Full EU summit canceled so Greek bailout talks can continue

Brussels (July 12)   Greece has another chance Sunday to convince skeptical European creditors that it can be trusted to enact wide-ranging economic reforms which would safeguard its future in the common euro currency.

As they headed into further talks Sunday morning, Greece’s European creditors sought to narrow their differences with Athens, saying they were working hard on a resolution to the financial crisis.

Greece desperately needs help to avoid a financial collapse. The economy is in freefall and the country faces big debt repayments in the coming weeks.

“We have lost so much time we cannot afford to lose time anymore,” Italian Finance Minister Pier Carlo Padoan said as he arrived for talks. “We continue to work to establish the conditions to start negotiations, which is the real target. … it is not about closing a deal.”

Greek banks have been shuttered for the best part of two weeks and daily withdrawals from ATMs have been limited to a paltry 60 euros ($67). The banks, according to some accounts, have barely enough cash in their vaults to last through the week.

Yet in a sign that a dramatic Greek exit from the euro would not happen Sunday, a full summit of the European Union’s 28 leaders was cancelled. Instead, the eurozone’s 19 leaders, including Greek Prime Minister Alexis Tsipras, will meet Sunday afternoon to assess the outcome of the finance ministers meeting and plot a further way ahead.

In an early morning tweet, Donald Tusk, who chairs meetings of European leaders, said the eurozone summit would start in mid-afternoon “and last until we conclude talks” on Greece.

Greece has asked Europe’s bailout fund for a 53.5 billion-euro ($59.5 billion) 3-year financial package but many officials in Brussels say the figure will have to be much higher. This would be Greece’s third bailout in five years.

“I would like to see the Greek government take concrete actions starting tomorrow in parliament to implement measures that are needed for Greece in the first place,” Padoan said. “And then to rebuild trust that would allow concrete negotiations to move forward.”

Finance ministers broke up talks Saturday after more than eight hours with Greece’s creditors unconvinced that the Tsipras government could be trusted to reform the Greek economy. They want iron-clad proof that it can deliver on promises to implement tough austerity and reform measures in return for billions more in rescue money.

The pressure remained on Greece to yield to creditor demands for imminent laws on a range of issues such as pension reform and sales tax increases.

Tsipras cleared one hurdle Saturday when lawmakers in the Greek parliament overwhelmingly backed a package of economic reforms and further austerity measures, in the hope that it would convince European creditors to back a third bailout.

The eurozone ministers have to give their blessing to Greece’s bailout request to the European Stability Mechanism. Traditionally, eurozone ministers agree by mutual consensus, though in exceptional circumstances a unanimous vote may not be needed.

Greece has received two previous bailouts totaling 240 billion euros ($268 billion) in return for deep spending cuts, tax increases and reforms from successive governments. Although the country’s annual budget deficit has come down dramatically, Greece’s debt burden has increased as the economy has shrunk by a quarter.

The Greek government has made getting some form of debt relief a priority and hopes that a comprehensive solution will involve European creditors at least agreeing to delayed repayments or lower interest rates.

Tsipras has made much of the need for a restructuring of Greek debt, which stands at around 320 billion euros ($357 billion), or a staggering 180 percent or so of the country’s annual GDP. Few economists think that debt will ever fully repaid.

Last week, the International Monetary Fund said a restructuring of debt was necessary for Greece.

Source: DailyNews