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Time-out from the eurozone

Germany
13.07.2015
By our dpa-correspondent and Europe Online    auf Facebook posten  Auf Twitter posten  
Eurozone leaders inch towards Greece bailout deal at marathon summit
Eurozone leaders were inching early Monday towards a new bailout agreement with near-bankrupt Greece, although sources said it was tough going after the threat of a Greek "time-out" from the eurozone was used as leverage in the talks.
GALLERY
Brussels (dpa) - The eurozone is in a race against time to avoid a default in Greece, which has been cut off from bailout aid, has fallen into arrears to the International Monetary Fund (IMF) and is now at risk of losing access to emergency support from the European Central Bank (ECB).
Greek Prime Minister Alexis Tsipras (C) talks with German Chancellor Angela Merkel (L) and French President Francois Hollande at the start of eurozone leaders summit on the Greek crisis at the European Council headquarters in Brussels, Belgium, 12 July 2015.

Sunday had been set as the deadline to reach a bankruptcy-averting agreement, one week before Athens owes a decisive 3.5-billion-euro (3.9-billion-dollar) debt repayment to the ECB.

But German Chancellor Angela Merkel was among several leaders who warned ahead of their summit in Brussels that there would not be an agreement with Greece "at all costs."

"I know that nerves are frayed, but it has to be ensured that the benefits outweigh the disadvantages," she said.

The leaders were still entrenched in negotiations with Greek Prime Minister Alexis Tsipras early Monday after 11 hours of talks. His government has requested a new three-year bailout - expected to amount to at least 74 billion euros.

The summit was interrupted several times for small-group consultations, with Tsipras reported to have met at least twice with Merkel and French President Francois Hollande.

Germany and France have the largest economies in the eurozone and are thus considered particularly influential. They are also among the largest contributors to 240 billion euros in bailouts that have helped keep Greece afloat since 2010.

The summit was soured by language in a document prepared by eurozone finance ministers which said that "in case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area."

A proposal that 50 billion euros of Greek assets should be parked away in a Luxembourg fund for later privatization also proved controversial, EU sources said on condition of anonymity.

The two ideas - pushed by the German Finance Ministry - were seen by Greece as a provocation, according to one official.

"You‘re wondering why people are opening this can of worms today when we were so close [to an agreement]," the source said.

The idea of a temporary Greek exit from the eurozone had met with harsh criticism. Austrian Chancellor Werner Faymann called the suggestion "degrading," while European Parliament President Martin Schulz warned against Greece being "humiliated."

After nine hours of talks, the "time-out" language had been removed from a document under consideration at the summit, while the amount of the privatization fund was in negotiations, sources said.

Diplomats also reported progress on the continued involvement of the IMF in the new bailout programme, which the eurozone had set as a condition.

"In a spirit of a global agreement, some things will be taken out and some things will stay in," one source noted.

Tsipras was "negotiating toughly to preserve the dignity of the Greek people," but recognized the need for a breakthrough, according to another official.

"I‘m here ready for an honest compromise," the Greek leader had said as he arrived for the summit. "We owe that to the peoples of Europe, who want Europe united and not divided."

His government has proposed reforms it would carry out in return for the new bailout, but eurozone finance ministers have determined that the plan needs to be "seriously strengthened," according to a copy of their recommendations to the summit seen by dpa.

Many ministers have also expressed doubts about whether Athens can be trusted to follow through on reform promises it is making to get the new bailout.

The ministers‘ four-page document spelled out a long list of economic reforms that Greece would have to start pursuing for negotiations on the new bailout to start, including legislative action on some measures by Wednesday.

"It is ... on the Greek side now to prove that it can be a reliable, trustworthy partner," Slovenian premier Miro Cerar noted ahead of the summit.

"There are reforms that are necessary, [Greece] has to demonstrate that she is ready to engage in them quickly," Hollande added. "And then at that moment all of Europe, the eurozone, has to say that it will give its support."

Greece needs aid quickly to stay afloat, including 7 billion euros by July 20, according to the finance ministers. Eurozone leaders were said to be considering different options for rapid support.

They include bilateral loans from other eurozone countries; funds from an existing central bank programme involving the purchase of Greek bonds; and access to 13 billion euros remaining in an early EU rescue tool, the European Financial Stabilization Mechanism, an EU official said.

In Athens, meanwhile, a few hundred people gathered in front of the parliament building on Sunday evening waving anti-austerity banners. The mood was subdued, but some expressed bitterness over what seemed like a bleak set of possibilities for their economy.

"They want us to have half the salary and pay double the tax," Panagiotis Piezzakis, a taxi driver from Kalamata, told dpa.

Banks in the country have been closed for two weeks, and only minimal amounts may be drawn from cashpoints.

 

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