Quick deal looks increasingly unlikely as Greek banks head for collapse

The European Union's 28 member states will hold a 'decisive' summit on the Greek debt crisis Sunday after an emergency eurozone leaders meeting today finished without a deal.

Amid warnings there were just five days left to save the Euro, European Council president Donald Tusk said: 'I have no doubt that this is the most critical moment in the history of the EU.

'The stark reality is that we only have five days left to find the ultimate agreement.'

‎If a compromise is not found, it is expected that the leaders will work out a framework of how to deal with Greece's exit from the Euro.

In what was his first meeting with other eurozone finance ministers, Euclid Tsakalotos - who has replaced hardline Leftist Yanis Varoufakis as Greece's finance minister - did not even bring a printed document to today's emergency meeting, a source has said.

His failure to put forward any credible proposal to solve the country's financial crisis comes as it was revealed U.S. President Barack Obama has personally intervened in the crisis.

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Euclid Tsakalotos had no concrete proposal to offer in a meeting with other European finance ministers earlier today, and didn't even arrive with a printed document, sources claimed

It had been hoped Tsakalotos - who replaced hardline Leftist Yanis Varoufakis - would be able to negotiate a new deal within 48 hours, a prospect which looks increasingly unlikely

News of the summit at the weekend comes after today's meeting in which no progress was made between eurozone leaders and the Greek Prime Minister Alexis Tsipras.

German Chancellor Angela Merkel said the fact that all EU leaders were being summoned to the talks on Sunday showed how urgent the situation was.

She also revealed for the first time that leaders have been discussing the possibilities of a parallel currency if Greece falls out of the Euro.

Austrian chancellor Werner Faymann said if a deal could not be reached it will be time to work out a Plan B.

Meanwhile, The White House said Mr Obama and Mr Tsipras spoke by phone Tuesday morning.

It's the first known phone call between the two leaders since the weekend referendum in which Greece rejected creditor proposals that included more austerity measures.

The White House has said it's in Europe's interest to reach a resolution that puts Greece on the path toward economic growth and stability.

Prime Minister Alexis Tsipras has been under pressure to come up with a new plan for the European nation since people rejected tough new austerity measures in return for more bailout cash earlier this week.

During today's meeting with other Eurozone leaders it was expected he would use the 'no' result of the recent referendum as leverage to negotiate a better deal with the country's creditors.

A woman carries shopping bags in central Athens, Greece, as it faces a last chance to stay in the eurozone

That process might prove difficult, however, with a rift opening up between French leaders - who are sympathetic to Greece's position - and Germany - which has said no new deal is possible.

Mr Tsipras said Athens was seeking a 'final exit' from crisis with a reform-for-aid proposal that he said would come by the end of the week.

'The discussion was held in a positive atmosphere. The process will be fast, it starts in the coming hours with the aim of concluding it by the end of the week, at the latest.

'The Greek side will continue the effort, having the strong weapon of the Greek people's verdict... the vast majority's will for a viable agreement to end the discussion [about a Grexit] and offer the prospect of finally exiting the crisis.'

In the meantime the European Central Bank has delayed a decision on whether or not to keep propping up the country banks, meaning they could run out of money before the end of the week.

'We still do not have the basis for negotiations,' German Chancellor Angela Merkel said as she arrived for the crisis summit. It is not a question of weeks any more, but a question of a few days.'

The European Central Bank has said it will not give any more to prop up Greece's banks until a deal has been reached, raising the prospect that they could run out of cash before Friday (pictured, Greeks wait outside the National Bank of Greece to withdraw the 60 Euros they are limited to)

If Greek banks do go bust, it will signal the first step of a likely exit from the Euro and return to the drachma (pictured, a man stands outside a shuttered meat market in Athens)

French President Francois Hollande urged Greece to present 'serious, credible proposals', adding that to keep Athens in the single currency 'it is this week that decisions must be made'.

A bank holiday in the country has been extended to at least Thursday, while Greeks are still limited to withdrawing 60 Euros (£40) per day from cash machines to stem the flow of funds away from the banks.

If the banks do run out of money, it would likely signal the first step in Greece exiting the Euro and readopting the drachma.

EU Commissioner for the euro Valdis Dombrovskis said ahead of today's meetings that a so-called 'Grexit' from the single currency 'cannot be excluded'.

In another bizarre twist in the Greek saga, Fidel Castro has written an open letter to Tsipras, praising his 'brilliant political victory' after campaigning for a 'no' vote in the referendum.

In the letter, published on the front page of Cuba's state-sponsored newspaper today, he wrote: 'Your country, especially your courage in the current moment, awakens admiration among the Latin American and Caribbean peoples of this hemisphere upon seeing how Greece, facing external aggressions, defends its identity and culture.'

Fidel Castro, former leader of Cuba and a committed Socialist, has written to Greek Prime Minister Alexis Tsipras to praise his 'brilliant political victory' in convincing the Greeks to vote no to austerity

Earlier in the day Jean-Claude Juncker, one of the men Tsipras negotiated with this evening, dismissed the same referendum as an 'irrelevant circus' saying he couldn't understand what the result meant

Pensioners wait outside a branch of the National Bank to receive part of their pension in Athens today

Tourists line up to buy a ticket for the Acropolis hill archaeological site in Athens this morning. With money running incredibly low in Greece, cash-holding tourists are helping to prop up the country's economy

However, earlier in the day Jean-Claude Juncker, the European Commission president who negotiated with Tsipras, described the Greek referendum as an 'irrelevant circus'.

He also admitted he is still trying to 'understand' the result, saying the wording of the referendum question was 'intelligible'.

Last night Germany warned that the euro could 'blow apart' if the single currency's members give in to demands from Greece to water down austerity measures.

