Greece submits new bailout plan to avoid euro exit

Pro-European Union protesters gather in front of the Greek parliament in Athens during a demonstration by a 'we stay in Europe' movement. The eurozone has received a detailed bailout request from Greece, a spokesman for Eurogroup chief Jeroen Dijsselbloem said. (AFP/LOUISA GOULIAMAKI)

BRUSSELS: Greece submitted new bailout reform plans to an impatient eurozone on Thursday (Jul 9) in a last-ditch effort to save the country's collapsing economy and its fragile place in the single currency.

With the crisis reaching a climax that could have dire consequences for the global economy, the proposals from Athens landed in Brussels less than two hours before a midnight deadline.

Eurozone officials will now study the details of the plan, which creditors say must include pension and tax reforms, before a make-or-break summit of all 28 European leaders on Sunday.

"New Greek proposals received by Eurogroup president Jeroen Dijsselbloem. Important for (creditor) institutions to consider these in their assessment," said Michel Reijns, a spokesman for the head of the eurozone finance ministers.

The radical left government of Greek Prime Minister Alexis Tsipras had spent the day huddling in Athens to produce a plan acceptable to its partners, especially sceptical Germany, in return for billions of euros in loans to keep the country afloat.

Details of the new plan were not immediately available. But there was growing pressure for the eurozone to ease Greece's crushing €320-billion (US$350-billion) debt burden as part of any plan.

EU President Donald Tusk said Greece's creditors must make a "realistic" proposal for managing the debt if Athens delivers a workable programme, echoing similar calls by the IMF and United States. Greece's parliament is now set to vote on the reform plan on Friday. Anti-bailout protesters gathered in central Athens on Thursday night.

GREEKS WANT TO STAY IN EURO

Ordinary Greeks are panicking over the realisation that, by backing Tsipras's 'No' in a referendum last weekend that soundly rejected austerity, their country has hurtled to the brink of an exit from the euro, or "Grexit".

"I voted 'No' but I am for Greece staying in the eurozone," said Viviane, a worried 46-year-old secretary in an Athens lawyer's office, echoing a majority view. "I want an agreement and no matter if it contains austerity measures - that is still better than going back to the drachma," sighed Stefanos, an unemployed 32-year-old.

Tsipras has vowed to submit "credible reforms, for a fair and viable solution". He risks breaking with hardliners in his Syriza party who reject any austerity no matter the cost. Early on Thursday, Tsipras held a telephone conversation with French President Francois Hollande, one of the very few eurozone leaders sympathetic to his predicament.

The new bailout is the third Greece will have asked for since its debt crisis erupted five years ago. It has already received €240 billion (US$265 billion) in loans from the two previous EU-IMF rescues, the last of which expired on June 30. In 2012, creditors forgave €107 billion (US$118 billion) of its debt.

But all that has proved insufficient, with Greece struggling through a depression that has shrunk its output by a quarter and sent unemployment rocketing to 26 percent.

The cash-strapped country needs money to reopen its banks which have been closed for nearly two weeks, and eurozone leaders have warned that the European Central Bank will cut emergency funding if it does not reach a new deal.

UPHILL BATTLE

Greece faces has an uphill battle to convince most of the eurozone nations. Germany, the Netherlands and several Nordic and eastern European states are hostile to another rescue and want to see Greece stick to reforms it has rejected, on taxes and pensions, before it talks of debt relief.

"I have said that a classic 'haircut' is out of the question for me and that hasn't changed between the day before yesterday and today," German Chancellor Angela Merkel told reporters on a visit to Sarajevo.

German Foreign Minister Wolfgang Schaeuble, also on Thursday, conceded that IMF chief Christine Lagarde was correct when she said Greece was in need of some debt restructuring.

But he was quick to add: "There cannot be a haircut because it would infringe on the system of the European Union and after all the European Union is a community of common laws."

The Eurogroup is set to meet on Saturday to discuss the new proposals, followed on Sunday by a summit of the 19 leaders of the countries that use the euro and then a meeting of all 28 EU leaders.

Tusk has called the next few days "really and truly the final wake-up call for Greece and for us", warning that it is the last deadline the country will get before it is cut loose.

Across Greece, hardship is piling up under capital controls imposed after Tsipras on June 27 called his referendum. The closure of banks and rationing of cash from ATMs was gradually bringing the Greek economy to a standstill. A ban on transferring money out of the country has isolated Greece from foreign suppliers of everything from food to medicine.

Last-minute bookings by foreign visitors to Greece - usually a hotspot summer vacation destination - have plunged by 30 per cent, dealing a serious blow to a sector that accounts for a fifth of the economy.

Greek authorities have repeatedly pushed back the day when banks and the Athens stock market should reopen, with the latest date given being next Monday.

International markets appeared to be betting that Greece would eventually reach a deal with its creditors. European stocks rose Thursday while the euro eased to US$1.1039 from US$1.1077 late in New York on Wednesday.