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Greece in last-ditch bailout bid

Published 09/07/2015

Alexis Tsipras at the European Parliament on Wednesday (AP)
Alexis Tsipras at the European Parliament on Wednesday (AP)

Greece will submit detailed proposals for economic reform in a last-ditch attempt to secure a further bailout as its banking system teeters on the brink of collapse.

The country's prime minister Alexis Tsipras has issued a plea for a resolution to his country's debt crisis which will offer "light at the end of the tunnel" after more than five years of austerity.

Athens has applied for a third bailout through the European Stability Mechanism (ESM) to avoid bankruptcy and the possibility of crashing out of the euro.

European Council president Donald Tusk said that "the last chance procedure" had started with a deadline for agreement by the end of the week.

Greece has offered to implement a series of tax and pension reforms as early as next week in order to secure a lifeline from the ESM.

The letter from Greece's new finance minister Euclid Tsakalotos requesting a three-year long programme of support said the country would "set out in detail its proposals for a comprehensive and specific reform agenda" today.

In the application he stressed the urgency of the loan request " given the fragility of our banking system", the lack of liquidity and the country's forthcoming obligations and highlighted Greece's " commitment to remain a member of the eurozone and to respect the rules and regulations as a member state".

Leading academics from the London School of Economics have called on both Greece and its international creditors to adopt a more responsible approach to the crisis

In a letter, signed by faculty members including Nobel Prize-winning economist Sir Christopher Pissarides, the academics said: "The consequences of Greece leaving the eurozone are highly uncertain and could very well be detrimental both for Greece and the eurozone.

"To avoid Grexit, it is essential that both the creditors and the Greek government act in an economically responsible manner."

They called for a relaxation of austerity and measures to reduce Greek debt to a sustainable level.

But they also stressed that structural reforms were needed in Greece, including on pensions, VAT, anti‐corruption, tax compliance, and institutional reform of product and labour markets.

"It is important that the Greek government acknowledges that there is still a lot to be done and comes up with credible proposals," they wrote.

At Prime Minister's Questions yesterday, David Cameron again insisted that the UK was prepared for "all eventualities" in the Greek crisis.

He said: "I do fear for the future of that country.

"Obviously we want to see Greece and the eurozone come to an agreement, but we have to be prepared for all eventualities and to make sure that, whether it is helping British tourists or British businesses or British pensioners living in Greece, we have taken all the plans and all the precautions that are necessary."

The Prime Minister and fellow leaders will meet in an emergency summit involving all 28 European Union members - not just the 19 in the eurozone - on Sunday to discuss the crisis.

The Foreign and Commonwealth Office last night amended its travel advice for Greece to reflect the announcement by the Greek government that banks will remain closed until at least midnight on Monday.

The British Ambassador to Greece, John Kittmer, said: " The extension of capital controls makes it all the more important that visitors to Greece take sufficient euros in cash to cover their stay, and to meet unforeseen circumstances and delays.

"Do also check your travel insurance to make sure that you have adequate cover for additional cash, and take sensible security precautions against theft.

"We want British holiday makers to arrive prepared so that they can complete their holidays with peace of mind."

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