Lenders grant beleaguered Greece two-day reprieve

Athens submits revised funding proposal to creditors but crunch talks fail to yield solution

The president of the Eurogroup says new Greek proposals are "a positive step in the process" and a result is possible in the next couple of days. Video: Reuters

 

Greece has been granted a two-day reprieve in its campaign for new rescue loans as it comes under extraordinary pressure from euro zone leaders and the European Central Bank to comply with their conditions for aid.

Athens has submitted revised funding proposals to its international creditors, but a day of emergency talks in Brussels yielded no new funding arrangement.

After weeks of stalemate, finance ministers directed euro zone officials to enter fresh talks with Greece, in anticipation of a deal before EU leaders return to Brussels on Thursday for their second summit of the week.

The ministers meet again tomorrow evening. Late last night, German chancellor Angela Merkel said time was running very short but she hoped the next summit would have nothing more to do but take note of an agreement with the ministers.

While it was clear that financial sustainability would have to be discussed, she noted that Greece did not have big debt repayments for many years.

European Commission chief Jean Claude Juncker said:“I simply wanted to say that the proposals that the Greek government was submitting to our mediation tonight and early this morning – although these proposals were coming in with some delay – are a major step taken by the Greek authorities.”

Mounting strain

With Greek banks under mounting strain due to large deposit withdrawals, the ECB is increasing emergency aid to the lenders on a day-to-day basis only.

The Financial Times reported last night that Minister for Finance Michael Noonan – together with German minister Wolfgang Schäuble – pressed at a meeting of euro zone ministers for curbs on emergency support for Greek banks unless capital controls were imposed.

Mr Noonan’s spokesman declined to comment on the ministers’ discussion on the basis that such meetings are private.

When it was put to him that international media were reporting that Ireland wanted capital controls in Greece, the Minister’s spokesman said: “The issue for Ireland is to ensure we have clarity around the proposals and the process. Our objective is to ensure that Greece negotiates a satisfactory conclusion and remains in the euro zone.”

It is understood that Mr Noonan raised the increasing reliance of the Greece banks on emergency liquidity assistance from the ECB with fellow ministers. He is understood to have asked how long Greece could continue in a situation in which the ECB was meeting daily to decide how much money it was putting into its commercial banks. He also asked how much time was available for a political solution to settle that matter.

In light of this intervention, and that of Mr Schäuble, ECB president Mario Draghi said his institution’s support for Greek banks was not an issue for ministers to decide. The ECB governors would continue to review the situation on a daily basis, he said.

Summit

As Taoiseach Enda Kenny arrived at the summit last night, he said progress was urgently required.

“The important thing is that there be a conclusion to the negotiations this week because this continued instability is really making great difficulty for the people of Greece,” Mr Kenny sai

d.