Greece closer to desperately needed deal with creditors

Leaders are discussing new proposals put forward by their finance ministers.

A number of options were explored by finance members from the eurozone during overnight meetings in Brussels, but talks of another Greek bailout were broken up on Sunday morning as disagreement led to confusion and frustration.

European sources said the meeting of finance ministers, known as the Eurogroup, was still continuing as leaders arrived for the summit.

The eurozone talks were not about whether to agree a new bailout, but rather over whether to allow further negotiations over the rescue package pushed by Greece.

A finance ministers’ meeting was suspended at midnight after mad exchanges during nine hours of acrimonious debate without a firm recommendation on Greece’s application for a three-year loan on the basis of reform proposals submitted by Tsipras.

If the talks don’t succeed, some of Greece’s eurozone partners warned, the country could be temporarily forced out of the euro, the European single currency that Greece has been a part of since 2002.

The dramatic weekend of backroom dealings in Brussels threatened to leave the European Union more divided than at any time in its 50-year history, and by a currency that was meant to bring it together.

Greece’s banks have been shut for two weeks, and cash withdrawals are capped. The economy is in freefall and the country faces a raft of big debt repayments.

“There is Greece in the eurozone or Greece no longer in the eurozone, but at that point it becomes a Europe that is retreating and I do not want that”, he said, reiterating that France would do “everything” to reach a deal to keep Greece in the euro.

“There will not an agreement at all costs”, she said, coming into Sunday’s summit meeting.

“There is no temporary Grexit, there is a Grexit or there is not a Grexit”, he said, adding that he would “do everything to find a deal tonight”.

They are considering proposals by eurozone finance ministers which would impose tough conditions on Athens.

The eurozone ministers are pressuring Greece to endorse economic reforms, including tax hikes and pension cuts, in order to receive a third bailout worth €74 billion (USD 83 billion).

They are pressing the Greek government to undertake immediate legislative action in parliament next week to reform pensions and Value-Added Tax.

Greece wants €53.5bn from Europe’s bailout fund but as it’s already been bailed out three times in the past five years – potential creditors want guarantees.

But there are doubts about whether Athens can be trusted to follow through on its promises, given that its proposed reforms are similar to measures that were rejected in a Greek referendum a week ago.

Meanwhile, Russian Federation is considering direct deliveries of fuel to Greece to help prop up its economy, Russian news agencies quoted Energy Minister Alexander Novak as saying yesterday.

Traditionally, eurozone ministers agree by mutual consensus, though in exceptional circumstances a unanimous vote may not be needed.

But Mrs Merkel cautioned there would not be a deal later on Sunday “at any price” and she said trust in debt-laden Athens had been lost, warning of “tough” negotiations ahead.

They also insisted that the worldwide Monetary Fund must remain fully involved in any third bailout for Athens.

Tsipras has made much of the need for a restructuring of Greek debt, which stands at around 320 billion euros, or a staggering 180 percent or so of the country’s annual GDP. An outright debt cancellation – or haircut – has been ruled out by Europe, although it may be willing to push back the date when Greece needs to begin repaying its bailout loans, and extending their maturities.