Bailout: Greece offers concessions to creditors

Greece’s Prime Minister Alexis Tsipras has offered new concessions to the country’s creditors. A letter to creditors obtained by the Financial Times says Mr Tsipras is prepared to accept most conditions that were on the table before talks collapsed and he called a referendum.

On Tuesday, eurozone finance ministers refused to extend the previous bailout. But Germany says a new agreement on a bailout would not be possible until after the referendum this weekend.

The Financial Times says that Tsipras was prepared to accept a deal made by creditors last weekend, if a few changes were agreed. Greece’s national broadcaster ERT says Mr Tspiras would accept a deal with only minor requests for changes.

European markets surged on the news Greece might be willing to accept a deal.But the German chancellor, Angela Merkel, said no new bailout talks would be possible before Greece holds a referendum on Sunday, that will ask Greeks if they want to accept their creditors’ proposals.

It is feared Greece could be forced out of the European single currency

Lenders’ proposals – key sticking points

VAT (sales tax): Alexis Tsipras accepts a new three-tier system, but wants to keep 30% discount on the Greek islands’ VAT rates. Lenders want the islands’ discounts scrapped

Pensions: Ekas top-up grant for some 200,000 poorer pensioners will be phased out by 2020 – as demanded by lenders. But Mr Tsipras says no to immediate Ekas cut for the wealthiest 20% of Ekas recipients

Defence: Mr Tsipras says reduce ceiling for military spending by €200m in 2016 and €400m in 2017. Lenders call for €400m reduction – no mention of €200m

Two key meetings are to take place to discuss aid for Greece, after Athens missed the deadline for a €1.5bn (£1.1bn, $1.7bn) payment to the IMF on Tuesday.In one, officials with the European Central Bank (ECB) will decide whether to grant an emergency loan to Greece.

In the second, eurozone finance ministers will discuss Greece’s latest proposal for a third bailout. It would last two years and amount to €29.1bn.

Ministers will discuss the proposal in a conference call at 15:30 GMT (Wednesday).

With the eurozone bailout expired, Greece no longer has access to billions of euros in funds. Only three other countries are still in arrears to the IMF – Sudan, Somalia and Zimbabwe. Between them, they owe €1.6bn, only marginally more than Greece.

The ECB has also frozen its liquidity lifeline to Greek banks, that did not open this week. Withdrawals from cash machines are capped at just €60 a day and long queues have been forming outside banks.

However, up to 1,000 branches re-opened on Wednesday to allow pensioners – many of whom do not use bank cards – a one-off weekly withdrawal of up to €120.

The Associated Press news agency said many pensioners had waited outside banks from before dawn, only to be told to return on Thursday or Friday. Some pensioners were told their pensions had not yet been deposited.

Close to 300 pensioners marched on the Bank of Greece in Athens after being given only a small sum from banks in the morning instead of the entire €120.

In making his calculations, the Greek Prime Minister Alexis Tsipras should be under no illusions: the rest of the eurozone wants him out. When he unexpectedly sprung a referendum on his European partners, they were outraged and quickly ended negotiations.

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Now in places like Berlin, Madrid and Helsinki, they spy an opportunity to rid themselves of a troublesome leader.

Inside the prime minister’s office at Maximos Mansion, there are reports of disputes and sharp arguments. There is a growing awareness of the size of the gamble, of the high risks they have embraced.

That is why it was not entirely unexpected – as happened today – that it was revealed that Mr Tsipras had sent a letter to Brussels accepting the bailout offer of June 28 with relatively minor conditions.

In recent days, Mr Tsipras seemed to understand his political future was on the line.

The European Commission – one of the “troika” of creditors along with the IMF and the ECB – wants Athens to raise taxes and cut welfare spending to meet its debt obligations.

Greece’s left-wing Syriza government, elected on an anti-austerity platform, has been in deadlock with its creditors for months over the terms of a third bailout. Last weekend, the Greek government took the unilateral decision to hold a vote, angering eurozone ministers.

EU leaders have warned that a ‘No’ vote would see Greece leave the eurozone – though Mr Tsipras says he does not want this to happen.

A poll by the Greek newspaper Efimerida ton Syntakton published on Wednesday suggested that 54% of Greeks would vote against the creditors’ terms for a bailout – fewer than in their last poll.

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