herald

Monday 5 December 2016

EU gives Greece until Sunday to stave off risk of financial disaster

DEADLINE

Frustrated and angered Eurozone leaders have given Greek prime minister Alexis Tsipras a last-minute chance to come up with a viable proposal on how to save his country from financial ruin.

Overcoming their surprise when Tsipras failed to present them with a detailed plan, the leaders reluctantly agreed to a final summit on Sunday, saying that could give both sides an opportunity to stave off the collapse of the struggling but defiant member nation.

Underscoring the gravity of the challenge, EU president Donald Tusk decided to call all 28 EU leaders to Brussels instead of only the 19 Eurozone members, because, for the bloc, it "is maybe the most critical moment in our history".

French president Francois Hollande agreed.

"It's not just the problem of Greece - it's the future of the European Union" that's at stake, he said.

"We'll see if on Sunday this issue will be solved once and for all," said Italian prime minister Matteo Renzi.

With Greece's banks only days away from a potential collapse that could drag the country out of the euro, Mr Tsipras arrived with only vague proposals and a commitment to back it up with real figures and a more detailed plan by tomorrow.

Speaking to reporters late last night, Mr Tsipras said he made proposals to the leaders during the evening summit but it was unclear if it meant anything more than the general direction of staving off too tough austerity and insisting on debt restructuring.

Yet he made clear he had got the message that there was not a moment to waste as deadlines for debt payments that Greece cannot afford draw near.

"The process will be swift, it will be speedy, it will begin in the next few hours with the aim of concluding until the end of the week at the latest," Mr Tsipras said.

But patience among Greece's allies was wearing very thin ahead of the meeting.

"You know, there was a promise for today. Then they're promising for tomorrow," said Lithuanian president Dalia Grybauskaite. "For the Greek government, it's every time 'mañana'."

Mr Tsipras came buoyed by a triumph in last Sunday's referendum, where an overwhelming majority of Greeks backed his call to reject the belt-tightening reforms that creditors had last proposed.

But that domestic victory did not appear to give him much leverage in talks with foreign creditors, who know he needs a deal soon to keep his country afloat.

Banks have been shut since last week and will not reopen before tomorrow, cash withdrawals have been limited for just as long and daily business throughout the country has come to a near standstill.

So it was with astonishment and dismay that European leaders learned Mr Tsipras did not yet have a written proposal for new rescue aid.

"At a certain point, you need to get to the truth," said Belgian prime minister Charles Michel, before asking: "Is there, yes or no, a political will of the Greek government?"

A Greek government official said Mr Tsipras was presenting a "common ground" to the 18 other leaders yesterday, while a detailed proposal would come later today.

abyss

He said the Greek government would submit a request for immediate financing in advance of €5bn in loans due for re- payment by the end of the month.

He predicted a full political deal could be reached in two or three weeks.

German Chancellor Angela Merkel warned Tsipras he was dancing close to the financial abyss.

"We are no longer talking about weeks but very few days," she said.

In his flurry of contacts, Tsipras spoke by phone with President Barack Obama, and the White House said it was in Europe's interest to reach a resolution that puts Greece on the path toward economic growth and stability.

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