Greece to offer new bailout proposal
Athens is to submit a new proposal to eurozone authorities for a third bailout by Wednesday morning after Greek negotiators stunned some eurozone finance ministers by arriving at their meeting without a revised economic reform proposal. Despite the apparently abortive start to what had been billed as a last-ditch effort to salvage Greece’s place in the eurozone, eurozone officials said they drew some comfort from Euclid Tsakalotos, the new Greek finance minister, who made a strong presentation to his counterparts. His intervention gave some hope that a deal could still be reached before Athens defaults on a €3.5bn bond payment owed to the European Central Bank in two weeks, considered to be the moment it crashes out of the euro. Athens is expected to request a new 2-3 year bailout and interim bridge financing, including through bond purchases by the ECB, to tide it over for three to four months. Both would require Athens to implement unpopular reforms and spending cuts. But some eurozone governments are known to be strongly against bridge financing or ECB bond-buying. Even though the willingness to accommodate Athens all but evaporated following Greece’s emphatic rejection of previous bailout terms in Sunday’s referendum, eurozone leaders were expected to discuss the Greek plan at an emergency summit in Brussels on Tuesday night. The ECB has also been sending strong signals that it cannot keep providing emergency loans to Greek banks. Late on Monday, it tightened the screw on Greek lenders when it required them to stump up more assets in exchange for emergency loans. It was a largely symbolic decision, but one official said would come before a complete withdrawal of its liquidity lifeline. On Tuesday the ECB said it could not be "overly generous" with emergency loans. Even though ministers expressed a willingness to consider a new Greek plan, several eurozone leaders arriving for a summit after the finance ministers’ session continued to express pessimism that an agreement on a new set of economic reforms could be reached in time. "There is still no basis for negotiations," said Angela Merkel, the German chancellor. "I say it’s not a matter of weeks but of a few days." A Greek government spokesman said the plan verbally outlined by Mr Tsakalotos was the same as that sent to creditors on June 30 "with certain improvements". The June 30 plan conceded to many of the demands made by bailout monitors but was still considered insufficient. Eurozone officials have said that in order to agree a new bailout programme, further reforms and savings would be needed on top of those demanded under its now expired bailout, given the recent deterioration in the economy. That led several to worry that Athens still had not come to grips with what it needed to do to win over sceptical colleagues. Dividing lines between Greece sympathisers and hardliners deepened during the course of the day, with French and European Commission officials attempting to find ways to bridge differences, while a growing number of national delegations — including many that have not been so outspoken in the past — angrily denounced Greek prevarication. "We can’t do it with a gun to our head or a knife at our throats," said Charles Michel, the prime minister of Belgium. "A prime minister has to face up to his responsibilities. If there’s nothing on the table and there continues to be nothing on the table, that means [Greek prime minister Alexis] Tsipras is not able to honour the demand of the Greek people to stay in the eurozone." Officials said that while the tenor of the eurogroup meeting was less combative than those with Mr Tsakalotos’ predecessor, Yanis Varoufakis, ministers continued to push for significant, detailed reforms that could be difficult for Mr Tsipras to swallow. In a bid to round up additional support, Mr Tsipras telephoned Barack Obama, the US president, before arriving in Brussels for Tuesday night’s summit, according to an American official. Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup, said ministers would hold a conference call again on Wednesday morning, where they were likely to task the European Commission to assess the new Greek submission. However, several officials said it was unlikely that ministers would be able to commit to any deal and only the bloc’s leaders had the authority to broker the difficult political compromises required to prevent Greece’s exit. Only then would national capitals weigh whether to formally open bailout negotiations — a process that requires parliamentary approval in several eurozone capitals, including Berlin. "We will see if we can formally start the negotiations," said Mr Dijsselbloem after Tuesday’s meeting. "All of this has to be done in a matter of days. We have very little time." Eurozone officials have been weighing a plan where a quick, short-term "bridge financing" programme would cover Athens’ needs over the summer to give both sides time to negotiate a more in-depth multiyear programme. But one senior eurozone official said that plan had lost favour after the No vote in Sunday’s Greek referendum on the bailout package and officials were now likely to see firm commitments to a two- to three-year programme as the only option.