Prime Minister Alexis Tsipras presented last-minute adjustments Sunday to Athens’ so-far unconvincing proposals on how to avoid default and ejection from the eurozone, in a flurry of phone calls with EU leaders ahead of Monday’s emergency summit.
“The prime minister presented the three leaders Greece’s proposal for a mutually beneficial agreement that will give a definitive solution and not postpone addressing the problem,” Tsipras’ office said in a statement quoted by Reuters.
There was no news of precisely what new ideas he discussed with Germany’s Angela Merkel, France’s François Hollande and Jean-Claude Juncker, the European Commission president.
“Work on new proposals is ongoing. However at this stage no new proposals have been presented yet,” said an EU diplomat, who confirmed that a series of urgent phone calls had taken place on the Greek situation.
There was speculation at the weekend that a modified Greek proposal might include an increase in taxes on fuel, for example, and the elimination of some tax breaks, but not the deep cuts in pension spending that Greece’s creditors have demanded.
Tsipras met with his cabinet on Sunday ahead of Monday’s meetings, which will first gather finance ministers from the eurozone and then heads of government.
The talks are possibly the last chance to help Greece avoid a default. Athens owes €1.6 billion to the International Monetary Fund at the end of the month, when its second bailout worth €240 billion expires. Without external financial support, Greece risks a collapse of its banking system and an economic catastrophe.
On Friday, the European Central Bank was forced to provide €1.8 billion in emergency funding to keep the Greek banking system afloat, after more than €1 billion was reportedly withdrawn in just one day by Greeks.
As the sense of urgency for Monday’s meetings increases, the start of the Eurogroup meeting of finance ministers was brought forward to 3 p.m.to 12:30 p.m. local time.
Pressure is growing for EU leaders to come up with a plan to manage a “Grexit” from the euro in case talks fail. Poland’s Prime Minister Ewa Kopacz is summoning an emergency meeting for her finance and foreign ministers as well as the central bank chief on Monday to deal with the possible fallout, even though Poland is not a member of the euro.
A demonstration backing the Greek government’s tough negotiating position is scheduled for Sunday night in Athens, while a second pro-European rally will be held on Monday. Opinion polls show that most Greeks want to keep the euro and want their anti-austerity government to strike a deal with Greece’s creditors.
Geek Minister of State Alekos Flabouraris spoke of a “supplement” to the existing Greek offer on television Saturday, adding: “We are not going there with the old proposal.”
Greece has been playing up the enormous threat that its exit would pose to the credibility and future prospects of the common currency. Writing in Germany’s Frankfurter Allgemeine Sonntagszeitung, Greek Finance Minister Yanis Varoufakis said Merkel faced a “stark choice” over whether to cut a deal with Athens.
“Our side will arrive in Brussels with the determination to compromise further as long as we are not asked to do what previous governments did: to accept new loan tranches under conditions that offer little hope that Greece can repay its debts,” he wrote.
The problem with that approach is that it is unlikely to be accepted by the IMF, which became involved in the Greek rescue to prevent political fixes. Greek officials are already saying that they want to cut the Fund out of the talks.
“I am one of those who think that the IMF should not be in Europe. I hope we find a solution without its participation,” Nikos Pappas, a minister of state and a close Tsipras ally, told the Ethnos daily newspaper Sunday.
Meanwhile, the Greek government and its creditors continued to blame each other for the stalemate. Varoufakis, writing in the Irish Times this weekend, said his reform proposals had met “with deafening silence” from Eurogroup ministers last week, while the ministers complained that Athens had failed to meet their demands for clear reform proposals.
Greece’s creditors want concrete promises of reforms and budget tightening that ensure a long-term surplus.
The populist Syriza government, elected on promises of ending the austerity that it blames for slashing GDP by a quarter over the last five years, wants a more flexible approach that would see overall debt reduced as well as an easing of the policies that have brought penury to millions of Greeks.
Pappas told Ethnos that “red lines” include no cuts to pension plans and wages, and reiterated the demand for a comprehensive review of Greece’s public debt, now at an unsustainable 177 percent of GDP.