What will Greece bring to the table?

An employee monitoring financial information on the trading floor at Panmure Gordon & Co in London yesterday. Following the results of the Greek referendum. European stocks fell as voters rejected creditors' austerity demands.
An employee monitoring financial information on the trading floor at Panmure Gordon & Co in London yesterday. Following the results of the Greek referendum. European stocks fell as voters rejected creditors' austerity demands.PHOTO: BLOOMBERG

After Greece's emphatic 'no' vote, euro zone ministers are keen to see what new reform proposals Athens has

BRUSSELS • Euro group ministers are expecting fresh reform proposals from the Greek government as they meet for talks today, two days after voters emphatically rejected a cash-for-austerity deal, bringing Europe "no closer to a solution".

Greece's creditors turned up the heat on Prime Minister Alexis Tsipras yesterday to come up with a plan to stay in the euro, as the nation of 11 million people stared at an economic calamity after five years of recession, turmoil and skyrocketing unemployment.

In a statement, European finance ministers said they are waiting for a proposal to restart bailout talks. The ministers are scheduled to meet today, hours before leaders from the euro zone nations gather for an extraordinary summit to decide the way forward after the July 5 vote.

Their tasks may be lightened slightly by the shock resignation of Greece Finance Minister Yanis Varoufakis. His five-month tenure was marked by his outspokenness and refusal to submit to convention.

As many as 61.31 per cent of Greeks rejected creditor demands for further austerity, leaving Greece's euro zone partners scrambling to respond and stock markets in retreat.

The "no" vote has brought Europe "no closer to a solution" to Athens' financial situation, Eurogroup chief Jeroen Dijsselbloem said yesterday. "If anything, the fact that suggestions were turned down makes it even more difficult," said Mr Dijsselbloem, who is also the Dutch Finance Minister.

The European Central Bank is evaluating its next moves to keep the country afloat as is the International Monetary Fund. IMF chief Christine Lagarde said yesterday that the global crisis lender would assist Greece if asked.

The onus is on Greece to act quickly to avoid a meltdown of its banking industry.

The country is buckling under the strain of the capital controls and is at risk of undoing four decades of integration with Europe. The economy has already shrunk about 25 per cent over the past six years while the jobless rate is still the highest in the euro region.

A week of capital controls is set to be extended, while the cash machines that have money are running short of notes and pensions are rationed.

"Tsipras' margin of victory and Varoufakis' resignation strengthen his hand in the upcoming negotiations," Mr Marchel Alexandrovich, senior European Economist at Jefferies Group, said.

"Now it is up to Merkel and Hollande to decide whether to let Greece go, or to offer a better deal than was on the table 10 days ago."

German Chancellor Angela Merkel was due to meet with French President Francois Hollande in Paris later yesterday to forge a joint stance on Greece.

Dr Merkel's chief spokesman, Mr Steffen Seibert, dampened any expectations of a rapid resolution to the stand-off, saying the conditions for bailout talks to restart were not yet in place. A deal within 48 hours, as Mr Tsipras' government suggested would happen, will be "difficult to achieve", Mr Seibert said.

However, leaders of Greece's main ruling and opposition political parties have given written assurances they will back Mr Tsipras in talks with creditors, the leader of Mr Tsipras' junior coalition partner said yesterday.

Mr Tsipras was expected to announce a more extensive Cabinet shake-up, focused on putting a more centrist negotiating team in place to deal with creditors.

The next few days could determine whether the gulf between Greece and its creditors is now too wide to bridge. But the critical issue was still what proposal any new Greek team would bring to the table.

BLOOMBERG, NEW YORK TIMES, REUTERS

A version of this article appeared in the print edition of The Straits Times on July 07, 2015, with the headline 'What will Greece bring to the table?'. Print Edition | Subscribe