Greece's creditors on Tuesday
drafted the broad lines of an agreement to put to the leftist government
in Athens in a bid to conclude four months of acrimonious negotiations
and release aid before the cash-strapped country runs out of money.
Greek Prime Minister Alexis Tsipras (C) gestures during his visit at the ministry in Athens June 2, 2015.
The joint effort by the European
Commission, the European Central Bank and the International Monetary
Fund to set out the terms for a cash-for-reforms deal came after the
leaders of Germany and France held emergency talks with those
institutions in Berlin on Monday night to press the lenders to bridge
their own differences and find a solution.
"It covers all key policy areas and
reflects the discussions of recent weeks. It will be discussed with
(Greek Prime Minister Alexis) Tsipras tomorrow," a senior EU official
said.
Another official said German Chancellor
Angela Merkel and French President Francois Hollande would put the plan
to Tsipras by telephone within hours to try to secure his acceptance.
A Greek government official said Tsipras
would travel to Brussels on Wednesday for a meeting with European
Commission President Jean-Claude Juncker in the evening, upon Juncker's
request.
"The prime minister will be in Brussels tomorrow with the Greek proposal in his luggage," the official said.
Tsipras, who has vowed not to surrender
to more austerity, tried to pre-empt a take-it-or-leave-it offer by the
creditors, sending what he called a comprehensive reform proposal to
Brussels on Monday before they could complete their version.
Euro zone officials branded the Greek text insufficient and said it was not formally on the table.
The Greek leader faces a backlash from
his own supporters if he has to accept cuts in pensions and job
protection to avert a default and keep Greece in the euro zone.
Despite defiant rhetoric and face-saving
efforts, he seems likely to have to swallow painful pension and labor
reforms, facing the choice between putting them to parliament at the
risk of a revolt in his Syriza party, or calling a snap referendum.
Starved of aid and access to bond
markets, Athens is precipitously close to running out of money. It has
threatened to default on an IMF payment this week without a deal, though
it also says it will reject any ultimatums.
Failure to reach agreement this month
could trigger a Greek default and lead to the imposition of capital
controls and a potential exit from the euro zone, dealing a serious blow
to Europe's supposedly irreversible single currency.
The euro zone source said the Greek
document contained no significant concessions on the main outstanding
issues of pension and labor market reform, fiscal targets and the size
of the civil service.
The European Union's economics chief
said earlier Athens had put forward first proposals for pension reform
as the talks reach a crunch point this week with Greek funds drying up.
The chairman of euro zone finance
ministers, Jeroen Dijsselbloem, who was not at the Berlin meeting, said
there were growing indications that Greece wanted a deal, but that
required the Greek government to tell its voters the truth, that it will
not be able to deliver on all its election promises.
"There are signs that Greece and Tsipras
are motivated to achieve a breakthrough," Dijsselbloem told RTL Nieuws.
"We aren't far enough along and time is pressing."
"The bottom line is that we are not
going to meet them halfway," he said. "The package as a whole must make
sense in budgetary terms."
"Real intensity"
The Berlin meeting showed that national
and international leaders have taken the battle to keep Greece in the
euro zone into their own hands after months of insisting it was a matter
for technical negotiations among experts.
A Greek government official said Athens
would make a 300 million euro ($329.58 million) repayment to the IMF on
Friday as due if there was an agreement with the creditors, hinting it
might otherwise withhold the money without saying so explicitly.
"If we judge that a deal has been
sealed, then we will make the June 5 payment normally," the official
said, adding that the money would be transferred even if a preliminary
agreement had not yet been approved by Eurogroup finance ministers.
Greece's central bank governor, Yannis
Stournaras, who served as finance minister in a previous
conservative-led government, urged the government to respect the
"sacrifices" its people had made to stay in the euro, citing a 35
percent drop in living standards since the crisis began in 2009.
EU Economy Commissioner Pierre Moscovici
deflected Greek demands for official debt relief, saying the issue of
making Greek debt sustainable in the longer term would only be addressed
once Athens had accepted a reform deal to release some 7.2 billion
euros in frozen aid.
That program expires at the end of June unless there is an agreement.
The ECB's top banking supervisor,
Daniele Nouy, stressed on Tuesday that Greece's banks remain solvent
despite deposit outflows and the government's cash squeeze - a key
condition for the central bank continuing to provide emergency
liquidity.
Greek officials say the IMF has been
toughest in demanding pension cuts and opposing any restoration of
collective wage bargaining, while some euro zone governments have
privately accused Juncker and Moscovici of being too soft on Athens.
Greece has received two EU/IMF bailouts
totaling 240 billion euros since 2010, when it lost access to capital
markets after admitting it had issued erroneous figures for years
concealing the true scale of its budget deficit.
Source: Reuters