Eurozone creditors set bailout terms for Greece

REUTERS

BRUSSELS — Greece’s creditors drafted the broad lines of an agreement Tuesday that would release aid before the cashstrapped country runs out of money.

The European Commission, the European Central Bank and the International Monetary Fund set terms for a cash-for-reforms deal after the leaders of Germany and France held emergency talks with the institutions in Berlin on Monday.

“It covers all key policy areas and reflects the discussions of recent weeks. It will be discussed with (Greek Prime Minister Alexis) Tsipras tomorrow,” a senior EU official said.

Another official said German Chancellor Angela Merkel and French President Francois Hollande would put the plan to Tsipras by telephone within hours to try to secure his acceptance.

Tsipras, who has vowed not to surrender to more austerity, tried to pre-empt a take-it-or-leave-it offer by the creditors. He sent a reform proposal to Brussels Monday before they could complete their version.

Eurozone officials branded the Greek text insufficient and said it wasn’t formally on the table.

The Greek leader will face a backlash from his own supporters if he accepts cuts in pensions and job protection to avert a default and keep Greece in the eurozone.

Despite defiant rhetoric and face-saving efforts, he seems likely to have to swallow painful pension and labor reforms. He faces the choice of putting them to parliament and risking a revolt in his Syriza Party, or calling a snap referendum.

Starved of aid and access to bond markets, Athens is close to running out of money. It has threatened to default on an IMF payment this week without a deal, though it also says it will reject any ultimatums.

Failure to reach agreement this month could trigger a Greek default and lead to the imposition of capital controls and a potential exit from the eurozone, dealing a serious blow to Europe’s supposedly irreversible single currency.

The eurozone source said the Greek document contained no significant concessions on the main outstanding issues of pension and labor market reform, fiscal targets and the size of the civil service.

The European Union’s economics chief said earlier Athens had put forward first proposals for pension reform as the talks reach a crunch point this week with Greek funds drying up.

Jeroen Dijsselbloem, the chairman of eurozone finance ministers, was not at the Berlin meeting. He said there were growing indications that Greece wanted a deal, but that required the Greek government to tell its voters the truth — that it won’t be able to deliver on all its election promises.