German, French leaders urge Greece to refresh proposals

Merkel and Hollande say doors still open for Greece and expect Athens to come up with new proposals in order to restart bailout talks despite overwhelming ‘no’ votes oppose creditors’ terms

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

The German Chancellor Angela Merkel and French President Francois Hollande met in Paris on Monday to talk Greek referendum result which opposed the terms imposed by international creditors on Athens with an overwhelming majority of popular vote.

The leaders stated that the doors for Athens would still be open despite the referendum concluded with the triumph of "no" votes, and urged the Greek Government led-by Prime Minister Alexis Tsipras to restart financial talks for bailout terms with the country's international lenders by setting a new credible proposal.

"The door is open for discussion," Hollande told reporters with Merkel after the meeting at the Elysee Palace on Monday, adding that they have appreciated the Greek side’s commitments to remain in the eurozone.

"It's now up to the government of Alexis Tsipras to offer serious, credible proposals so that this will can be turned into a programme which gives a long-term perspective, because Greece needs a long-term perspective in the euro zone with stable rules, as the eurozone itself does," Hollande said.

In a Sunday referendum, Greek people voted "no" with a 61 percent to the bailout terms imposed by the country’s negotiators, including the European Commission, European Central Bank (ECB) and the International Monetary Fund (IMF).

The Greek PM, who reassured his political support through the referendum against the international creditors, is expected to unveil his government's proposals on Tuesday when the eurozone countries would re-negotiate Greece’s bailout terms at a hastily-arranged emergency summit in Brussels.

The German side however expressed its discontent with the Greek referendum results and urged Athens to work hard for a new proposal which is needed to be submitted on the table this week.

Merkel said conditions for a new Greek rescue package "have not yet been met” for which "the time is of the essence," of the talks as she demanded a Greek proposal “has to be on the table this week.”

"We say very clearly that the door for talks remains open and the meeting of eurozone leaders tomorrow should be understood in this sense. But at the same time we say that the requirements for starting negotiations about a concrete ESM programme are not present at the moment," she said.

Since Greece declared its default as a result of failure of bailout negotiations with its lenders last week, the Syriza-led Greek government had decided to close all banks in order to preserve further escalation of its financial market.

Greek government announced on Monday to prolong the closure of banks at least for a few more days as money liquidities were shrinking following the mass pull outs.

Meanwhile the ECB announced on Monday that it would resume liquidity lifeline to Greek banks in order to afloat the Greek financial system which is very dependent on foreign loans, adding that it would tighten collateral terms for them to access the funds in the wake of failed talks.

“In this context, the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for Emergency Liquidity Assistance [ELA]," the ECB said in a statement on Monday.

The IMF chief Christine Lagarde said her organisation was "ready to assist Greece if requested to do so" despite Athens failed to pay 1.6 billion euros last week.

After the euphoria of the referendum that resulted with a major victory of no vote camp promoted by the Syriza cabinet, the Greek Finance Minister Yanis Varoufakis stepped down on Monday.

Tsipras immediately appointed Euclid Tsakalotos, a 55-year-old economist, as the new finance minister instead of Varoufakis, who had previously clashed with the creditors, ahead of the Tuesday talks in Brussels.

“We want to continue the discussion... I believe something can change in Europe," said Tsakalotos when he sworn in as finance minister by adding that, "I won't hide from you that I am very nervous and very anxious. I am not taking over at the easiest moment in Greek history."  

Greece’s left-wing Syriza Party has so far not agreed on a number of issues, such as debt restructuring, a lower target for the primary surplus to take in more than it spends apart from debt interest payments, and a pledge to make no further cuts to pensions or wages.

Athens has been negotiating with its creditors, the IMF and the ECB, over the past several months about the release of some 7.2 billion euros in aid.

The country is heavily indebted to the EU and the IMF, almost 240 billion euros, since the eurozone economic crisis seriously hit the country’s economy from 2009 to the present.

The failure of the negotiations would lead Greece to default, one of the most likely scenarios which might also mark a historic blow to the EU's most ambitious project, the common currency usage, euro.



TRTWorld and agencies