Eurozone officials were steeling themselves Saturday for weekend talks that could decide Greece’s future in the single currency, hours after Athens’s parliament approved a reform package to save the country from financial collapse.
A European Union source in Brussels said on Friday that the latest debt proposals from Athens ─ which closely resemble the last offer from its creditors before talks stalled ─ were “positive” enough to form the basis of a massive new bailout worth 74 billion euros ($82 billion).
But Athens’s biggest creditor, Berlin, has remained conspicuously quiet on the offer ahead of the talks, when eurozone ministers will have to decide how much financial and political capital they are willing to commit to keeping Greece afloat before a full EU summit on Sunday.
The EU source, who asked not to be named, said the plans stand only a “50-50” chance of approval when they go before the Eurogroup of 19 eurozone finance ministers on Saturday as hardliners such as Germany oppose any debt relief for Athens.
Hours earlier in Athens, Greece’s parliament approved the bailout package submitted to the EU by Greek Prime Minister Alexis Tsipras which includes plans for a pensions overhaul, tax hikes and privatisations similar to those offered by creditors last month.
The plans, submitted in Brussels on Thursday, included several key points Tsipras’s ruling coalition ─ and Greek voters ─ had previously fiercely opposed, along with a request for a three-year funding plan and a separate 35bn euro investment package.
Speaking before the vote, the leftist premier told parliament: “It is a choice of high national responsibility, we have a national duty to keep our people alive… we will succeed not only to stay in Europe but to live as equal peers with dignity and pride.”
The Greek government had hoped the vote ─ backed by 251 out of 300 deputies ─ would give it a mandate to continue the last-ditch debt talks, but it also revealed the depth of opposition to any fresh austerity measures among the ranks of the ruling Syriza party.
Three senior government figures were among 10 deputies who abstained or voted against the plan, while several others from the ruling party stayed away, prompting commentators to wager the result could force a shake-up in the government and even a cabinet reshuffle.
A ‘positive’ evaluation
In Brussels, the EU source said on Friday “there has been positive evaluation of the Greek programme”.
The EU’s bailout fund, the European Stability Mechanism, was ready to consider putting up 58bn euros, plus 16bn euros from the International Monetary Fund, for what would be a third Greek debt rescue since 2010, the source said.
The latest plan seems to have brought Athens closer to sealing a deal to save it crashing out of the euro, but it will face opposition in Brussels where some eurozone nations fear Greece could turn into a black hole for any new loans.
The Greek proposals also fail to meet international demands on some thorny issues, including tax breaks for its islands and cuts to military spending.
Speaking ahead of an EU summit called Sunday for a final decision, Tsipras admitted mistakes had been made but insisted the new proposals were the best possible deal for Greece.
“The loan deal… entails many proposals that are far from our pledges, from what we feel is right for the recovery of the economy,” he said.
Still, the premier said it was “marginally better” than proposals put forward by the creditors last month that did not offer relief from Greece’s suffocating 320bn euro mountain of debt.
Sunday’s EU summit comes a week after Greeks decisively rejected creditor demands for more austerity in return for fresh EU-IMF bailout funds in a historic public referendum.
Euro, markets soar
Earlier, France and Italy welcomed the new proposals, with French President Francois Hollande calling them “serious and credible” while cautioning that “nothing is decided yet”.
Italian Prime Minister Matteo Renzi declared himself “more optimistic” that a deal would be done.
But Germany said the outcome of this weekend’s crisis talks was “completely open”.
Berlin leads a bloc of hard line eurozone nations saying that, after two bailouts over the past five years totalling 240bn euros, and 107bn euros in debt forgiveness in 2012, Greece is looking like a bottomless money pit.
The possibility of a breakthrough sent stock markets soaring in Europe, Asia and the United States on Friday, while the euro briefly rose above $1.12 for the first time in July.
Although Greek voters last Sunday roundly voted “No” to accepting tough austerity terms for a bailout that expired June 30, they are alarmed at capital controls that have closed banks and rationed cash at ATMs.
Some 8,000 people gathered in Athens ahead of the parliamentary vote on Friday to protest against more austerity, police said, although most overwhelmingly want to keep the euro.
“The government has to find a deal with its European partners no matter what. We didn’t vote ‘No’ to leave the eurozone,” said a pensioner in Athens, Nikos Eftekidis.
But another pensioner, Giorgos, said the “government’s proposed measures are very tough, I wasn’t expecting that”.
“That’s not what the Greeks voted for.”
