As we reported yesterday, following the latest European leaders summit, Greece was given until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin.
"The stark reality is that we have only five days left ... Until now I have avoided talking about deadlines, but tonight I have to say loud and clear that the final deadline ends this week," European Council President Donald Tusk told a news conference.
It did that moments ago when Greece officially submitted a request for a three-year loan facility from the European Stability Mechanism also promising to implement tax reform, and pension measures at the beginning of next week, which had been the biggest sticking point in negotiations for the past 5 months. And to think Syriza's main election promise was no more bailouts and the Greek people resoundly said not to just this over the weekend.
As Bloomberg reports, the loan will be used to meet Greece’s debt obligations, and to ensure financial system stability. Greece proposed immediate implementation of measures, including tax, pension reforms as early as next week. Govt to detail its proposals for specific reform agenda on July 9 at latest or tomorrow.
More details from the WSJ:
Greece formally requested a three-year bailout from the eurozone’s rescue fund Wednesday and pledged to start implementing some of the overhauls demanded by creditors by early next week, according to a copy of the request seen by The Wall Street Journal.
Crucially for Greece’s creditors, the letter says the government would start implementing some measures, including on taxation and pensions, by the beginning of next week, though it doesn’t go into details.
The letter is a first step toward fulfilling a demand by international creditors, who have given Athens until Sunday to come up with tougher measures they would impose in return for desperately needed financing that could keep the country from bankruptcy and even worse economic turmoil.
The full list of overhauls and budget cuts is what will determine whether the application for a new rescue program will be approved by the rest of the eurozone. The currency union’s leaders said Tuesday they would assess whether it makes sense to start formal negotiations on a bailout program at an emergency summit on Sunday.
In other words, and as expected, Greece has essentially capitulated to Troika demands which will come with far harsher terms and even more austerity, just to keep the myth that Greece is an "equal member" in the Eurozone, yet virtually all the proceeds will go back to repaying the ECB, the IMF and other official taxpayer-backed European creditors as well as the occasional private holdout creditor.
This is all happening as Tsipras is currently talking in the Euro parliament, where he is trying to strike a far more cooperative tone now the only Greek hope is that it is not too late for Europe to accept any offer Greece will propose, oblivious of the referendum.
Earlier he submited the following statement after the Eurozone summit.
Here are some of his speech highlights via Reuters:
Thank you for the invitation-& honor-to address the elected representatives of peoples of Europe.
The Greek people's brave choice in conditions of unprecedented pressure, does not mean a break w/Europe.
My country was used to experiment with austerity. The experiment, we must admit, failed.
The majority of Greek people feel that there is no other choice but to stop treading this road to nowhere.
Our proposal to the institutions includes: credible reforms based on a fair sharing of burdens.
It includes the adequate coverage of the country's financial needs.
It includes a strong investment program, primarily for combating unemployment and encouraging entrepreneurship.
It includes a commitment to begin a sincere discussion regarding a solution to problem of sustainability of Greece's public debt.
Our proposals for financing our obligations & restructuring our debt will not burden European taxpayers.
I'm not one of those politicians who claim that foreigners are to blame for all of Greece's woes.
Previous governments created clientelistic state, furthered corruption & strengthened ties to economic elite.
Our proposals focus on reforms that aim to change #Greece, reforms that the Memoranda purposely did not include.
Now, must reach a viable & honest compromise, one that will avoid a historical break & goes against EU tradition.
And I am sure that we're all aware of-& we'll all take into account-our historic responsibility. Thank you.
It is unclear if Tsipras has converted the Syriza hard cores to his camp just days aftter the critical Greek "Oxi" referendum passed on a landslide, but at least one MEP was convinced:
All of us, urgently, by Sunday, have to do what needs to be done, whatever it takes, as Mr. Draghi says, so we see the word Grexit wiped out of EU vocabulary for ever.
- Dimitrios Papadimoulis, MEP FROM TSIPRAS'S SYRIZA PARTY
But others were not easily fooled:
So if this piece de theatre continues I think we will be more and more confused about who and what we are trying to save. Are we trying to save the currency union, Greek society, the credibility of the government, the creditors, the reputation of Angela Merkel, or the infallibility of ever closer-union?
