Euro zone leaders gather on Monday night in Brussels for crunch talks on the fate of Greece as its government and banks teeter on the brink of bankruptcy.
The leaders’ emergency summit comes after prolonged discord with the government of Greek premier Alexis Tsipras and a weekend of diplomacy in which he tabled a revised funding proposal to the country’s international creditors.
“They’re now engaging more seriously on the key issues,” a European source said last night of the latest Greek stance. “So it’s a step in the right direction.”
The new Greek plan follows many weeks of rancour and brinkmanship. It will be considered first by euro zone finance ministers, who meet at noon in Brussels after inconclusive talks last week in Luxembourg failed to break the deadlock with Athens.
Although the plan led to official-level discussions on Sunday night in Brussels, it was not immediately clear whether there was enough in the proposed compromise to bring an end to the stalemate. Without a speedy delivery of new loans from its creditors, Greece is likely to default on a €1.6 billion debt repayment to the International Monetary Fund by June 30th.
Greece’s exit
Such a default could set Greece’s exit from the euro zone in train, sending the country back to the drachma and Europe into a new crisis.
Any failure to reach a deal to pay the IMF would call into question crucial European Central Bank support for the enfeebled commercial banks of Greece, which are running out of funds as depositors withdraw cash. Savers pulled €4 billion from their accounts last week, raising the prospect of capital controls. After agreeing a marginal increase in its support for Greece on Friday, the ECB is due to review the situation again this morning.
Mr Tsipras has been seeking for months to unlock €7.2 billion in unpaid bailout aid but an agreement remains elusive.
Pension cuts
Led by Germany, euro zone creditors say Athens should implement a tough new retrenchment programme embracing pension cuts and VAT increases.
Mr Tsipras has refused to sign up, saying such measures would humiliate Greeks more than five years after their economy plunged into recession. He has continued in recent days to campaign for debt relief, something the creditors rejected months ago.
In an emailed statement, Mr Tsipras’s office said his revised plan stands as an attempt to achieve a “definitive” solution to the problems besetting his country.
The statement said Mr Tsipras had phoned German chancellor Angela Merkel, French president François Hollande and European Commission chief Jean-Claude Juncker to brief them on the new proposal.
“The prime minister presented the three leaders with Greece’s proposal for a mutually beneficial agreement that will give a definitive solution and not a postponement of addressing the problem,” said the statement.
