Eurozone hastens Greek rescue plan

A race to save Greece from bankruptcy and keep it in the euro gathered pace on Wednesday when Athens formally applied for a three-year loan and European authorities launched an accelerated review of the request.

Greek Prime Minister Alexis Tsipras called in a speech to the European Parliament for a fair deal, acknowledging Greece’s historic responsibility for its plight, after EU leaders gave him five days to come up with convincing reforms.

The government submitted a request to the European Stability Mechanism bailout fund to lend an unspecified amount “to meet Greece’s debt obligations and to ensure stability of the financial system”. It promised to begin implementing tax and pension measures sought by creditors as early as Monday.

With its banks closed, cash withdrawals rationed and the economy in freefall, Greece has never been closer to a state bankruptcy that would probably force it to leave the euro and print an alternative currency.

European officials told Reuters that some Greek banks may have to be shut and taken over by stronger rivals, regardless of whether the country bailout funds or not.

Yet leftist premier Tsipras seemed almost nonchalant, albeit with a note of humility, when he appeared before EU lawmakers in Strasbourg to cheers and scattered boos.

Speaking hours after euro zone leaders, at another emergency summit in Brussels, set Greece a deadline of the end of the week to come up with far-reaching reform proposals, Tsipras said Greeks had no choice but to demand a way out of “this impasse”.

“We are determined not to have a clash with Europe but to tackle head-on the establishment in our own country and to change the mindset which will take us and the euro zone down,” he said to applause from the left. But he gave scant details of his reform plans, frustrating many lawmakers.

The head of the Eurogroup of finance ministers of the 19-nation currency area, Jeroen Dijsselbloem, asked the European Commission and the European Central Bank to evaluate the loan request, assess Greek debt sustainability and study whether Greece poses a risk to the financial stability of the euro zone.

IMF chief Christine Lagarde reiterated that Greece’s massive debt would need restructuring, something Germany is resisting. “Greece is in a situation of acute crisis, which needs to be addressed seriously and promptly,” she said at the Brookings Institution think-tank in Washington.

EMERGENCY FINANCE

The aim is for Eurogroup ministers meeting on Saturday to be in a position to recommend a loan, and some emergency bridging finance, which a full summit of the 28 EU leaders would approve on Sunday if they are satisfied with Greek reform commitments.

Read also: Bailout crisis: Greek finance minister resigns

That is a big ‘if’, both due to Athens’ chequered record and because many of the liberalization measures required run counter to the leftist ideology of Tsipras’ Syriza party.

The prime minister promised to deliver detailed reform plans on Thursday and avoided the angry rhetoric that has alienated many European partners. He did however criticize attempts to “terrorize” Greeks into voting for “never-ending austerity”.

The European Central Bank kept Greece’s banks on a tight leash, holding a freeze on emergency funding that means they could soon run out of cash. The Greek government said banks would remain closed until July 13, with an ATM withdrawal limit unchanged at 60 euros per day.

European Council President Donald Tusk reiterated that the final deadline for Greece to submit convincing reform plans and start implementing them was this week.

“Our inability to find an agreement may lead to the bankruptcy of Greece and the insolvency of its banking system,” Tusk told EU lawmakers.

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