Greek prime minister Alexis Tsipras faces an uphill struggle to prevent a rebellion in the Syriza party if he accepts a deadline by Wednesday to adopt further austerity in order to keep Greece in the euro.
Euro area leaders met in Brussels on Sunday night to debate a draft proposal to commence talks with Athens on a third bailout worth up to €86 billion.
Negotiations among finance ministers in Brussels ended on Sunday with Athens agreeing to a third programme of tax increases and pension cuts in exchange for loans, with additional measures to ensure compliance.
Mr Tsipras said in Brussels he was looking for a "fair compromise" with other euro leaders, but senior figures in his party accused Germany and other creditors of trying to humiliate Athens by insisting it enact "punitive" reforms almost immediately.
Earlier, Taoiseach Enda Kenny called on the Greek government to hold parliamentary votes on austerity measures and structural changes as soon as Monday.
An agreed statement from euro zone finance ministers has been sent to leaders to consider at a summit on Sunday night.
The statement requires the Greek parliament to legislate for austerity measures in coming days before detailed negotiations on a third bailout can begin.
Sources said the statement “requires some prior actions, legislation in Greeks parliament etc to allow for detailed” discussions on a memorandum of understanding on a third bailout to take place.
Before the summit of leaders of euro zone countries, Mr Kenny said the Greek government must immediately demonstrate it is serious about reform.
“From Ireland’s point of view, we are quite willing to work to bring this to a conclusion that a solution can be reached where negotiations can start on the details of a third programme that will keep Greece in the eurozone,” Mr Kenny said.
In line with comments from other European leaders that Greece must build up trust, Mr Kenny said Alexis Tspiras’s government must prove it is “serious”.
“I’d like to see them demonstrating starting tomorrow in their parliament they are serious about implementing the changes - legislative and structural - that need to be put in place, and there are many of them,” the Taoiseach said. “But as a start to demonstrate a conviction towards being serious here, about building trust with other colleagues around the table.
“It does now mean that the Greeks have got to demonstrate in their parliament their intent and their seriousness in making the changes and starting to implement in a really serious way what can bring about a functioning Greek economy that will be able to stay in the eurozone.”
Mr Kenny said today marked the “umpteenth” visit by European leaders to Brussels to discuss the Greek crisis.
“Everyday like this that goes on, the eventual solution is more costly. I understand that, in fairness, the Greeks have applied for a programme. They have tabled their proposition. They have been assessed and now discussed at the Euro zone ministers.
“I understand that in a very frank and forthright series of exchanges, the Greeks have actually strengthened their commitment to change and to building trust which seems to a fundamental issue with a lot of people.
“In Ireland’s case, trust was only built with the troika through incremental analysis, and as a consequence payments when we have proven what we could actually do.
“I think it is important to keep in mind here the bigger European picture and the statements of intent made by leaders of the Euro zone at the last meeting need now to be backed by the Greeks in terms of demonstrating their convictions to remain a member of the eurozone.
“It is important to keep in mind what Europe an the euro zone is about. We don’t want to look back in ten years’ time and have a situation where this could have been saved but wasn’t.”
Before the summit, German chancellor Angela Merkel warned against backing an “agreement at any price”.
“I know nerves are strained but we have to make sure that the benefits outweight the costs for the future of Greece and for the principles of co-operation in the euro zone,” she said. “We will examine whether the circumstances are there for opening negotiations. If that succeeds we will have to see.”
Earlier, European Commission president Jean-Claude Juncker said he was prepared to “fight until the very last millisecond for a deal and I hope it will happen”.
Greece was hanging by a thread in the euro zone with nerves “bare” as the two-meeting marathon of euro zone finance ministers and leaders took place.
Following a bad-tempered, nine-hour session on Saturday, euro finance ministers reconvened on Sunday morning in a final attempt to close differences of opinion on whether the EU should open talks with Greece on a third loans programme.
Eurogroup leader Jeroen Dijsselbloem abandoned attempts to draft a statement for leaders on Saturday night amid sharp exchanges on Greek debt writedowns between ECB president Mario Draghi and German finance minister Wolfgang Schäuble.
“It’s still very difficult but work is still in progress, that’s all I can say,” he said.
His adjournment, as much to allow tempers cool as work on new positions, came amid ongoing disagreement over the numbers in Greece’s Thursday application ESM bailout fund application. Agreement is outstanding, too, on “prior actions” to demand of Athens to ensure reform promises are kept before opening talks on fresh loans.
Euro group officials said they hoped EU leaders would help find a political agreement after a hard line in technical talks lead by Dr Schäuble.
Last Sunday, Greek voters backed a call by the Syriza-lead government to reject previous proposals from its EU-IMF creditors for a new programme. Eurozone finance ministers and leaders met in Brussels on Tuesday and, anticipating a new programme application from Athens, agreed that Sunday, July 12th was the deadline to decide whether to open bailout talks with Greece.
Amid wrangling over how best to guarantee Greece delivers on reform promises, Germany and Finland caused additional tension on Saturday in an already fractious meeting.
Dr Schäuble surprised and annoyed his colleagues when his ministry floated a five-year “timeout” for Greece from the euro in a “non-paper” that was leaked to a German Sunday newspaper.
The short-term Grexit proposal was reportedly agreed with chancellor Angela Merkel and her junior coalition head, Social Democrat (SPD) leader Sigmar Gabriel, and apparently sent to some Greece-critical delegations - Finland, the Baltic countries, Slovakia, Slovenia, Austria and the Netherlands. But it was neither presented nor discussed at the meeting, attendees said, and it did not go down well at the meeting.
Greek economics minister Giorgis Stathakis dismissed sharply the “non-paper” on Greek TV station Mega as a political manoeuvre to torpedo talks.
A second shock came with news that the populist Finns party threatened to bring down the coalition it joined in May if Helsinki signs up to a new programme.
Finance minister Alexander Stubb left the meeting saying he had been given a "narrow" negotiating mandate by his government.
The reform proposals put forward by Greece, including pension reform and sales tax changes, were “simply not enough”, but insisted Finland was alone in its concerns.
Brussels sources agreed with that assessment, saying that political pressure was coming from Helsinki rather than the Finnish team in Brussels and that Finland was just one member of a hard-line group in the meeting.
Though finance ministers were taken by the low-key first appearance by new Greek finance minister Euclid Tsakalotos, a contrast to his predecessor Yanis Varoufakis, doubts about Greek reliability are running high given its five-year record of under-delivering on reforms.
Antipathy is particularly high, according to meeting participants, among the Baltic countries, Portugal and eastern European countries with lower standards of living than Greece.
“There’s serious difficulty as well to trust the Greek government that two weeks ago was going against what it is trying to implement now,” said one senior Brussels official.
