Donald Tusk: Greek deal failure ‘will affect all of Europe’

They are now due to remain closed through Monday, at which time he said a new order would be issued expanding what transactions can be carried out. With a deadline just hours away to come up…

The left-wing PM, now in his sixth month of office, stepped into a packed Strasbourg plenary – amid both applause and boos – as MEPs waited to hear an update on what has turned out to be the EU’s biggest crisis since it was founded.

After meeting with French President François Hollande, German Chancellor Angela Merkel said Monday Greece is running out of time to come up with a viable reform plan.

The uncertainty is weighing on ordinary Greeks, panicked at the realisation that, by backing Tsipras’s “No” in a referendum last weekend that soundly rejected creditors’ austerity conditions, they have been brought to the brink of an exit from the euro, or “Grexit”. The government said it would provide those specifics Thursday. The latest bailout program ended last week.

Spain’s Prime Minister Mariano Rajoy welcomed the latest Greek proposals as a “positive” change in tone.

Finance officials from the European institutions and the global Monetary Fund were to fine-comb through the package on Friday before the 19 eurozone finance ministers assess it on Saturday.

Creditors may insist on even harsher terms than those Greece has proposed, largely because the black hole in its finances grows with each passing day without a deal.

Tusk said after also speaking with Tsipras that a “realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors“.

European President Donald Tusk warned a solution would have to be found or “we will wake up in four days with a different Europe”.

The United States and the global Monetary Fund (IMF) share that view.

“The Greek proposal… includes funding of the country’s financing needs… for three years, debt adjustment and a front-loaded investment package of 35 billion euros ($38 billion)”, the source said.

Making Greece’s debt more sustainable would likely involve lowering the interest rates and extending the repayment dates on its bailout loans.

Germany is ruling out an outright debt cut, arguing that it would be illegal under European treaties.

If Greece leaves the euro zone, the results could be catastrophic for a country that has already endured the worst economic collapse of any developed nation since the end of World War II. Banks and the stock market have been shut for just as long. A ban on transferring money out of the country has isolated Greece from foreign suppliers of everything from food to medicine.

“Can you see anybody in the shop?”

Pensioners without bank cards have been particularly hard hit as they have struggled to access their accounts. Hundreds of elderly Greeks lined up outside banks Thursday morning. Separately, many ATMs had a shortage of 20 euro notes, effectively reducing the daily withdrawal limit to 50 euros.

Without a deal, Greece faces an nearly inevitable collapse of the banking system, which would be the first step for the country to fall out of the euro.

“I want an agreement and no matter if it contains austerity measures – that is still better than going back to the drachma”, sighed Stefanos, an unemployed 32-year-old.

When a reporter asked if there would be an agreement, he responded: “We will get it all“.

France’s Socialist government has been among the Greek government’s few allies in the eurozone during the past months of tough negotiations.

Schaeuble, who has been skeptical of the Greek government’s commitment to reform, conceded the chance of such actions before Sunday’s European summit on the Greek crisis was “rather limited”.

NEW YORK, July 7 (Reuters) – The euro dropped to a five-week low against a buoyant US dollar on Tuesday, after the European Central Bank left emergency liquidity aid for Greek banks at current levels but increased the haircuts on the collateral it demands.

Greek banks are now reportedly nearly illiquid after a run by panicked customers in the lead-up to the referendum, which Tsipras abruptly called on June 27 to break an impasse with the creditors.