Eurozone leaders have given Greece until the ‘final deadline’ of Sunday to come up with acceptable terms for a new bailout.
After Greek Prime Minister Alexis Tsipras unexpectedly failed to put forward fresh proposals yesterday, the Greek government is now required to propose new terms by Friday and get the eurozone’s other 18 governments on board with the plan by Sunday. Unless a new agreement is reached, Greece faces the prospect of its banks going bust on Monday.
Speaking at a news conference yesterday, the President of the European Council Donald Tusk plainly stated: “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.”
German Chancellor Angela Merkel is pressing for new terms by Thursday to give her time to put them to the German Parliament and authorise new negotiations. She has said she is “not exaggeratedly optimistic” about the situation.
The final deadline comes after the Greek public voted overwhelmingly against accepting the last set of bailout terms in a referendum last Sunday. 61% of Greeks voted to decline the bailout terms set out by the European Commission (EC), the International Monetary Fund (IMF) and the European Central Bank (ECB). The bailout terms included severe austerity measures, VAT increases and raising the retirement age.
Sunday will see a summit of the EU’s 28 members to discuss the proposed terms. If an agreement cannot be reached, Greece’s banks will run out of money on Monday and the country will be the first to crash out of the Euro since its inception in 1999. There are widespread fears this could cause a ‘domino-effect’, pushing other eurozone countries to crash out of the currency. There are also grave concerns about the viability of an incomplete eurozone in the long-term.