BRUSSELS — Haggling through the night into Monday morning over a deal to
calm Greece’s debt crisis, European leaders demanded that Athens make new concessions and quickly
adopt a host of economic policy changes as they worked to overcome deep
divisions and avert a historic fracture in the Continent’s common currency.
As testy talks dragged on past the self-imposed
midnight deadline they had set without an agreement, leaders of the 19
countries that use the euro struggled to draft a compromise that would assuage
some of Greece’s concerns over tough German-set terms while assuring creditors
that a new bailout worth tens of billions of euros would not be money wasted.
The mood grew increasingly tense as it became clear
that the leaders were weighing steps that Greece’s left-wing government, while
desperate for a deal to pave the way for new funding, would find difficult to
sell at home — just a week after Greek voters overwhelmingly rejected softer
terms in a referendum.
The new steps under review included a temporary Greek exit from the
eurozone, and placing proceeds from the privatization of Greek assets worth up
to 50 billion euros, about $55 billion, in a fund in Luxembourg to help pay
down Greece’s huge debt. Similar options were first put forward in a policy
paper prepared by the German Finance Ministry, and have since stirred anger
from some Greek officials.
Among some supporters of Prime Minister Alexis
Tsipras and his left-wing Syriza party, the demands were portrayed as
humiliating and a further effort to force him from office.
But there were some signs of progress as another
long meeting in Brussels dragged into Monday morning, according to two people
with direct knowledge of the talks who spoke on the condition of anonymity
while leaders parried over the terms of a new bailout.
Mr. Tsipras, these people said, had agreed to
accept the involvement of the International Monetary Fund, which had been
regarded by many Greeks as uncompromising during the country’s previous two
bailouts. The eurozone leaders, who had demanded that Greece’s Parliament pass
a number of measures by Wednesday, also appeared to be near agreement with Mr.
Tsipras’s contention that it would be impossible to pass all of them by then.
Going into the meeting, some of the European leaders said the priority was to
hold Europe together, and others suggested that they had so little trust in
Greece to honor its commitments that a deal would be difficult, if not
impossible. Failure to find some compromise could leave Greece unable to pay
its bills or reopen its banks, forcing it to become the first country to leave
the euro.
Such an outcome would throw into reverse a quest
for ever-closer European unity stretching back more than a half-century.
With Greece’s banks all but broke, the European
Central Bank was looking early on Monday for any sign of progress in the talks
that would allow it to loosen up its credit line to the Greek banking system
and avert a collapse that could otherwise come within hours or days.
The options being debated by the leaders
amounted to demands that Greece move quickly and forcefully to re-establish
trust and credibility with creditors after years of failure to follow through
on promised changes and months of bitter wrangling over the country’s need for
more money to keep it afloat. But they also included the possibility of what a
draft assessment of options by the eurozone finance ministers called “a timeout
from the euro area,” accompanied by discussions about reducing Greece’s
crippling debt load.
An assessment of Greece’s situation prepared
over the weekend by the finance ministers put Greece’s financing needs at €82
billion to €86 billion over the next three years. That sum is significantly
larger than the €74 billion previously reported, and is around €30 billion more
than the €53.5 billion request made by Greece on Thursday for what would be its
third bailout package since 2010. Greece already has more than €300 billion in debt.
In a sign of the rapid pace of events, a full
summit meeting of the European Union’s 28 heads of state planned for Sunday was
abruptly canceled. But the separate meeting of eurozone leaders went ahead,
enveloped by dark warnings from the French president and others that failing to
help Greece would mean a perilous retreat from the principles that have guided
Europe since the end of World War II.Arriving in Brussels for what was billed as a
last-chance meeting on Greece after months of ill-tempered and increasingly
divisive debate, President François Hollande of France warned that failure to
find an agreement to keep Greece in the euro would “mean a Europe that is in
retreat, a Europe that no longer moves forward.” France, he added, “will do
everything to find an agreement this evening.”
