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Greece debt crisis: Athens seeks new last-minute deal Greece debt crisis: Eurozone rejects bailout appeal
(about 2 hours later)
The Greek government has requested a new bailout deal from the eurozone, just hours before it must repay €1.6bn (£1.1bn) to the International Monetary Fund (IMF). Eurozone finance ministers have rejected a Greek government call to extend its bailout, just hours before it expires and a €1.6bn (£1.1bn) payment to the IMF falls due.
Greece is asking for a new two-year €29.1bn aid deal from a bailout mechanism for eurozone countries. The move came after ministers held an emergency conference call.
Eurozone finance ministers discussed the Greek offer in a teleconference on Tuesday evening, but made no decision. Greek PM Alexis Tsipras had requested a short extension to Greece's current bailout, and a two-year rescue deal.
If it fails to make the IMF payment, Greece could risk leaving the euro. If it fails to repay the International Monetary Fund (IMF), Greece could risk leaving the euro.
The European Commission, which is one of Greece's creditors, wants Athens to raise taxes and cut welfare spending. Greece has also asked the IMF for more time, according to Deputy Prime Minister Yannis Dragasakis.
No advanced economy has ever missed a payment on an IMF loan. Eurogroup chairman and Dutch Finance Minister Jeroen Dijsselbloem said it would be "crazy" to extend the Greek bailout beyond its midnight expiration as Athens was refusing accept the European proposals on the table.
Amid fears of a Greek default on its huge public debt of €323bn - and a possible exit from the euro - long queues of people are continuing to snake from many cash machines in Greece, where withdrawals are capped at just €60 a day. Speaking after the conference call, he added that a Greek request for a new €29.1bn European aid programme would be considered later.
Analysis: By Chris Morris, BBC News, Brussels The European Commission - one of Greece's "troika" of creditors along with the IMF and the eurozone's European Central Bank - wants Athens to raise taxes and cut welfare spending to meet its debt obligations.
Nothing if not dramatic, the Greek government has waited until well past the eleventh hour to request an entirely new third bailout. Amid fears of a Greek default on its huge public debt of €323bn, people have queued at cash machines. Withdrawals are capped at just €60 a day.
It involves borrowing money from the eurozone's permanent bailout fund, the European Stability Mechanism - there is no mention of the IMF. Greece is asking for loans totalling €29.1bn to cover its debt repayments until the end of 2017. Greek banks did not open this week after talks between Greece and its creditors broke down. However, up to 1,000 bank branches will re-open from Wednesday to allow pensioners - many of whom do not use bank cards - to withdraw up to €120.
But reaching an agreement on a third bailout could take weeks if not months. Analysis: By Andrew Walker, economics correspondent
So the letter the Greek government has sent to the ESM and the eurogroup also asks again for an extension to the current bailout - in order to ensure that a technical default is not triggered. The sky will not fall in when the deadline for Greece to repay to the IMF passes, but the tension will rise.
The trouble is that the level of political distrust between Greece and its creditors is so high at the moment that any progress will be difficult to achieve. If a payment to the IMF is missed and managing director Christine Lagarde informs her board, the eurozone would have the right under the loan agreements to demand immediate repayment of more than €180bn they have already lent Greece, together with interest.
Loans from the ESM come with conditions attached - conditions which would include many of the economic and structural reforms that the two sides have been haggling over for months. Failure to repay the IMF comes under a list of "events of default" set out in the legal documents. IMF officials say Ms Lagarde intends to inform the board promptly if Greece doesn't pay on time.
But the alternative to yet more talks on finding a deal? A massive step into the unknown for all concerned. Of course, in practice, the rest of the eurozone won't demand the money back and send in the bailiffs. Athens couldn't possibly repay and in any event they want to keep talking, hoping they can keep Greece in the eurozone. But the fact that they would have the option is a sign of how close Greece is getting to the brink.
On Tuesday evening, thousands of pro-EU protesters braved stormy weather and gathered outside the Greek parliament in Athens to urge a "yes" vote in a referendum on Sunday over whether the country should accept its creditors' proposals.On Tuesday evening, thousands of pro-EU protesters braved stormy weather and gathered outside the Greek parliament in Athens to urge a "yes" vote in a referendum on Sunday over whether the country should accept its creditors' proposals.
It follows a similar demonstration by those advocating a "no" vote - the path preferred by Prime Minister Alexis Tsipras - on Monday. It follows a similar demonstration by those advocating a "no" vote - the path preferred by Mr Tsipras - on Monday.
Greek banks did not open this week after talks between Greece and its creditors broke down. EU leaders have warned that a no vote rejecting creditors' proposals would mean Greece leaving the eurozone - though Mr Tsipras says he does not want this to happen.
However, up to 1,000 bank branches will re-open from Wednesday to allow pensioners - many of whom do not use bank cards - to withdraw up to €120. The ECB is believed to have disbursed virtually all of its emergency funds for Greece, amounting to €89bn (£63bn).
The European Commission offered a slightly amended deal to Greece late on Monday night, which the Greek government did not accept.
Instead, Greece responded with a request for a two-year deal under the European Stability Mechanism (ESM), the bailout mechanism for eurozone countries whose aim is to maintain the stability of the euro. The ESM did not exist when Greece was bailed out in 2010 and 2012.
However, German Chancellor Angela Merkel has insisted that the eurozone's wealthiest member will not enter into new aid negotiations with Greece before its weekend referendum.
"Before a referendum, as planned, is carried out, we won't negotiate on anything new at all," she said.
European Union leaders have warned that a rejection of creditors' proposals would mean Greece leaving the eurozone - though Mr Tsipras says he does not want this to happen.
What will happen next?What will happen next?
01:00 Greek time Wednesday (22:00 GMT): Greece's €1.6bn repayment to the IMF is due.01:00 Greek time Wednesday (22:00 GMT): Greece's €1.6bn repayment to the IMF is due.
5 July - the referendum on creditors' proposals, and many say Greece's membership of the eurozone, takes place5 July - the referendum on creditors' proposals, and many say Greece's membership of the eurozone, takes place
20 July - Greece must redeem €3.46bn of bonds held by the European Central Bank. If it fails to do so, the ECB can cut off Greece's access to emergency loans.20 July - Greece must redeem €3.46bn of bonds held by the European Central Bank. If it fails to do so, the ECB can cut off Greece's access to emergency loans.
On Monday Mr Tsipras appealed to Greeks to reject the creditors' proposals, saying this would give Greece "more powerful weapons" in negotiations.
He also hinted that he would resign if the result of the referendum was a "yes" vote.
"If the Greek people want to proceed with austerity plans in perpetuity, which will leave us unable to lift our head... we will respect it, but we will not be the ones to carry it out," he said.
Meanwhile, European Commission President Jean-Claude Juncker said he felt betrayed by the Tsipras-led government and called on Greek voters to oppose him.
The ECB is believed to have disbursed virtually all of its emergency funds for Greece, amounting to €89bn (£63bn).
Days of turmoilDays of turmoil
Is Grexit nearer?Is Grexit nearer?
Katya Adler: A European divideKatya Adler: A European divide
Existential threat to euro from Greek exitExistential threat to euro from Greek exit
A guide to the key numbers and issuesA guide to the key numbers and issues
Lenders' proposals - key sticking pointsLenders' proposals - key sticking points
Source: European Commission document, 26 Jun 15 (pdf)Source: European Commission document, 26 Jun 15 (pdf)
Greek debt jargon explainedGreek debt jargon explained
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