Eurozone tells Greece 'take it or leave it'

  • 13/07/2015
German Chancellor Angela Merkel speaks with Alexis Tsipras (R) and French President Francois Hollande (Reuters)
German Chancellor Angela Merkel speaks with Alexis Tsipras (R) and French President Francois Hollande (Reuters)

Eurozone leaders have set Greece brutal take-it-or-leave-it conditions for a desperately needed bailout deal as an exit from the single currency loomed ever larger.

Hawkish Germany on Sunday pushed for a Greek "time out" from the euro if leftist Prime Minister Alexis Tsipras fails to agree terms for a three-year rescue plan worth up to 86 billion euros (NZ$142.3 billion).

Athens faces demands to push through new reform laws next week to win a third bailout since 2010, with the government in a tight corner as the cash-starved country's banks look set to run dry in days.

"There will be no agreement at any price," Merkel said as she arrived for a summit of 19 eurozone leaders, complaining of a loss of trust in Athens and warning of "tough negotiations" ahead.

Tsipras, who was elected on an anti-austerity platform in January, insisted a deal was possible "if all parties want it" and added that he was ready for an "honest compromise".

The tensions were underscored when EU President Donald Tusk halted the summit midway for three-way talks between Tsipras, Merkel and French President Francois Hollande.

The summit came after the Eurogroup of eurozone finance ministers finished two days of intense talks on Greece's reform proposals. The Greek parliament approved the plans on Saturday, despite them being similar to those rejected by Greeks in a controversial referendum on July 5.

Greece would now have to push through new laws by Wednesday under the conditions agreed by the eurozone ministers and to be considered by the leaders of the bloc, Finnish Finance Minister Alex Stubb said afterwards.

Athens would also have to introduce tough conditions on labour reform and pensions, VAT and taxes, and measures on privatisation, he said.

The Eurogroup even proposed a temporary Greek exit from the euro, a move first floated by Germany, which some observers said was a thinly disguised way of pushing Athens out of the single currency softly.

"In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area, with possible debt restructuring," said the document obtained by AFP. The passage was in brackets to indicate it was not unanimously approved and needs the approval of leaders.

Other measures include letting the "troika" of creditors back on the ground in Athens after they were expelled by Tsipras's government, and getting creditors' approval for any legislation affecting issues covered by the bailout.

The crisis has exposed tensions between the eurozone's two biggest powers with pro-austerity Germany going head to head with France, which has been the country most supportive of Greece during the crisis.

Hollande said Paris would do "everything" to keep Greece in the euro and ruled out the "temporary Grexit" proposal.

In Greece, there is growing alarm at capital controls that have closed banks and rationed cash at ATMs for nearly two weeks, leading to fears that food and medicine will soon run short.