Greek crisis explainer: four days to avoid a Grexit

EU leaders have given Greece until the end of the weekend to reach an agreement with its creditors or face crashing out of the euro.

Athens formally submitted a request for a new three-year bailout to the eurozone’s €500 billion bailout fund yesterday, the first of many steps it has to complete before euro zone and EU leaders gather in Brussels on Sunday to decide its fate. Here are the other deadlines it has to meet to salvage its place in the single currency and avert the biggest crisis in the EU’s history.

Thursday: 96 hours to deadline:

In their letter to the European Stability Mechanism, Greek authorities vowed to "set out in detail its proposals for a comprehensive and specific reform agenda" by Thursday. These are the "prior actions" that so bedevilled the bailout talks before Alexis Tsipras, the Greek prime minister, walked away from the negotiating table and called a referendum on the creditors' proposal last month.

Euro zone leaders have warned that these new prior actions must be more comprehensive than those negotiated only two weeks ago - for an obvious reason. The previous bailout talks were over a single, final €7.2 billion tranche in Greece’s old bailout. These reforms will be part of a new, multi-year programme - the kind of thing normally negotiated over a period of weeks, if not months.

Friday: 72 hours to deadline:

Under the treaty governing the ESM - Greece's two previous bailouts were granted before the ESM even existed - the European Commission "in liaison with the ECB" must evaluate any request for aid before it goes to national capitals for consideration. With time running out, that evaluation must occur in just 24 hours, on Friday.

Angela Merkel, the German chancellor, went out of her way on Tuesday to highlight the issues the commission must consider in its evaluation - including whether there is a "risk to the financial stability of the euro area as a whole", a line Berlin insisted on during the debate over the ESM treaty. Germany has long argued that bailouts should only be forthcoming if the entire euro zone is threatened.

Saturday: 48 hours to deadline:

In many ways, this is a more critical day than Sunday’s summit. Under the ESM treaty, it is the ESM’s board of governors - the eurozone’s 19 finance ministers - who decide whether formal negotiations should begin. Under the timetable agreed by eurozone leaders on Tuesday night, eurozone finance ministers will meet on Saturday to make this very determination.

If the board of governors decide there is enough in the Greek proposal to start talks, they then ask the trio of bailout monitors - the commission, ECB and "whenever possible" the International Monetary Fund - to start talks over a new "memorandum of understanding", a politically poisonous phrase in Greece that has come to stand for the tough austerity measures the country has lived under for the last five years.

Sunday: 24 hours to deadline:

If eurozone finance ministers agree to start bailout talks, Sunday’s summit of EU leaders may not even be needed, according to eurozone officials. After all, despite Mr Tsipras’ repeated insistence that a “political agreement” was needed at the highest levels, almost all bailout decisions are delegated to finance ministers.

But if no deal is struck on Saturday, leaders from all 28 EU countries have been summoned to Brussels to sort out the mess. According to EU officials, one of the most important things they will be asked to decide on is a humanitarian relief programme for Greece, something that may be needed amid rising shortages of medicines and, potentially, food and fuel.

Monday: deadline day +1

This day will look very different depending on whether “Grexit” has been avoided or not. If a deal is agreed by finance ministers on Saturday, there are several countries that still need parliamentary approval before such permission is officially granted.

This has always been a concern in Germany, where Ms Merkel's own Christian Democratic bloc has grown increasingly restive. The Bundestag, which is on a month-long July recess, will have to be called back into session , to vote on any agreement.

If no deal is agreed, Monday’s focus turns to the ECB. With the prospect of a Greek default and bankruptcy imminent, the central bank’s governing council is likely to be convened to withdraw the €89 billion in emergency loans keeping Greek banks alive. Grexit would ensue.

- Financial Times Service