Greece on edge as it heads for showdown summit

Greek PM tries to break deadlock; default may trigger ripples globally

ATHENS - A nervous Greece goes into a summit with its European partners today, desperately trying to stave off bankruptcy. As the clock ticked down, Greek Prime Minister Alexis Tsipras spoke to the leaders of Germany, France and the European Commission (EC) by phone, and made "definitive" proposals over a cash-for-reforms deal.

After months of wrangling and with anxious depositors pulling billions of euros out of Greek banks, Mr Tsipras' leftist government finally appears willing to make concessions in order to unlock €7.2 billion (S$10.9 billion) in bailout money.

But a day before an emergency summit in Brussels, it was still unclear how far Mr Tsipras - elected in January on a pledge to lift his people out of years of austerity - will yield.

His Syriza party plans to hold a rally in Athens to send "a loud message of resistance" against demands for more cuts and tax hikes in a country battered by years of recession.

But the mood has also hardened in Germany, which has contributed more money than any other country to bailing out Greece. German Chancellor Angela Merkel is under pressure not to give in to Greece's demands, even if that means contemplating the nation leaving the euro zone.

Athens urgently needs access to funds to avoid defaulting on a €1.6 billion International Monetary Fund (IMF) loan that is due at the end of the month.

Money has drained out of Greek banks after a breakdown in talks last weekend and Greece might have to impose capital controls within days if there is no breakthrough.

Mr Tsipras called Dr Merkel, French President Francois Hollande and EC president Jean- Claude Juncker with the latest Greek offer over the weekend.

"The Prime Minister presented the three leaders with Greece's proposal for a mutually beneficial agreement that will give a definitive solution and not a postponement of addressing the problem," said a statement from Mr Tsipras' office.

His government was holed up in an hours-long meeting yesterday.

Meanwhile, underlining international concern that a Greek default could ripple across the world economy, United States Treasury Secretary Jack Lew said it was up to Greece to make concessions.

"It's clear that within Greece, the consequence of a failure here would mean a terrible, terrible decline in its economic performance," he said.

Today's meeting, one of a series over the week, is meant to bridge the gap between Greece and its European Union-IMF creditors over reforms.

If all goes well, on Thursday and Friday, when the EU holds its regular summit, an agreement could be concluded. By June 30, Greece must make a bundled debt payment to the IMF for which it does not have the funds.

REUTERS, AGENCE FRANCE-PRESSE

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A version of this article appeared in the print edition of The Straits Times on June 22, 2015, with the headline 'Greece on edge as it heads for showdown summit'. Print Edition | Subscribe