International
Francois Lenoir / Reuters
Eurozone leaders have told Greece that it must restore trust by enacting key reforms demanded by creditors if it is to receive further bailout money.
At an emergency meeting on Sunday, it was proposed that Athens must push forward with painful austerity measures from Monday if funds are to be released to steer the country away from insolvency.
The development came after a full EU summit, at which the fate of Greece’s continuation in the eurozone was set to be decided, was canceled amid “exceptionally difficult” talks between Athens and its creditors.
Greek Prime Minister Alexis Tsipras arrived for the separate emergency meeting of the 19 eurozone leaders in Brussels saying that he was ready for further compromise. He added that an agreement was possible “if all parties want it.”
Talks between Tsipras and sceptical European leaders have dragged on past a self-imposed deadline into the early hours of Monday, with talks reportedly stuck on how Greece would guarantee austerity measures in exchange for a rescue package to prevent its banks from collapsing.
If the talks don't succeed, some of Greece's eurozone partners including Germany, have warned the country could be temporarily forced from the euro which it joined in 2002.
No country has ever left the joint European currency, which launched in 1999 and there is no mechanism in place for a country to leave.
It was not clear what a temporary exit or "Grexit" would entail, but the threat put intense pressure on Tsipras to swallow politically unpalatable austerity measures, as his people overwhelmingly want to stay in the eurozone.
European officials said talks between Greece and its European creditors appear to be stuck on several issues and a resolution is not anticipated for a while yet.
One official, who spoke on condition of anonymity because he was not authorized to speak publicly, said the main difference centered on when the European Central Bank could start to increase its emergency liquidity assistance to Greek banks.
Tsipras wants a deal to pave the way to ECB help as soon as Monday, the official said, while European creditors would prefer to wait until the Greek Parliament passes several austerity measures.
Another official, who also spoke on condition of anonymity, said some issues remain difficult, including a proposal for Greece to transfer billions of euros worth of state assets to an independent fund in Luxembourg under European supervision.
On Sunday German Chancellor Angela Merkel, whose country is the biggest contributor to euro zone bailouts, said the conditions were not yet right to start negotiations, sounding cautious in deference to mounting opposition at home to more aid for Greece.
"The most important currency has been lost and that is trust," she told reporters. "That means that we will have tough discussions and there will be no agreement at any price."
The cancellation of the planned 28-nation meeting will come as a blow to Athens, which has already climbed down on a number of key issues — such as demand for punishing reforms to the country’s tax and pension codes — in a bid to secure further bailout cash to keep the country solvent.
European Council President Donald Tusk said Sunday that the eurozone leaders summit would continue until talks with Greece are concluded.
The move came after divided eurozone finance ministers held talks on Greece late into the night on Friday, telling their Greek counterpart that Athens must go beyond an initial set of proposals for reforms if it wants them to open negotiations on a bailout.
Several sources said there was consensus among the other 18 ministers around the table during the "exceptionally difficult" talks that the leftist government in Athens must take further steps to convince them it would honor any new debts.
On Sunday, eurogroup ministers told Athens that it must pass new laws by Wednesday as a condition of any new bailout deal.
Describing a joint proposal the eurogroup of finance ministers have put to a summit of eurozone leaders, Finish Finance Minister Alexander Stubb told reporters: 'It has far-reaching conditionality, on three counts: Number one, it needs to implement laws by July 15. Number two, tough conditions on for instance labor reforms and pensions and VAT and taxes.
'And then number three quite tough measures also on for instance privatization and privatization funds.
'And for us the most important thing is that... this whole package has to be approved by both the Greek government and the Greek parliament and then we'll have a look.'
Earlier on Saturday, the Greek parliament backed a proposed bailout package with painful austerity measures from Prime Minister Tsipras’ government, with 251 of 300 MPs voting in favor of the package. Such harsh austerity measures were something his leftist party was elected to counter.
Officials have voiced concern over whether or not Greece can be trusted to stick to the proposed reforms, which include spending cuts in areas such as pensions and tax hikes, to secure a three-year bailout of $59bn.
"We are still far away. It looks quite complicated," said Eurogroup chairman and Dutch finance minister Jeroen Dijsselbloem.
"On both content and the more complicated question of trust, even if it's all good on paper, the question is whether it will get off the ground and will it happen. So I think we are facing a difficult negotiation," Dijsselbloem said.
Banks in Greece have been closed for two weeks and if a deal is not reached when the markets open on Monday, some banks could collapse.
A “Grexit” would make Greece the first country to leave the eurozone and its departure would have unpredictable ramifications on both Greece and the global financial markets.
Al Jazeera and wire services
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