Barbancho.
Riot police detain masked youth during minor clashes in central Athens, Greece early July 6, 2015. REUTERS/Marko Djurica
A woman enters a voting station before casting her ballot during a referendum in Athens, Greece, July 5, 2015. REUTERS/Jean-Paul Pelissier
French President Francois Hollande (R) meets German Chancellor Angela Merkel (L) at the Elysee Palace in Paris, France, July 6, 2015. Hollande and Merkel met in Paris on Monday evening following the Greek people's resounding 'No' to a European cash-for-reform deal in a referendum in Greece. REUTERS/Etienne Laurent / Pool
Supporters of the No vote celebrate after the results of the referendum at Syntagma square in Athens, Sunday, July 5, 2015. (AP Photo/Emilio Morenatti)
Former Irish Rugby international Trevor Hogan speaks at the Solidarity for Greece protest at the Central Bank yesterday. Photo: Tony Gavin 4/7/2015
Anti-austerity protesters clash with a policeman in Athens
A Greek Orthodox priest exits a booth holding a ballot at a polling station in Athens, Greece July 5, 2015. REUTERS/Yannis Behrakis
A thousand people gathered at the Solidarity for Greece protest at the Central Bank yesterday. Photo: Tony Gavin 4/7/2015
A member of the Communist-affiliated PAME labor union shouts slogans at the police during an anti-austerity protest calling to "Vote NO" in central Athens
A pensioner is helped by a bank manager after collapsing while waiting outside a National Bank in Athens along with dozens of other pensioners to withdraw money. Photo: Reuters
"No" supporters shout slogans during celebrations following a referendum in front of the parliament in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
A Greek Orthodox priest exits a booth holding a ballot at a polling station in Athens, Greece July 5, 2015. REUTERS/Yannis Behrakis
"No" supporters wave Greek national flags on the main Constitution (Syntagma) square in Athens, Greece July 5, 2015. REUTERS/Yannis Behrakis
A man looks at the newspapers at a newsstand in central Athens (AP Photo/Emilio Morenatti)
Finance Minister Euclid Tsakalotos arrives at the presidential palace in Athens yesterday

Ailish O'Hora, Peter Dominiczak and Matthew Holehouse

Greece will submit a new aid proposal to European creditors "maybe" on Wednesday, a senior eurozone official said, with Athens' European partners convening in Brussels for emergency talks.

"They say they will submit a new request and outline of proposals maybe tomorrow," the official, who spoke on condition of anonymity, told Reuters.

A second official also said the Greek delegation to a meeting of the Eurogroup of euro zone finance ministers had not submitted any formal proposal for credit.

"If they really plan to present something formal tomorrow, they may not find anyone to read it," the official added.

Read more here: Greece Crisis: Alex Tsipras met with anger at Eurozone meeting as he had no written proposals 

According to reports, Mr Tsipras will address the European Parliament tomorrow.

Greece faces a last chance to stay in the euro zone this week after Greek voters resoundingly rejected the austerity terms of a defunct bailout.

With Greek banks rapidly running out of cash and the European Central Bank slowly tightening the noose on their funding, Tsipras must persuade the bloc's other 18 leaders, many of whom are exasperated after five years of Greek crisis, to open rapid negotiations for a major new loan to rescue his country.

With the focus firmly on Brussels, German publication Süddeutsche Zeitung is reporting that it has seen Greece's new proposal.

It said it is not much different from what it terms 'Juncker's plan', the one that was presented last month, the terms of which were rejected by the Greeks at the weekend's referendum.

Under the terms, the VAT rebate for the islands would be maintained and VAT for restaurants would stay at 13pc while limited cuts in defence spending are also proposed.

The paper also quoted Greece's new finance minister Finance Euclid Tsakalotos as saying: "I cannot hide that I'm nervous."

Greece may agree to new European proposals on pensions and tax in return for a new bailout, it is understood.

Enda Kenny said a new bailout deal is urgently needed for Greece in order to end the suffering of the Greek people.

Speaking before an EU summit in Brussels, Mr Kenny said: “I think we need a deal here. The time is now to bring some hope and certainty and stability to the people in Greece in the medium term because they are now suffering. And for that reason I look forward very much to hearing what Prime Minister Tsipras has to say.”

Mr Kenny did not take questions from reporters as he entered the meeting.

The European Commission boss Jean Claude Juncker was keen to send out the signal that the summit is there to restart negotiations today.

He said it was a chance for the Greek government to "explain how it sees us extricating ourselves from this programme" although he conceded that solution would not be found "overnight."

"My aim is to prevent Grexit. I am against Grexit."

Read more: Referendum celebrations dim as reality kicks in

Earlier, the leaders of Germany and France, the currency area's two main powers, said 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, facing rising 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 labour reforms that were on the table before its bailout expired last week.

Germany also added that it was unwilling to grant a write-down to Greece as it would result in similar deals for other bailout states including Ireland, Portugal and Spain.

The German finance minister Wolfgang Schaeuble added today that debt haircuts are not allowed under Europe's bailout rules.

Read more: Germany fears knock-on debt write-down for Ireland

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 are likely to accept a deal. But that may be more than Germany and its northern allies can swallow.

Read more: What next: Drachmas or more debt talks

"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. (1600 Irish time) 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 lead to a state leaving the euro for the first time since it was launched in 1999, creating a precedent and raising 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.

In an intensive round of telephone diplomacy, he called the heads of the ECB, the IMF and the European Commission, as well as Merkel and Russian President Vladimir Putin.

But he gave little public clue of what reform concessions he would make to try to convince deeply sceptical Europeans to lend Athens more money after five months of acrimonious and fruitless negotiations.

His proposals were not expected to go much beyond a letter he sent to euro zone partners last week, acccepting 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.

Greek newspapers dramatised the make-or-break nature of the Brussels showdown.

Centrist daily Ethnos headlined: "Time has run out for a solution before catastrophe," while the centre-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 Commission President Jean-Claude 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 favour 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.

Even with the country was 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 defence spending from cuts, which rightist junior coalition partners the Independent Greeks have called "red lines".

Mr Gabriel said plans for humanitarian aid for Greece must now be drawn up amid fears the country could run out of fuel and food.

Mrs Merkel clashed yesterday with Francois Hollande, the French president, who wants Greece to be offered a generous deal.

Reuters

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