Angela Merkel and Francois Hollande were locked in a bitter stand-off ahead of yet another bid by eurozone leaders to prevent the debt-ridden state crashing out of the single currency.

Athens yesterday extended its 'bank holiday' until at least Thursday after the European Central Bank deferred a decision on whether to continue propping up the country's financial institutions.

But one American hedge fund, Balyasny, yesterday warned investors that Greek banks were on the verge of running dry, leaving the country 48 hours from civil unrest.

German Chancellor Angela Merkel showed the strain ahead of her meeting with Francois Hollande yesterday

In need of help: A Greek Orthodox priest blesses people outside a chapel in central Athens this morning as Eurozone leaders hold an emergency summit in Brussels on July 7 to discuss the country's future

Turning to religion: The faithful prepare to pray during a celebration of a saint at a church in Athens today

Waiting: People queue outside a bank to withdraw cash from a cash machine in central Athens this morning

In a further signal that Greece's financial woes could spark a wider geopolitical crisis for the West, Greek Prime Minister Alexis Tsipras yesterday held talks by phone with Russian President Vladimir Putin.

Moscow said the call had been arranged 'at the request' of Mr Tsipras, with the two men discussing the outcome of the referendum. Some observers believe Moscow could agree to bail out Greece in return for Athens blocking further EU sanctions against Russia.

France was last night pushing for an EU brokered deal, with Mr Hollande saying it was vital to Europe to show 'solidarity' with Greece.

The French President said 'the door is open' to further discussions with Mr Tsipras, who was expected to table fresh proposals in Brussels today.

But Germany gave no sign it is willing to back down in the face of the Greek referendum on Sunday, when voters overwhelmingly rejected the austerity measures demanded as a condition of future bailout funds.

An elderly man leans on the main gate of the National Bank of Greece this morning as he waits for it to open

Elderly men and women queue to collect their pensions outside a bank in Kotzia Square, Athens today

Still waiting: Queues form outside banks before they opened this morning. Greek Prime Minister Alexis Tsipras is working on new debt crisis proposals and is due to present them at a eurozone emergency summit today

Welcome: A bank employee opens the main gate of the National bank of Greece in central Athens this morning

Mrs Merkel said the conditions for a deal 'are not there yet'. She added: 'We have already shown a great deal of solidarity to Greece and the latest proposal put forward to them was extremely generous.'

Sigmar Gabriel, the German vice-chancellor and economy minister, said there could be no question of writing off Greek debt because other countries that have had loans such as Ireland, Portugal and Spain would demand equal treatment.

'I really hope that the Greek government – if it wants to enter negotiations again – will accept that the other 18 member states of the euro can't just go along with an unconditional haircut,' he said.

'How could we then refuse it to other member states? And what would it mean for the eurozone if we'd do it? It would blow the eurozone apart, for sure.'

In the UK, ministers are pessimistic about the prospects for a deal.

David Cameron held talks by phone with Mrs Merkel on the crisis, while George Osborne discussed the issue with International Monetary Fund boss Christine Lagarde. But neither man emerged from the discussions with any indication that a deal is imminent.

Athens yesterday extended its 'bank holiday' until at least Thursday after the European Central Bank deferred a decision on whether to continue propping up the country's financial institutions

An elderly woman prepares to join the back of the queue outside a closed bank in Athens this morning

People read the front pages of various newspapers hanging at a kiosk in central Athens this morning

Lining up: People queue at an ATM to withdraw cash in central Athens earlier this morning

In the Commons, Mr Osborne said there was now a severe danger that the political talks would be overtaken by the financial realities on the ground.

The Chancellor said the chances of a 'happy resolution' were 'sadly diminished' by Sunday's 'No' vote in Greece.

He said the crisis would 'deteriorate rapidly' unless today's eurozone meeting signals that a deal is on the cards.

Valdis Dombrovskis, the European Commission vice president responsible for the euro, said a write-down of Greece's £270 billion debt mountain was now 'off the table' after the referendum.

He said the vote 'dramatically weakens the negotiating stance of the Greek government' and 'makes things more complicated'.

At a briefing in Brussels, he added: 'The 'No' result unfortunately widens the gap between Greece and other eurozone countries. There is no easy way out of this crisis. Too much time and too many opportunities have been lost.' Mr Dombrovskis also claimed the vote had no legal basis.

Greek Prime Minister Alexis Tsipras yesterday held talks by phone with Russian President Vladimir Putin (pictured together earlier this year)

Crisis talks: David Cameron held talks by phone with Mrs Merkel on the crisis, but a deal with Greece does not look imminent. George Osborne discussed the issue with International Monetary Fund boss Christine Lagarde

Pressure on Greece's banks last night increased as the European Central Bank toughened the terms of its emergency funding.

The ECB demanded Greeks banks put up more collateral in order to keep the 89 billion euro lifeline of Emergency Liquidity Assistance.

Even though the country's four main banks are expected to meet the new threshold, the decision pushes them closer to the brink as they struggle to replenish cash machines.

Global stock markets slid lower yesterday as the result of the Greek referendum. Shares across Europe tumbled and the single currency was hammered amid speculation Greece is on the verge of leaving the euro and readopting the drachma.

Britain's blue chip companies have now lost £145billion of value since April in a blow to millions of families with savings and pensions.

But holidaymakers heading to the Continent are getting more bang for their buck thanks to the rising value of the pound. Sterling rose as high to above 1.41 euros – up more than 12 per cent on a year ago when £1 was worth less than 1.26 euros.

Tory eurosceptics have urged British voters to follow Greece's lead in standing up to EU 'bullying'.

Steve Baker, who leads the Conservatives for Britain campaign, said Greek's referendum should encourage Britons to 'be courageous and vote in line with what they think best when the referendum comes'.