A race to save Greece from bankruptcy and keep it in the euro gathered pace on Wednesday when Athens formally applied for a three-year loan and European authorities launched an accelerated review of the request.
Greek Prime Minister Alexis Tsipras called in a speech to the European Parliament for a fair deal, acknowledging Greece’s historic responsibility for its plight, after EU leaders gave him five days to come up with convincing reforms.
The government submitted a request to the European Stability Mechanism bailout fund to lend an unspecified amount “to meet Greece’s debt obligations and to ensure stability of the financial system”. It promised to begin implementing tax and pension measures sought by creditors as early as Monday.
With its banks closed, cash withdrawals rationed and the economy in freefall, Greece has never been closer to a state bankruptcy that would probably force it to leave the euro and print an alternative currency.
Yet, the Premier seemed almost nonchalant, albeit with a note of humility, when he appeared before EU lawmakers in Strasbourg to cheers and scattered boos.
Speaking hours after Eurozone leaders, at another emergency summit in Brussels, set Greece a deadline of the end of the week to come up with far-reaching reform proposals, Mr. Tsipras said Greeks had no choice but to demand a way out of “this impasse”.
The head of the Eurogroup of Finance Ministers of the 19-nation currency area, Jeroen Dijsselbloem, asked the European Commission and the European Central Bank to evaluate the loan request, assess Greek debt sustainability and study whether Greece poses a risk to the financial stability of the Eurozone.
The aim is for Eurogroup Ministers meeting on Saturday to be in a position to recommend a loan, and some emergency bridging finance, which a full summit of the 28 EU leaders would approve on Sunday if they are satisfied with Greek reform commitments.
That is a big ‘if’, both due to Athens’ chequered record and because many of the liberalisation measures required run counter to the leftist ideology of Mr. Tsipras’s Syriza party.
The Prime Minister promised to deliver detailed reform plans on Thursday and avoided the angry rhetoric that has alienated many European partners. He did however criticise attempts to “terrorise” Greeks into voting for “never-ending austerity”.
The European Central Bank kept Greece’s banks on a tight leash, holding a freeze on emergency funding that means they could soon run out of cash.
European Council President Donald Tusk reiterated that the final deadline for Greece to submit convincing reform plans and start implementing them was this week.
“Our inability to find an agreement may lead to the bankruptcy of Greece and the insolvency of its banking system,” Mr. Tusk told EU lawmakers. “And for sure it will be most painful for the Greek people.
“I have no doubt that this will affect Europe, also in the geopolitical sense. If someone has any illusion that it will not, they are naive,” he said.
Eurozone officials want Greece to rush a first wave of measures through Parliament before Sunday to prove its serious intent. German Chancellor Angela Merkel has said she would ask Parliament in Berlin to authorise the opening of loan negotiations if the Greek measures are deemed satisfactory.
Eurozone sources said one key question was whether the package will be more ambitious than the spending cuts, tax increases and modest reforms that Greek voters rejected on Sunday in a referendum on a previous bailout plan.
Mr. Tsipras admitted that after winning power on a promise to end austerity, his government had “spent more time negotiating than governing” but he disappointed those who had hoped to hear concrete immediate measures to transform the shattered economy.
Having secured a referendum victory and the unprecedented support of the five main parties in Parliament, Mr. Tsipras also made clear he wanted to act fast to pre-empt any possible revolt against the painful concessions he will need to make.
He was strongly critical of Greece’s failings as a society, citing a history of clientelism, corruption, tax evasion that had “run riot”, inequality and “the nexus of political and economic power”.
