Greek proposal draws praise from Paris

Greek prime minister Alexis Tsipras arrives for a session of the Syriza party parliamentary group

A new Greek reform proposal aimed at restarting bailout talks with creditors drew praise from France but a muted reaction from a more sceptical government in Germany.

French president François Hollande, who has been pushing for a last-minute deal with Athens, on Friday welcomed the proposal as “serious and credible” and said “the Greeks have just showed determination to stay within the eurozone”.


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The reforms, approved by the cabinet of leftwing Greek prime minister Alexis Tsipras late on Thursday, bear a striking resemblance to a compromise offer extended by creditors late last month that the country’s voters subsequently rejected in a national referendum on Sunday.

Greece’s bailout monitors — the European Commission, the European Central Bank and the International Monetary Fund — will have a short window to evaluate them before a meeting of eurozone finance ministers on Saturday.

The ministers will then decide whether the Greek offer is sufficient to launch negotiations on a third bailout, which officials said could amount to more than €70bn. The alternative would be to hold a summit of EU leaders on Sunday to discuss preparations for an imminent Greek exit from the euro.

German chancellor Angela Merkel, who has taken a harder line than Mr Hollande, declined to comment on the latest Greek plan before it was assessed by the bailout monitors.

Martin Jäger, the finance ministry spokesman, emphasised the tall hurdles that Athens must still clear in order to secure a deal.

“It would not be enough to present the proposals from the end of June in new packaging,” he said.

Greece’s economy has deteriorated further since then, necessitating a bigger reform effort, according to creditors.

Meanwhile, Athens is no longer trying to secure a final aid payment in an existing bailout — as it was last month — but now attempting to agree a new three-year rescue.

Greece’s banks, under capital controls for more than a week, are now on the brink of collapse. They face bankruptcy as early as Monday without the prospect of a deal with creditors that would allow the ECB to continue emergency loans that are keeping the financial sector on life support.

To avoid that fate, Mr Tsipras must not only persuade the country’s creditors but also his own far-left Syriza party, where hardline members have already voiced displeasure ahead of a crucial parliamentary vote on the plan later on Friday.

“The Greek proposal is not in line with Syriza’s programme. It cannot respond to the problems of the country and deliver positive prospects,” Panagiotis Lafazanis, a government minister and the leader of Syriza’s radical left said on Friday.

Stavros Theodorakis, leader of the centre-left To Potami party, predicted the package would pass by a large majority, though that may only come because of expected support from mainstream opposition parties.

In a copy of the submission obtained by the Financial Times, Euclid Tsakalotos, the new Greek finance minister, vows to press ahead with several reforms — including pension reforms and tax increases — early next week, even before a final bailout agreement could be reached.

In a two-page letter accompanying the submission, Mr Tsakalotos said the quick passage of the reforms was intended “as a first element in a trust-building exercise with our partners”.

The initial measures are likely to include an overhaul of Greece’s complicated value added tax system — though the plan seeks to maintain special discounts for small, remote islands — and phasing out the pension system’s “solidarity grant” to poorer pensioners by December 2019.

Tellingly, none of the documents submitted to creditors, including Mr Tsakalotos’s letter and a separate missive from Mr Tsipras, contain any mention of debt relief — one of the primary demands of Yanis Varoufakis, former finance minister.

According to officials briefed on the Greek plans, which include a 13-page list of specific reforms, the new submission was compiled with the assistance of the European Commission and the French government. These two are leading a small camp trying to overcome a growing tide of scepticism and mistrust among eurozone governments.


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