Greece premier says he has offered 'definitive' plan to EU leaders ahead of Monday summit

Greek Prime Minister Alexis Tsipras (left).
Greek Prime Minister Alexis Tsipras (left).PHOTO: AFP

ATHENS (BLOOMBERG, REUTERS) - Greek Prime Minister Alexis Tsipras has made an offer to European Union leaders he described as a "definitive" solution ahead of Monday's emergency summit.

Mr Tsipras briefed German Chancellor Angela Merkel, French President Francois Hollande, EU Commission President Jean-Claude Juncker on the new proposal in phone calls, according to an e- mailed statement from the prime minister's office.

Details of the offer were not immediately available.

The proposal was for "for a mutually beneficial agreement, which will give a definitive solution, and not defer the problem," the statement said.

Following an ongoing cabinet meeting on Sunday in Athens, Mr Tsipras will fly to Brussels for talks with EU leaders.

After months of wrangling and with anxious depositors pulling billions of euros out of Greek banks, Mr Tsipras's leftist government has signalled a willingness to make concessions in order to unlock 7.2 billion euros (S$11 billion) in bailout money.

But a day before the emergency summit in Brussels, it is 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 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 from within her ranks not to give in to Greek demands, even if that means contemplating Greece leaving the euro zone.

Athens urgently needs access to funds to avoid defaulting on a 1.6 billion euro IMF loan that falls due at the end of the month. But as the crisis gets pushed from one meeting to the next, each side has put the responsibility on the other's shoulder for finding a deal.

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.

For a deal to work, Mr Tsipras will need a solution that is acceptable to his party or else may be pushed to call a snap election or a referendum to secure a mandate for an agreement.

Under the austerity measures imposed by the IMF, the European Union and the European Central Bank in two bailouts, Greece's economic output has fallen 25 per cent, wages and pensions have been slashed, and one in four Greeks is jobless.

The Greek government has resisted demands for pension cuts or tax rises, arguing that the austerity imposed on the southern European country had made the crisis worse.

A senior Syriza lawmaker said on Sunday that previous ideas put forward by Mr Juncker would have led to a "social holocaust".

"Democracy cannot be blackmailed, dignity cannot be bargained," the Syriza party said in a statement on Sunday, announcing its planned protest. "Workers, the unemployed, young people, the Greek people and the rest of the peoples of Europe will send a loud message of resistance to the alleged one-way path of austerity, resistance to the blackmail and scare-mongering."

European ministers have played down the prospect of a final agreement on Monday but hope a political understanding can be reached in time for a full deal by the end of June.

Mrs Merkel's Bavarian allies warned against giving in to Greece, with senior Christian Social Union lawmaker Hans Michelbach saying he saw no realistic chance of an agreement on Monday.

"If the EU lets the government in Athens get away with its intransigence, we can bury the euro," Mr Michelbach said in a statement on Sunday. "Either Greece declares itself willing for a viable solution or the country must leave the euro. The euro zone could cope with the consequences of a Greek exit," he said.