Fra Guardian
I think a recap might be helpful.
Eurozone leaders are locked in an emergency summit tonight that will, most likely, determine Greece’s future in the eurozone.
Alexis Tsipras, the Greek prime minister, has laid out Athens’ plans for a new aid programme.
There are reports that Greece going to ask for a short-term funding deal, to cover its immediate needs, and then a longer package.
Sources have told the Guardian that Donald Tusk, president of the European Council, wants a decision tonight on whether a third bailout package is viable. That will determine whether talks resume with Greece, or whether the eurozone starts planning to lose a member.
The states tonight are desperately high, as leaders talk over their vichyssoise soup, cod fillet, and chocolate mousse.
As Ireland’s Enda Kenny put it:
The time is now to bring some hope, certainty and stability to the people of Greece in the medium term, for they are now suffering.
Speculation is rife that a summit could be called on Sunday – either to hammer out a Greek aid plan, or to prepare Grexit.
My colleague Ian Traynor has also heard that EU officials are planning ways to help Greece avoid defaulting on €3.5bn owed to the ECB on 20 July.
But Eurozone leaders have already warned that Greece cannot expect any debt relief soon.
Earlier, Greece’s new finance minister Euclid Tsakalotos attended his first eurogroup meeting. Afterwards, he told reporters there is ‘political will’ for a deal.
The White House has confirmed that President Obama spoke withAngela Merkel today, and pushed her to avoid Greece leaving the eurozone.
How Greece could avoid defaulting on the ECB
There is a way that Greece could agree a bailout programme and avoid defaulting on its payments to the European Central Bank in two weeks, if tonight’s negotiations go well.
Europe editor Ian Traynor has been speaking to insiders, and explains:
If the option of a new Greek bailout through the ESM gets the go-ahead, the best predictions of actual cash disbursements are mid-to end August, way too late to stop Greece defaulting big time on the €3.5bn in bonds it must redeem at the ECB on July 20 (as explained earlier).
But given a modicum of goodwill, something so far in very short supply (although the general temper today has been a lot better than when Yanis Varoufakis was doing the rounds), there is a fix available to the ECB problem.
When Greece’s 2nd bailout expired last Tuesday, some €3.3bn in ECB profits from its securities markets programme due to Greece also vanished [that’s money that the ECB made from bailing Greeceout].
For 2014 the profits amounted to €1.85bn. These are held in an ESM account and could be released to the Greeks if the eurogroup so decided. There is also a further €1.5bn currently held by eurozone governments. This money could also be released to the Greeks — meaning the ECB problem is effectively solved.
A eurozone source says:
“It’s not an easy solution, but probably the only solution,”
The advantage here is that this money could be released without having to wait for any tiresome parliamentary procedures. But the fly in the ointment here is that both wads of cash need to be authorised by the eurogroup unanimously, meaning that a single country could veto the whole show.
The German finance ministry, for example, has been sending negative signals on this, indeed it has been demanding back €500m of the money held by the ESM, the 2014 profits.
Updated
More developments……various sources are reporting that Greece is sending a letter tonight, outlining its request for a new bailout.
