Greece given days to agree bailout deal

Greece, July-8 Greece has 48 hours to strike a new bailout deal with its eurozone creditors or face a banking collapse, a humanitarian emergency, and the start of an exit from the single currency, European leaders decided on Tuesday evening.

Unless Athens presents convincing details entailing more austerity as the basis for its third bailout in five years, all 28 national EU leaders, not just those of the eurozone, are to gather in Brussels on Sunday in emergency session to discuss how to contain the fallout from Greece’s financial collapse.

“We have a Grexit scenario prepared in detail,” said Jean-Claude Juncker, president of the European commission.

The stark ultimatum emerged from a special eurozone summit in Brussels on Tuesday where the Greek prime minister, Alexis Tsipras, was pressed to explain to the other leaders how he wanted to proceed following his victory in a referendum on Sunday when his country voted no to eurozone austerity measures as the price of staying in the euro.

The Greek leadership exasperated EU leaders by failing to present new bailout proposals on Tuesday. It is to present a formal application on Wednesday for a new rescue package from the European Stability Mechanism (ESM), the eurozone’s permanent bailout fund. If Berlin, Paris, Brussels and other key creditor capitals can agree the terms and timings with Athens, Greece would be offered a stay of execution in the euro. Sunday’s summit would then be of the 19 eurozone leaders.

If not, the summit of all 28 leaders, including David Cameron and heads of government of other non-euro countries, would instead convene to deal with the consequences of a Greece cut loose from the eurozone financial system.

“That shows there’s only a few days to go to taking a decision,” said Chancellor Angela Merkel of Germany. “That shows how serious it is.”

“Our inability to find agreement may lead to the bankruptcy of Greece and the insolvency of its banking system … This is the most critical moment in our history,” said Donald Tusk, the president of the European council who chairs the summits. “The stark reality is that we have only five days left to find the ultimate agreement. The final deadline ends this week.”

Ministers from the Eurogroup could decide to release the profits from 2014, which amount to €1.85bn, and top them up with an additional €1.5bn currently held by eurozone governments in order to facilitate payments due to the European Central Bank in less than a fortnight.

A eurozone source said: “It’s not an easy solution, but probably the only solution.”The advantage for Greece would be that the money could be released without the delays caused by getting agreement through the parliaments of euro zone members. The potential downside is that the cash would need to be authorised by the Eurogroup unanimously.

Source: Theguardian