European Union leaders from all 28 member states are to hold a decisive summit on the Greek debt crisis Sunday. Greece has been given until the end of the week to reach a new bailout deal and avoid crashing out of the euro, after Greek voters rejected international creditors' plans in a referendum.
In the first step of its renewed bid for funding, Greece's leftist government must submit detailed reform plans by Thursday, EU President Donald Tusk said after euro zone leaders held an emergency summit with Greek Prime Minister Alexis Tsipras.
Greek Prime Minister Alexis Tsipras sounded upbeat as he left the summit. By winning last week’s anti-austerity referendum with 61 percent of the vote the Greek PM claimed he’d gained leverage over creditors.
Tsipras said that Greece had outlined its new proposals. He promised to work for a socially just deal that would bring a "final exit" from the crisis, return Greece to growth and restructure Greek debt to make it viable. However, the impatience of his fellow EU leaders has become increasingly palpable.
Failure, Tusk warned, would undermine the EU's standing in the world and said the six-decade-old bloc may face "the most critical moment in our history".
European Commission President Jean-Claude Juncker warned "we have a Grexit scenario prepared in detail" if Greece failed to reach a deal. Nonetheless he insisted that he wanted Athens to stay in the euro zone.
German Chancellor Angela Merkel meanwhile warned Greece would need a debt programme lasting "several years" and insisted writing off any of Greece's 320-billion-euro debt mountain was out of the question.
But even if the Tsipras endorses a bailout deal that defies his election pledge to end the austerity he will face opposition within his radical left Syriza party. Nevertheless by winning Sunday's referendum Tsipras shored up his domestic position. Moreover the meeting he held Monday with opposition political leaders gives him confidence that he can rely on opposition parties to secure enough parliamentary votes to approve any new bailout deal.
SHORT-TERM FUNDING SOLUTION
Greece will submit on Wednesday a formal request for a two-year loan program, with a first list of reform commitments to be spelled out in greater detail on Thursday. While the new program would stretch for two to three years, the Greek government has asked the eurozone for an interim budget solution to cover its finances for July ahead of any long-term deal, according to a senior official.
Euro zone finance ministers will hold a conference call Wednesday to discuss an expected Greek request for a medium-term loan from the European Stability Mechanism (ESM), Eurogroup chair Jeroen Dijsselbloem said.
Asked whether bridge financing will be offered to Greece, the Eurogroup president replied: “We won’t be talking for a medium-term program for reasons of credibility”.