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Greece makes new offer as PM warns of eurozone collapse

The Eurozone logo/AFP

The Eurozone logo/AFP

BRUSSELS, June 9- Cash strapped Greece submitted a new reform plan to its EU-IMF creditors Tuesday as Prime Minister Alexis Tsipras warned the lack of a deal would lead to the collapse of the eurozone.

The radical leftist Greek government is on the verge of default and needs an agreement to unlock 7.2 billion euros ($8.1 billion) in bailout cash before its international rescue package expires at the end of the month.

Athens and Brussels traded barbs over the weekend after Tsipras rejected a plan put forward by European Commission chief Jean Claude Juncker last week, but on Tuesday Greece relented and sent in its counter offer.

“The three insitutions are currently assessing these suggestions with diligence and care,” Commission spokesman Margaritis Schinas said, referring to the EU, European Central Bank and International Monetary Fund, the three monitors of Greece’s bailout.

Tsipras has requested a meeting with German Chancellor Angela Merkel and French President Francois Hollande on the sidelines of an EU Latin American summit on Wednesday to discuss the crisis.

Schinas would not indicate whether Juncker would take part in the meeting, saying Brussels had to study the new Greek plan first.

Last week the Greek premier testily rejected Juncker’s “absurd” plan following a meeting with the EU executive chief, leading Juncker on Sunday to accuse Tsipras of failing to respect “minimal rules”.

In an emotional interview published Tuesday, Tsipras said any failure to reach a deal would be a catastrophe for the 19 nation euro area.

“I think that is evident. It would be the beginning of the end for the eurozone,” Tsipras told the Italian newspaper Corriere della Sera.

– Greece’s latest proposal –

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Greece’s five year debt crisis surged back as an international concern in January after Tsipras’s radical Syriza party won elections on a vow to end painful austerity measures made as part of the country’s 240 billion euro bailout since 2010.

The Syriza led government has since been locked in a four month standoff with its dissatisfied creditors. Greece has offered reforms on pensions, VAT and the country’s primary surplus, but has also demanded debt relief and insisted on its own social programmes.

Last week Greece was forced to bundle up a 300 million euro payment to the US based IMF until the end of June, when a total of 1.6 billion euros will be due, making it the first country since Zambia in the 1980s to choose that option.

Greece’s latest proposal was made on Tuesday by Greek Minister of State Nikos Pappas and Deputy Foreign Minister Euclid Tsakalotos, who submitted what Athens said was “two supplementary texts” to EU’s Economic Affairs Commissioner Pierre Moscovici.

Sources said the crux of the offer was a bid by Athens to delay huge repayments due to the ECB this summer, which would almost certainly push Greece into bankruptcy.

Based on an idea from controversial Greek finance minister Yanis Varoufakis, this would be done by transferring that debt to the ESM, the crisis-fighting liquidity fund controlled by European governments.

The offer also includes a proposal that Athens claim 10.9 billion euros in bailout funds earmarked for Greek banks, which was refused out of hand by European ministers in February.

“If everything is confirmed, the offer proves that we have entered the details of the deal… We can begin to be optimistic,” European affairs professor Kostas Yfantis from the University of Athens told Greek public radio.

– March 2016 extension? –

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European sources also told AFP that Greece and its creditors were debating a possible extension of its current eurozone bailout programme until March 2016.

The extension would be the third for Greece since last year and align it with the end of the IMF’s own bailout agreement with Athens, which has run in tandem with the EU and ECB programme.

Tsipras is under huge pressure from all sides, with the more radical elements of his Syriza party pushing for an outright refusal of any further concessions to the creditors.

The Greek drama was central stage at a G7 summit in Germany on Monday with US President Barack Obama urging both sides to compromise.

Greece’s ASE Index gained 2.3 percent on Tuesday on the outlook for a deal, the most among western European markets and rebounding from sharp falls the day before.

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