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Greek prime minister prepares last-ditch offer to avoid default on debts Greek prime minister prepares last-ditch offer to avoid default on debts
(about 14 hours later)
The race to save Greece from economic collapse intensified on Saturday night as its beleaguered leader conducted a flurry of behind-the-scenes negotiations before an EU summit on Monday that is expected to decide the country’s fate. The race to save Greece from economic collapse has intensified as the country’s beleaguered leader conducted a flurry of behind-the-scenes negotiations before an EU summit on Monday that is expected to decide the country’s fate.
Alexis Tsipras, the prime minister, met senior officials in an attempt to devise a package of reforms that would secure emergency funds and avoid the nation defaulting on its massive debts. It will be the third such proposal that Athens has made to its creditors in as many weeks. Alexis Tsipras, the prime minister, met senior officials on Saturday in an attempt to devise a package of reforms that would secure emergency funds and avoid the nation defaulting on its massive debts. It will be the third such proposal that Athens has made to its creditors in as many weeks.
“We will try to supplement our proposal so that we get closer to a solution,” Greece’s minister of state, Alekos Flabouraris, told broadcaster Mega TV. “We are not going [to the summit] with the old proposal. Some work is being done to see where we can converge, so that we achieve a mutually beneficial solution.”“We will try to supplement our proposal so that we get closer to a solution,” Greece’s minister of state, Alekos Flabouraris, told broadcaster Mega TV. “We are not going [to the summit] with the old proposal. Some work is being done to see where we can converge, so that we achieve a mutually beneficial solution.”
Flabouraris, widely seen as a mentor to the young prime minister, said Tsipras would hold crucial talks with the head of the European commission, Jean-Claude Juncker. The Greek cabinet will meet in an emergency session on Sunday with Tsipras also dispatching senior officials to Brussels.Flabouraris, widely seen as a mentor to the young prime minister, said Tsipras would hold crucial talks with the head of the European commission, Jean-Claude Juncker. The Greek cabinet will meet in an emergency session on Sunday with Tsipras also dispatching senior officials to Brussels.
The frantic diplomacy came as Greece’s eurozone partners warned that, after five months of fruitless talks, the game was up for Tsipras’s radical leftwing government. The country, which has been thrown two lifelines since 2010, has until 30 June to secure €7.2bn (£5.1bn) in bailout funds. Failure to release the loans will result in default, as Greece owes €1.6bn to the International Monetary Fund at the end of the month.The frantic diplomacy came as Greece’s eurozone partners warned that, after five months of fruitless talks, the game was up for Tsipras’s radical leftwing government. The country, which has been thrown two lifelines since 2010, has until 30 June to secure €7.2bn (£5.1bn) in bailout funds. Failure to release the loans will result in default, as Greece owes €1.6bn to the International Monetary Fund at the end of the month.
On Friday the president of the European council, Donald Tusk, who convened Monday’s summit, warned the situation was dire. Either Tsipras’s anti-austerity government accepted painful reforms, reportedly at a cost of €5bn, he suggested, or it would go bust.On Friday the president of the European council, Donald Tusk, who convened Monday’s summit, warned the situation was dire. Either Tsipras’s anti-austerity government accepted painful reforms, reportedly at a cost of €5bn, he suggested, or it would go bust.
“We are close to the point where the Greek government will have to choose between accepting what I believe is a good offer of continued support or to head towards default,” he said in a video message. That ultimatum appears to have focused minds.“We are close to the point where the Greek government will have to choose between accepting what I believe is a good offer of continued support or to head towards default,” he said in a video message. That ultimatum appears to have focused minds.
Membership Event: Guardian Newsroom: Should Greece leave the Euro?Membership Event: Guardian Newsroom: Should Greece leave the Euro?
Among the measures that the Syriza-led coalition was reportedly working on on Saturday were reductions in early retirement schemes. Pension and VAT reforms, along with labour deregulation, remain sources of friction between the two sides.Among the measures that the Syriza-led coalition was reportedly working on on Saturday were reductions in early retirement schemes. Pension and VAT reforms, along with labour deregulation, remain sources of friction between the two sides.