Mr. Hollande told reporters: “At stake is
whether Greece will tomorrow be in the eurozone, and also at stake is Europe.” Mr. Hollande’s pleas for unity — joined in by
Prime Minister Matteo Renzi of Italy — contrasted with a far more skeptical and
hardheaded position staked out by Germany. This exposed a rift between Paris and Berlin —
a tandem that has traditionally powered European decision making — over how to
deal with a Greek crisis that Donald Tusk, the president of the European
Council, has called “the most critical moment in our history.”
Sunday’s meeting in Brussels followed a swirl of dramatic events that
began last Sunday when Greek voters rejected further austerity measures in a referendum and then careered in the
opposite direction on Thursday when Prime Minister Tsipras submitted a plan to
creditors that embraced tougher measures than those rejected by voters and his
own party.
The week’s
whiplash-inducing twists have turned the once taboo issue of “Grexit,” as
Greece’s exit from the euro — or potentially even the European Union — is
widely known in Europe, into a serious possibility that has spooked ordinary
Greeks and many others beyond its borders, including senior officials in the
United States.
With banks in
Greece closed since June 29, and cash machines running out of money, possibly
as early as Monday, the outcome of the showdown in Brussels will weigh heavily
on a decision in coming days by the European Central Bank on whether to
increase or perhaps cut off emergency funding for Greek banks. Without an
infusion of cash from the Frankfurt-based European bank, Greece’s banking
sector will crumble and send the country crashing out of the euro.
Chancellor Angela Merkel of Germany, arriving for the summit meeting, acknowledged that the economic plight
of Greece was “extremely difficult” but said that “there will not be an
agreement at any price.” She added, “The most important currency has been lost
— and that is trust.”
Noting that “nerves are stretched tight,” the German
leader demanded a coolheaded review to ensure that “the advantages outweigh the
disadvantages and that goes for the future of Greece as well as for the
eurozone as whole, and for the principles of our cooperation.”
Germany’s stand is shared by a number of other countries,
notably Finland and Slovakia.
Ms. Merkel faces strong pressure from within her
party, including from her own finance minister, Wolfgang Schäuble, not to give
Greece more money without ironclad conditions, stirring alarm that she has put
domestic political calculations ahead of Germany’s postwar commitment to the
so-called European project.
Mr. Schäuble is widely viewed in Greece as wanting the
country out of the euro.
Instead of softening their demands after the July 5
Greek referendum, Germany, Greece’s biggest creditor, and its supporters in
northern Europe and the former Soviet bloc have pushed for further austerity
and demanded that the Greek Parliament pass legislation in the next few days to
entrench Syriza’s pledges of action.
A draft assessment prepared by eurozone finance
ministers after yet another round of emergency weekend meetings in Brussels
called on Greece to legislate separate sets of measures by July 15 that must
include “the streamlining of the VAT system and the broadening of the tax base
to increase revenue” as well as “upfront measures to improve long-term
sustainability of the pension system as part of a comprehensive pension reform”
program.
Greece would
also need to legislate to ensure the independence of its state statistical agency,
overhaul its civil justice system, and adopt European rules to ensure orderly
closure of failing banks. And it would have to accept “continued full
involvement” of the I.M.F. in overseeing any bailout.
Gianni Pittella, the president of the second-biggest
political bloc in the European Parliament, on Sunday accused Mr. Schäuble, the
German finance minister, of seeking to push Greece out of the single currency.
“His tricks and political games risk to lead Greece to bankruptcy and to
Grexit,” Mr. Pittella, the leader of the Socialists and Democrats group, said
in a statement. Mr. Tsipras, whose party won elections in Greece in January on
promises to end austerity, showed up in Brussels without a tie, as he always
does for meetings with fellow leaders, but also without his customary broad
smile.
“We can reach an agreement tonight if all parties want
it,” a grim-faced Mr. Tsipras said, adding that leaders owed this “to the
people of Europe who want Europe united, not divided.”
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