Greece made a request for aid from Europe’s bailout fund Wednesday as it rushed to deliver details of its proposed economic reforms in time to secure the country’s future in the euro and avoid a descent into financial chaos. The government has asked for a three-year loan program and insisted the rescue will be accompanied by major economic reforms. No amount was mentioned.
According to the letter sent to the European Stability Mechanism, Athens said it would “immediately implement a set of measures as early as the beginning of next week.”
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Those include tax and pension reforms, details of which will be presented Thursday at the latest. Those are two of the issues that divided the Greek government and creditors over the past few months of protracted discussions.
In the letter, the Greek government said it was asking for the loans “given the risk to the financial stability of Greece as a member state and of the euro area as a whole.” Its aim, it went on, was to regain “full and affordable market financing to meet its future funding requirements as well as sustainable economic and financial situation” by the time the loan ends at the latest.
Greece has been told it has to deliver details of the reforms by Thursday night so a deal can be agreed at a summit of the European Union’s 28 leaders Sunday.
Without a deal, the country faces an almost inevitable collapse of the banking system, and European leaders have warned Greece this is its last chance to remain in the euro.
Markets are holding up despite the apparent ultimatum, with many investors predicting a last-minute deal. The Stoxx 50 index was up 0.3 percent.
“Guarded optimism is the theme today, as the eurozone gives Greece one final deadline,” said Chris Beauchamp, senior market analyst at IG in London.
Prime Minister Alexis Tsipras, addressing lawmakers at the European Parliament, said his country is seeking a deal that would bring a definitive end to his country’s financial crisis. Greece has had two bailouts from its European partners and the International Monetary Fund since May, 2010, totaling 240 billion euros ($260 billion).
“We need to ensure the medium-term funding of our country with a development and growth program,” Tsipras told lawmakers in Strasbourg, France.
The head of France’s central bank said he feared the “collapse” of the Greek economy and “chaos” if Greece doesn’t strike a deal by Sunday.
And in unusually strong language, Christian Noyer told Europe-1 radio he predicted “riots” in Greece if no deal is reached. He also indicated the European Central Bank would effectively pull the plug on its emergency liquidity measures for Greek banks if no deal is struck.
Tsipras insisted he has “no hidden agenda” to drive Greece out of the euro and that last Sunday’s referendum result, in which voters soundly rejected a previous creditors’ reform proposal, does not mean a break with Europe.
Applause rose from left-wing quarters in the EU Parliament when Tsipras said aid to Greece only helped out banks, not ordinary Greeks. A few called for compromise.
The head of a conservative group in the Parliament, Belgium’s Guy Verhofstadt, said he was “furious” at Tsipras’ failure to spell out specifics of his reform plans.
In Greece, meanwhile, people were struggling with an eighth day of limits on money withdrawals and shuttered banks. They cannot take out more than 60 euros ($67) a day from ATMs, are unable to send money abroad, including to pay supplies or bills, without special permission.
Tsipras said Greece’s troubles predated his arrival in office in January and condemned the “austerity experiment” his country has endured over the past five years that he blames for spiraling unemployment and poverty.
“We demand an agreement with our neighbors, but one that gives us a sign that we are on a long-lasting basis exiting from the crisis — which will demonstrate to us that there is light at the end of the tunnel. An agreement which will bring about the credible and necessary reforms,” he said.
Tsipras vowed to continue reforms but warned about the austerity-weariness of the public.
“This has exhausted the patience and resilience of the Greek people,” he said.
The Greek crisis has frayed the nerves of other European leaders, who have accused the Greek government, elected in January on promises to repeal austerity, of foot-dragging and exacerbating the situation.
Greek Ambassador Christos Panagopoulos on the debt crisis
For more on the debt crisis in Greece, CCTV America’s Mike Walter spoke to Greek Ambassador Christos Panagopoulos.
Greek Ambassador Christos Panagopoulos on the debt crisisFor more on the debt crisis in Greece, CCTV America's Mike Walter spoke to Greek Ambassador Christos Panagopoulos.
Highlighting the rising anger with Tsipras, European Commission President Jean-Claude Juncker had a stark warning for Greece after Tuesday’s eurozone summit.
“We have a Grexit scenario, prepared in detail,” he said, apparently referring to the situation in which Greece would be forced out of the currency union.
Greece’s Eurozone partners have said they want to help the country stay in the currency club while complaining about foot-dragging by the Greek government.
One big sticking point has been Greece’s demand for some relief on its debt burden, which stands at around 320 billion euros ($350 billion), or around 180 percent of the country’s annual GDP.
Germany appears to be particularly reluctant to help Greece deal with its debts if reforms aren’t forthcoming.
Germany’s stance is at odds with the IMF — another major creditor. In a report last week, it said European states should accept longer repayment periods and lower interest rates on their loans to Greece.