Greece scrambles for debt deal with fresh plan before summit

[ATHENS] Greece's prime minister presented new proposals to European leaders Sunday aimed at ending his country's debt crisis, as Athens announced a frenzied round of meetings ahead of a summit that could determine whether Greece crashes out of the eurozone.

In a telephone call with German Chancellor Angela Merkel, French President Francois Hollande and European Commission President Jean-Claude Juncker, Alexis Tsipras detailed a "mutually beneficial deal", the Greek premier's office said in a statement.

The flurry of diplomatic contacts came as Athens scrambled to reach a deal with its eurozone lenders, with Mr Tsipras also scheduled to meet the leaders of its IMF, EU and ECB creditors on Monday before the summit.

Italian Prime Minister Matteo Renzi urged the two sides to seize a "window of opportunity", saying all conditions were in place for them to reach a "win-win accord".

Athens said its new proposals were aimed at reaching a "definitive solution" to the five-month standoff between Athens and its creditors - the European Commission, International Monetary Fund and European Central Bank - as fears deepened over a potential "Grexit" from the eurozone.

The heads of the 19 eurozone countries will hold an emergency summit on the crisis in Brussels on Monday under pressure to prevent Greece from defaulting on its debt with a June 30 payment deadline fast approaching.

Separately, the European Central Bank's governing council will also meet Monday to discuss whether to raise the level of emergency funding to Greek banks yet again, after the country's banking system came under intense pressure with clients withdrawing billions in savings.

'SANITY WILL PREVAIL'

The head of Greece's biggest bank said she thought "sanity will prevail".

"To enter into such uncharted waters and take up all the risk both for the eurozone and for Greece for two or three billion (euros) difference, I think it's insane," National Bank of Greece chief Louka Katseli told BBC radio.

Greece's anti-austerity government met Sunday to refine its proposals, while a European source said Tsipras and Juncker held talks Saturday and will again speak Sunday, adding that there were many exchanges and "informal work under way to find a solution".

Failing a deal, Greece is likely to default on an IMF debt payment of around 1.5 billion euros (S$2.28 billion) due on June 30, setting up a potentially chaotic exit from the eurozone.

Last Wednesday the Greek central bank put the risk in stark terms saying: "Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and - most likely - from the European Union."

The IMF was called in to help rescue Greece at the end of 2009 when the debt-plagued country could no longer borrow on international markets.

The EU's involvement in the huge bailout, which was to provide 240 billion euros in loans in exchange for drastic austerity measures and reforms, runs out at the end of this month, but IMF support was supposed to continue to March 2016.

Talks between Greece's radical-left government and its lenders have been deadlocked for five months over the payment of the final 7.2 billion euro tranche of the bailout, with talk also turning to an extension of the European help.

For the Greek government any extension of the bailout should be about kickstarting the country's devastated economy and not further austerity.

They also want an easing of the country's crippling debt burden, which officially stood at 312.7 billion euros, or 174.7 per cent of gross domestic product, in March.

The international lenders have rejected a series of proposals from Athens, insisting on their own mixture of cuts and reforms.

Minister of state Nikos Pappas, who is close to Tsipras, said the counter-proposals would be "unacceptable to whichever Greek political party" was in power.

'BRIDGING THE GAP'

Alekos Flambouraris, another Tsipras minister, said Saturday that Athens would propose reworked measures that "bridge the gap", while also predicting that Greece's creditors would not be satisfied with the gestures, Greek media reported.

"You'll see they won't accept loosening budget (restrictions), or our proposal on the debt," he said of two main sticking points in the talks.

But the country's Finance Minister Yanis Varoufakis, whose flamboyant style has irked many of his European counterparts, turned the tables by putting the onus on the leader of paymaster Germany to do a deal.

"The German chancellor has a clear decision to make on Monday," he wrote in an op-ed for the Frankfurter Allgemeine Zeitung.

"On our side, we will come with determination to Brussels to agree to further compromises as long as we are not asked to do what the previous (Greek) governments have done: accept new debt under conditions that offer little hope for Greece to repay its debts," he wrote, without specifying the compromises.

AFP