Eurogroup agrees to develop first “detailed and credible” plan from Athens in five months of wrangling to help avert bankruptcy

This article is more than 5 years old

This article is more than 5 years old

Tsipras of Athens – a gripping drama entering its final act | Larry Elliott Read more

Greece’s eurozone creditors have raised the prospect of an agreement to stave off imminent bankruptcy after agreeing to develop proposals from Athens aimed at unlocking vital bailout funds.

A meeting of eurozone finance ministers broke up after little more than an hour of discussions over a new offer from the government of the Greek prime minister, Alexis Tsipras. However, while negotiators said the proposals on budget surpluses, pensions and tax represented a good basis for discussing a last-ditch deal, the move came too late for a definitive breakthrough at an emergency summit of EU leaders on Monday evening.



Expectations of a broad agreement were raised, however, after Greece’s economy minister, Giorgos Stathakis, told the BBC he expected eurozone leaders would reach agreement over the Greek bailout, allowing authorities in Athens to unlock €7.2bn (£6.3bn) of financial aid.

An EU official on the creditors’ side described the Greek proposals as the first “detailed and credible” plan that they had seen in five months of deadlock.

Jeroen Dijsselbloem, the Dutch finance minister, who chairs the group of 19 eurozone countries, said that the European Union institutions needed time to look at the Greek proposals with the aim of reaching an agreement later this week.



The Greek plan was “a basis to really restart the talks again and really get a result”, he said, although officials needed to assess whether “the economic reforms [proposed] are enough for the economy to take off again”.

Greece submitted concessions overnight in response to creditors’ key demands including raising VAT and making changes to the country’s pension system that would eventually raise the retirement age to 67.



Several eurozone finance ministers complained of confusion after the Greek government sent two versions of the proposals, but Dijsselbloem dismissed it as “no big problem”.

An EU official involved in the talks on the creditors’ side said of the proposals:

“I am not sure if they will fly, but they are a good basis for discussion.”

He also confirmed that the Greeks had made meaningful concessions on VAT rates and pensions reform, two of the main sticking points. The Greeks wanted to keep a three-tier system of VAT, but the lowest rate, which the creditors want abolished, would only apply to a “couple” of items, believed to be books and medicines.

Eurozone ministers are expected to meet again on Thursday – their third meeting in eight days – in yet another attempt to end the deadlock which has brought Greece to the brink of bankruptcy.





Meanwhile, the Greek prime minister, Alexis Tsipras, was still due on Monday night to meet German chancellor Angela Merkel, French president François Hollande and other eurozone leaders to discuss the latest plan.

The emergency meeting of EU leaders is being seen as a victory for Tsipras, who has long argued that a breakthrough can only be made at the highest political levels.

Negotiators are promising debt relief for Greece but officials have stressed that a breakthrough will depend on a positive response from Tsipras.



Greece’s international creditors are looking at a deal that would extend the country’s bailout by six months and supply up to €18bn (£12.9bn) in rescue funds.

Greece urgently needs funds ahead of a €1.6bn payment to the International Monetary Fund due on 30 June.

The six-month rescue extension being considered would unlock the €7.2bn in Greece’s bailout fund that is yet to be disbursed as well as €10.9bn already lent to Athens but earmarked for recapitalisation of its weakened banks. The latter sum could be quickly transferred to the government to help debt repayments.

Earlier on Monday, as finance ministers arrived in the pouring rain in Brussels for their meeting, many played down hopes of an imminent breakthrough, saying they had not had enough time to study the plans..





Alexander Stubb, Finland’s finance minister, complained that finance ministers and eurozone leaders had “wasted a lot of air miles” over Monday’s meetings. As the talks broke up he tweeted: “Work continues. Institutions assess proposals.”



“We need a deal in the coming days,” said the European commissioner responsible for the euro, Valdis Dombrovskis.

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

EU leaders had been reluctant to discuss Greece at this Thursday’s summit, where the packed agenda includes the humanitarian migrant crisis on Europe’s borders, a controversial trade deal with the US and the UK’s demands for treaty change.

Tsipras met his three main creditors – the European commission, the IMF and the European Central Bank (ECB) – on Monday morning, after getting an initially positive reaction to his compromise plan.



Greek crisis: last-ditch bid to avert default - live updates Read more

Talks between Greece’s leftist government and its creditors have been deadlocked for five months and the country is fast running out of money.

But hopes that an agreement might be reached sent shares across Europe surging today, with the Greek stock market rising 9%. The German DAX leapt by 2.5% and the French market was also up over 2%. In London, the FTSE 100 index jumped by 75 points, or 1.1%. Italian shares were up by 1.8%.



Italy’s prime minister, Matteo Renzi, urged the two sides to seize a “window of opportunity”, saying that all conditions were in place for them to reach a “win-win accord”.



The Greek financial system was given a boost ahead of the crunch talks, when the ECB agreed to extend emergency funding to Greek banks.



A banking source told Reuters that the ECB’s decision-making governing council had raised the amount of emergency funds available to Greece’s cash-starved banks and was ready to convene again any time it was needed.

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 Guardian is holding a panel discussion on Greece, Grexit and the troika on Thursday. Come along to have your say. Click here for more details.