We certainly cannot save all of these. There will be some casualties.
- Ryszard Legutko, MEP FROM CONSERVATIVE GROUP ECR
In any event, the latest Greek crisis, if only for the time being, is likely about to close this weekend. Will the can be kicked for 3 years or will the Greek people confirm they have had enough and rebel from under Tsipras, we will hopefully find out shorly.
In the meantime, here is the recap of all the key Greek headlines and events in the past several hours from Reuters and Bloomberg...
- 1147 - German finance ministry spokesman rejects measures that reduce the current value of Greek debt such as debt reprofiling
- 1139 - European Banking Authority says remains vigilant but markets coping well so far with Greek uncertainty
- 1130 - Greece proposes to implement as early as next week tax and pension reform measures, letter shows
- 1125 - Greece requested a three-year loan from the European Stability Mechanism bailout fund but didn't specify volume of financing sought, a euro zone source tells Reuters
- 1125 - European Council President Donald Tusk says without unity on Greece we will in four days wake up in a different Europe
- 1122 - If Greece and its creditors don't agree by Sunday to start talks on third bailout, it will be necessary to think about other options, a spokesman for the German finance ministry says
- 1117 - Greek Prime Minister Alexis Tsipras tells EU Parliament he will come up with very specific proposals on Thursday
- 1015 - Technical experts will review Greece's request for an ESM loan on Wednesday but there will be no conference call among euro zone ministers, a spokesman says
- 0956 - Russia is not in a position to help solve the Greek debt crisis, and the EU should resolve it on its on, the chief executive of Russia's second largest bank VTB says
- 0947 - Greece lodges formal request for bailout loan with the euro zone's special support fund, a spokesman for the European Stability Mechanism says
- 0920 - European Central Bank Governing Council member Ewald Nowotny says hard to imagine that ECB council could increase emergency liquidity for Greece
- 0904 - Bank of Italy and ECB member Ignazio Visco says ECB will will do what it can to contain financial and economic consequences of Greek crisis.
- 0903 - Greece successfully rolls over T-bills to refinance a maturing six-month issue
- 0820 - Greek Prime Minister Alexis Tsipras tells European Parliament says will present details proposal to EU in next 2-3 days.
- 0812 - Greek Prime Minister Alexis Tsipras tells European Parliament the referendum gave him a mandate to find a socially just and economically sustainable solution to end the crisis.
- 0747 - EU Economics Commissioner Pierre Moscovici tells BBC radio an agreement between Greece and its euro zone partners is still possible.
- 2347 - Euro zone members give Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans
- 2135 - Merkel says she hopes to have sufficient reform proposals from Greece this week to be able to ask the German parliament to approve negotiations on a new long-term aid programme for Athens. If the reform list was adequate and Greece took some prior actions to enact first measures, she says she is sure that short-term finance can be provided to help Athens over its immediate funding needs.
- 2030 - Austria's finance minister says Greece's request for financial aid from the European Stability Mechanism (ESM) is so far very vague.
- 2020 - Summit over; Italian Prime Minister Matteo Renzi says a final meeting on Greece, involving all 28 EU leaders, will take place on Sunday.
- 1932 - Greek banks could start to run out of cash over the next two days if creditors do not agree to a new aid deal, two sources familiar with the country's financial system say.
.... and here are the key catalysts in the coming days.
- July 8: Greece scheduled to submit request for a bailout agreement to the European Stability Mechanism
- Euro area finance ministers may hold a conference call to assess Greece’s request for a new program * European Central Bank Governing Council will review liquidity situation of Greek lenders
- Greek bank holiday, capital controls decree expires; government set to renew it
- July 9: Greece must submit its reform agenda, which will be assessed by the European Commission, the European Central Bank and the International Monetary Fund. Results will be given to the Eurogroup, which will hold another call to discuss the new proposals
- July 10: Greece needs to refinance EU2b in t-bills
- July 11: Euro-area finance ministers will meet in Brussels
- July 12: Euro-area and EU leaders will hold meetings to discuss the results of Greece’s expected comprehensive reform agenda