Euro zone gives Greece until Sunday for debt deal

Members of the European Parliament with posters with the word “No” (Oxi in Greek) attend a debate on Greece at the European Parliament in Strasbourg, France, 8 July - Reuters

Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe’s currency bloc and into economic ruin.

“The stark reality is that we have only five days left ... Until now I have avoided talking about deadlines, but tonight I have to say loud and clear that the final deadline ends this week,” European Council President Donald Tusk told a news conference.

Prime Minister Alexis Tsipras has until Friday to present the proposal, but German Chancellor Angela Merkel said she hoped to have convincing reform commitments from Tsipras on Thursday so she could ask the German parliament to authorise negotiations on a new aid programme.

Merkel said she was “not exaggeratedly optimistic” for a solution.

At an emergency summit in Brussels on Tuesday, representatives of the 19-country euro zone said all 28 European Union leaders would meet on Sunday to decide Greece’s fate. The talks were organised after Greeks voted in a referendum on Sunday against a bailout that carried stringent austerity measures.

French President Francois Hollande said the European Central Bank would ensure that Greek banks had the minimum necessary liquidity to stay afloat until Sunday.

The situation in Greece worsened with banks closed for a second week, limited cash withdrawals and businesses feeling the crunch of demands from vendors for cash payments.

Under a timetable agreed by the 19 leaders of the common currency area, Greece will submit on Wednesday a formal request for a two-year loan programme, with a first list of reform commitments to be spelled out in greater detail on Thursday.

If the European Commission, the International Monetary Fund and the European Central Bank approve, Eurogroup finance ministers will meet on Saturday to recommend opening negotiations on a conditional assistance program.

Tsipras pleads for fair deal for Greece in EU parliament

Reuters: Greek Prime Minister Alexis Tsipras pleaded in the European Parliament on Wednesday for a fair deal to keep his country in the euro zone, acknowledging Greece’s own responsibility for its plight, after EU leaders gave him five days to come up with reforms.

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 criticised attempts to “terrorise” 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.