Greek debt crisis: Tsipras offer is welcomed as 'good basis for progress' / GUARDIAN

Greek debt crisis: Tsipras offer is welcomed as 'good basis for progress'

Proposal from Athens receives upbeat assessment from Jean-Claude Juncker’s head of cabinet ahead of crunch summit

Staff and agencies

Monday 22 June 2015 / http://www.theguardian.com/world/2015/jun/22/greek-debt-crisis-tsipras-offer-is-welcomed-as-good-basis-for-progress

Greece’s new proposals to European leaders ahead of a crunch summit on Monday offered a ray of hope that a deal to end the country’s debt crisis could be struck after five months of deadlock.

The Greek prime minister, Alexis Tsipras, detailed what his office called a “mutually beneficial deal” in a phone call with Germany’s chancellor, Angela Merkel, the French president, Francois Hollande, and the European Commission president, Jean-Claude Juncker.

Juncker’s head of cabinet, Martin Selmayr, said the Athens proposal offered “a good basis for progress”, though he described the negotiations as a “forceps delivery”, underscoring the exertions to prevent Greece crashing out of the eurozone.

The heads of the 19 eurozone countries are holding an emergency summit on the crisis in Brussels on Monday in an attempt to ease the debt crisis before a critical €1.6bn payment to the International Monetary Fund falls due next Tuesday.

Greece’s international creditors are aiming to strike a deal to stop Athens defaulting and possibly tumbling out of the euro by extending its bailout by six months and supplying up to €18bn (£12.9bn) in rescue funds.

The negotiators representing Greece’s lenders are also proposing to pledge debt relief for the austerity-battered country – but officials stressed that a breakthrough hinged on a positive response from Tsipras.

Greece’s creditors were still waiting for Tsipras and his Syriza party to formally submit revised fiscal targets, pensions cuts and tax increases in an attempt to secure the six-month lifeline, concessions that the country’s leader has resisted since he came to power five months ago.

Greece said its new proposals were aimed at reaching a “definitive solution” to end the standoff between Athens and its creditors.

Athens announced a frenzied round of meetings before the summit, with Tsipras also scheduled to meet the leaders of its International Monetary Fund, European Union and European Central Bank [ECB] creditors on Monday.

Separately, the ECB’s governing council also meets on 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 massive sums in savings.

Italy’s 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”.

Asian markets mostly reacted positively in early trade, with Tokyo rising almost 1% and Hong Kong up 0.55%. The euro also ticked higher, buying $1.1362 and 139.55 yen, compared with $1.1349 and 139.23 yen in New York late on Friday.

Shoji Hirakawa, the chief equity strategist at Okasan Securities Co in Tokyo told Bloomberg News: “Originally there wasn’t going to be [a proposal], so the fact that there’s a new proposal on the table appears to be seen favourably.”

Underlining the growing concern beyond Greece, several thousand demonstrators gathered in Brussels on Sunday and several hundred in Amsterdam to plead for solidarity with the cash-strapped country.

In Athens itself, more than 7,000 people took to the streets for the second time this week to protest austerity with banners reading “A different Europe with Tsipras” and “You can’t blackmail the people, the country is not for sale”.

The head of Greece’s biggest bank said she thought “sanity will prevail” and lead both sides to a deal.

Louka Katseli, the chief of the National Bank of Greece, told BBC radio: “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.”

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 €240bn ($270bn) in loans in exchange for drastic austerity measures and reforms, runs out at the end of June, but IMF support was supposed to continue to March 2016.

Talks between Greece’s radical-left government and its lenders have been stalled by disagreements over the reforms demanded in exchange for the final €7.2bn 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 €312.7bn, or 174.7% 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.

Alekos Flambouraris, another Tsipras minister, said on 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.

Shinya Harui, a Europe-focused financial markets analyst at Nomura Securities in Tokyo, said that despite the optimism displayed by financial markets, it was difficult to forecast the summit outcome.

“[Greece] is unlikely to have presented clean-cut proposals that meet creditors’ demands but they are likely to claim they have made enough concessions, and it is creditors who are blocking a deal,” he told Agence France-Presse.

“They are probably still trying to negotiate at their own pace.”

Agence France-Presse contributed to this report