Speculation is rife that Greece’s creditors at the EU, European Central Bank and IMF would offer a six-month extension of the bailout programme – disbursing more than €10bn in aid to tide the country over the summer – if agreement was reached. Discussions over a third bailout Athens will inevitably also require would be kicked down the road.Speculation is rife that Greece’s creditors at the EU, European Central Bank and IMF would offer a six-month extension of the bailout programme – disbursing more than €10bn in aid to tide the country over the summer – if agreement was reached. Discussions over a third bailout Athens will inevitably also require would be kicked down the road.
Speaking to the Observer, Athens’s chief negotiator, Euclid Tsakalotos, described the prospect of a short-term deal as perhaps the worst possible outcome. Prolongation of the political uncertainty – and scenarios of Greece’s enforced exit from the euro – would, he said, do nothing for the country’s economic recovery.Speaking to the Observer, Athens’s chief negotiator, Euclid Tsakalotos, described the prospect of a short-term deal as perhaps the worst possible outcome. Prolongation of the political uncertainty – and scenarios of Greece’s enforced exit from the euro – would, he said, do nothing for the country’s economic recovery.
“What we need is a mid-term solution that will take us through to the end of 2016,” he said. “A short-term solution might be the worst of all. What we don’t want is a postponement of issues like Grexit and financing, so the economy remains depressed and people don’t have a shift in expectations. Optimism is a material force in the economy.”“What we need is a mid-term solution that will take us through to the end of 2016,” he said. “A short-term solution might be the worst of all. What we don’t want is a postponement of issues like Grexit and financing, so the economy remains depressed and people don’t have a shift in expectations. Optimism is a material force in the economy.”
The war of words between Athens and its lenders reached boiling point last week amid signs of a complete breakdown of trust between the two.The war of words between Athens and its lenders reached boiling point last week amid signs of a complete breakdown of trust between the two.
Writing in the Irish Times, the Greek finance minister, Yanis Varoufakis, accused his eurozone counterparts of being unwilling to even hear him out – or discuss the proposals Greece had drawn up – at a meeting many had hoped would end the crisis last week.Writing in the Irish Times, the Greek finance minister, Yanis Varoufakis, accused his eurozone counterparts of being unwilling to even hear him out – or discuss the proposals Greece had drawn up – at a meeting many had hoped would end the crisis last week.
“Is it more likely that the eurozone will become a better union to belong to if Greece is thrown to the wolves, despite the type of proposals tabled at Thursday’s eurogroup meeting?” he asked. “Or is a deal revolving around these proposals more likely to lead to greater openness, efficiency and democracy?”“Is it more likely that the eurozone will become a better union to belong to if Greece is thrown to the wolves, despite the type of proposals tabled at Thursday’s eurogroup meeting?” he asked. “Or is a deal revolving around these proposals more likely to lead to greater openness, efficiency and democracy?”
Tsipras, who was elected in January on a platform of “wiping out” the foreign-mandated budget cuts that have impoverished Greeks, has been roundly criticised for his handling of the talks. During a visit to Russia last week, he intimated that Athens would be prepared to forge other alliances if its relations with Europe broke down. Last week, Juncker accused Tsipras of deliberately misinforming Greeks of the demands creditors had made.Tsipras, who was elected in January on a platform of “wiping out” the foreign-mandated budget cuts that have impoverished Greeks, has been roundly criticised for his handling of the talks. During a visit to Russia last week, he intimated that Athens would be prepared to forge other alliances if its relations with Europe broke down. Last week, Juncker accused Tsipras of deliberately misinforming Greeks of the demands creditors had made.
“I don’t understand Tsipras,” Juncker told German news weekly Der Spiegel. “The trust I placed in him has not always been reciprocated in kind.”“I don’t understand Tsipras,” Juncker told German news weekly Der Spiegel. “The trust I placed in him has not always been reciprocated in kind.”
Trust – or the lack of it – may well determine the outcome of Greece’s fate on Monday.Trust – or the lack of it – may well determine the outcome of Greece’s fate on Monday.