Greek PM Tsipras makes last-ditch attempt to get new bailout
Greek Prime Minister Alexis Tsipras made an extraordinary last-minute bid to prevent his country tumbling out of the euro as he appealed yesterday for a new bailout from his European and international partners.
Although it seemed that Mr Tsipras had failed to prevent Athens from defaulting on its €1.55bn loan from the International Monetary Fund by last night's 11pm deadline, his efforts prompted a flurry of activity, including a conference call of eurozone finance ministers.
However, Mr Tsipras - who at one point last night was rumoured to be on a flight to Brussels to meet European Commission President Jean-Claude Juncker - was still standing by his plan for a referendum this Sunday on whether to accept the terms of the most recent bailout proposal, to the annoyance of the rest of the eurozone.
In the latest instalment of the Greek euro drama, Mr Tsipras made his bailout appeal in a letter to Jeroen Dijsselbloem, who heads the Eurogroup of finance ministers from the 19 countries that use the euro. His letter requested a third bailout, in the form of a €29.1bn, two-year loan.
Mr Tsipras also asked for Greece's debt to be "restructured and reprofiled… to ensure that Greece's debt becomes sustainable and viable over the long term".
Eurozone officials had previously indicated they were open to reprofiling, which would mean extending the debt payment plans. However, there is fierce resistance to restructuring - confirmed as a key demand by sources in the Greek Prime Minister's office - which would mean writing down some debt, or offering lower interest rates.
With just hours to go before the IMF default deadline, Mr Tsipras also sought to extend the country's current bailout programme "for a short period of time, in order to ensure a technical default is not triggered". Although under IMF rules, non-payment would technically put Greece in "arrears" rather than in "default", the country would nonetheless be ineligible for IMF aid until the bill is paid.
Mr Dijsselbloem convened a conference call of the Eurogroup last night, but the call ended after two hours without any agreement to extend the existing bailout. He said Greece's new proposal presented little that was new. "The political stance of the Greek government doesn't appear to have changed," he said.
A further call will take place today, but none of Greece's fellow eurozone leaders were ready to offer concessions, and Mr Dijsselbloem hinted that a third bailout might include demands on Greece for reforms similar to those previously rejected by Mr Tsipras. This is partly due to the rupture of confidence between the Greek government and its creditors. There is also scepticism about whether Mr Tsipras can secure his parliament's approval for any new deal. Crucially, German Chancellor Angela Merkel said she opposed reopening talks with Greece. With 27% of the voting rights in the European Stability Mechanism (ESM), the EU's bailout fund, Germany effectively holds a veto.
Ms Merkel is thought to want Greece to go ahead with Sunday's referendum on the demands from creditors for economic reforms in exchange for billions of euros in an extension of the current bailout. With polls suggesting a strong majority in favour of the bailout terms, and Mr Tsipras all but promising to resign if he does not secure his No vote, Berlin seemed to be calculating that Greece could yet stay in the euro, but be rid of Mr Tsipras.
Similarly, while Mr Juncker made a renewed attempt late on Monday to reach a compromise in a late-night phone call to Mr Tsipras, he did not offer any concessions, and insisted that either the referendum be scrapped, or that Mr Tsipras campaign for a Yes vote.
Mr Tsipras's overtures came as it became clear that the rest of the eurozone was closing ranks against him.
Italian Prime Minister Matteo Renzi said Mr Tsipras was attempting to dodge the painful reforms that other vulnerable eurozone countries had endured. "We haven't scrapped early retirements for Italians so that the Greeks could keep theirs," he said in a newspaper interview.