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Debt crisis: Deadline day for 'last chance' Greece bailout plan

Prime Minister Alexis Tsipras on Wednesday vowed "concrete proposals, credible reforms, for a fair and viable solution" in his bailout request for billions of euros, the third plan Greece has asked for in five years of deep financial crisis.

world Updated: Jul 09, 2015 20:59 IST
Greek-PM-Alexis-Tsipras-German-chancellor-Angela-Merkel-and-other-leaders-prior-to-Eurozone-summit-in-Brussels-AP-Photo( )

After the referendum and amid the ongoing economic crisis, Greece was to submit a detailed bailout request to its eurozone partners on Thursday. This was to be the last-ditch effort for Greece to save its collapsing economy and its membership in the European single currency.

In a surprise concession, EU President Donald Tusk said that if Greece delivered, its creditors would have to drop their steadfast refusal to look at ways at managing the country's massive 320-billion-euro ($350-bn) debt mountain.

"The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors," Tusk said. "Only then will we have a win-win situation."

Prime Minister Alexis Tsipras on Wednesday vowed "concrete proposals, credible reforms, for a fair and viable solution" in his bailout request for billions of euros, the third plan Greece has asked for in five years of deep financial crisis.

But other eurozone nations, led by Germany, are sceptical about Greece meeting austerity conditions attached to the loans, especially after Greeks in a weekend referendum backed Tsipras's past rejection of tough terms on its last bailout.

These nations refuse to study debt relief or restructuring for Greece until it shows a commitment to reforms.

Tusk has called the next few days "really and truly the final wake-up call for Greece and for us".

Leaders of the 28-nation European Union, including the 19 states that share the euro, are to hold a summit on Sunday billed as the "final deadline" for a deal.

While Europe has no provision under its treaties to force a country out of what is meant to be an "irreversible" monetary union, some legal advisers say it could be made to happen by kicking an errant state out of the European Union.

A demonstration of Greeks calling for their country to remain in Europe was to take place in central Athens late on Thursday.

Brink of collapse

Greece, which has until midnight Brussels time (2200 GMT) to file its reform proposals for what would be its third bailout in five years, is facing financial collapse.

Giorgos, a 77-year-old pensioner from Athens, sits outside a branch of the National Bank of Greece as he waits along with dozens of other pensioners. (HT photo)

Banks remain closed and ATMs have a daily withdrawal limit of 60 euros ($67) per card holder. The capital controls also ban overseas money transfers, isolating Greece and its population of 11 million from foreign suppliers of everything from food to medicine.

The head of Greece's bank association, Louka Katseli, asserted on state television that there was "adequate" liquidity to keep the ATMs running until next Monday evening.

She added that no "haircut" - taking a portion of customers' deposits to recapitalise the banks - was "foreseen".

Authorities have extended the closure of the banks and the Athens stock market to next Monday.

The number of last-minute tourist bookings to Greece - usually a European summer hotspot for its many sunbleached islands - has plunged 30 percent over the past two weeks because of the uncertainty.

International markets appear generally sanguine about the possibility of contagion. European stocks rose Thursday while the euro was trading at $1.103.

US President Barack Obama has urged Europe to keep Greece in the eurozone and his administration has also urged a restructuring of the country's debt.

France and Italy have expressed a strong desire to see Greece remain in the euro club.

"We are starting to see the beginnings of chaos in Greece," French Finance Minister Michel Sapin told French radio, adding that the country was a transit point for migrants trying to reach wealthier EU countries.
'Difficult' situation

Greek media reported that French experts were helping Athens prepare its reform plan. But France denied any of its officials were involved in the process.

"France wants to help things along and very much backs an agreement, but in no way are we helping them draft the proposals," a French official said.

Greece's new finance minister, Euclid Tsakalotos, disappointed his eurozone counterparts on Tuesday when he turned up to a meeting without any concrete plans for ending the standoff.

On Wednesday, Tsakalotos asked the eurozone's crisis fund, the European stability mechanism, to give Greece a three-year loan for an unspecified amount.

In exchange, he said, Greece would "immediately implement a set of measures as early as the beginning of next week" dealing with pensions and tax reform -- the two main areas of disagreement with creditors.

There was no immediate reply from the ESM made public.
The European Central Bank on Wednesday left untouched its cap on a 89-bn-euro ($99-bn) lifeline it had previously extended to
Greece's banks.

Its chief, Mario Draghi, who in 2012 famously defended the euro by saying the ECB would do "whatever it takes" to save the currency, has expressed doubts about Greece staying in the eurozone.

As he arrived in Rome on Wednesday on a flight from Brussels, Draghi was asked by journalists if the Greek crisis would be successfully resolved.

"I don't know. This time, it's really difficult," Draghi said, according to the newspaper Il Sore 24 Ore.