Greek Prime Minister Alexis Tsipras presented a new plan to stave off default before an emergency summit Monday that could decide his nation’s future in the euro.
The new offer “was a good basis for progress at tomorrow’s Euro summit,” European Commission spokesman Martin Selmayr, said in a Twitter posting. He also referred in German to the inception of the plan as “birth by forceps.” The euro strengthened in Asian trading.
Before the start of the summit in Brussels, Tsipras will meet with representatives of the countries’ main creditors. He’ll sit down with European Council head Donald Tusk before they’re joined by European Central Bank President Mario Draghi, International Monetary Fund Managing Director Christine Lagarde, EU Commission President Jean-Claude Juncker and Eurogroup head Jeroen Dijsselbloem, an e-mailed statement from the Greek prime minister’s office said.
With the clock running down on a June 30 deadline to make payments and work out a new aid deal after months of fruitless negotiations, Tsipras will have to convince the country’s creditors that he’s ready to compromise on election promises and avoid a default. With its finances in tatters and banks bleeding deposits at record pace, it’s unclear how long Greece can hold out without a fresh infusion of rescue loans.
In phone calls Sunday, Tsipras briefed German Chancellor Angela Merkel, French President Francois Hollande and Juncker on Greece’s proposal to unlock bailout funds, according to a separate statement from his office.
“It’s not Merkel or others, but the Greek government itself that will decide if Greece stays in the eurozone,” Belgian Finance Minister Johan Van Overtveldt said in a tweeted message.
The euro gained in trading on Monday in Asia, adding 0.2 percent to $1.1378 at 12:30 in Sydney. Asian shares also advanced with the MSCI Asia Pacific Index adding 0.6 percent to 148.11.
Greece’s proposal is “for a mutually beneficial agreement, which will give a definitive solution, and not defer the problem,” according to a government statement. The government didn’t provide details on the plan, and the Greek government spokesman didn’t respond to phone calls and text messages seeking comment.
Tsipras’s anti-austerity coalition has rejected demands from creditors which would require Greece to slash pensions and hike sales taxes to qualify for an extension in aid. Instead, Tsipras has said that any solution should focus on the country’s unsustainable debt.
The new plan includes elimination of early retirement options as of next year, an increase on tax surcharges that middle- and high-income earners pay, as well as a levy on companies with annual net income of more than 500,000 euros, a Greek government official said earlier Sunday. The official asked not to be named because the plans weren’t finalized and were subject to approval by the Greek cabinet that met on Sunday.
“This isn’t about the money, this is about the principles of economic reform,” Richard Jerram, the chief economist at the Bank of Singapore, said on Bloomberg Television. “It’s a question of are you prepared to do stuff that is going to have a sustainable effect on your economy or are you going to be permanently reliant on European support?”
While the German chancellor says she wants to keep the euro intact, Tsipras is probably overestimating her willingness to compromise, according to a person familiar with the government’s thinking.
Merkel is expected to head into Monday’s summit with a chancellery estimate that the financial impact on Germany of a Greek default would be limited to 1 billion euros ($1.1 billion) a year, said the person, who asked not to be identified discussing government deliberations.
Euro-area finance ministers will meet at 12:30 p.m. to prepare the gathering of government leaders set to begin at 7 p.m. Earlier in the day, the ECB will hold a conference call to assess emergency funding for Greece’s banks as deposits continue to drop at dizzying rates.
Months of back-and-forth between Greece and its creditors have left the country’s banks living day to day on ECB funding. Failure to strike an agreement for unlocking emergency loans by June 30 — when Greece’s euro area-backed bailout expires — would risk leaving the country unable to service its debt.
Panicked depositors have withdrawn more than 30 billion euros since December. Without a deal, Greece faces the specter of capital controls and what U.S. Treasury Secretary Jacob J. Lew said would be a “terrible” economic decline.
A few thousand anti-austerity demonstrators held a peaceful rally in front of the Greek parliament Sunday night, their second in the past week, just as Tsipras left for the airport. Holding placards with slogans such as “the people cannot be blackmailed” and “the country isn’t for sale,” the protesters gathered to hear labor union officials and leftist political organizers call on the government to resist extending the bailout program.
“Without a full default of the debt, it’s impossible for our country to recover over the next 50 years,” said Pavlos Antonopoulos, a member of the country’s public sector union.