Greek government asks for 3-year aid program, races to submit suitable reforms proposal

Greece requested a new three-year rescue program from its European partners on Wednesday and rushed to complete a detailed plan of economic reforms in time to avoid the country’s descent into financial chaos.

ATHENS, Greece — Greece requested a new three-year rescue program from its European partners on Wednesday and rushed to complete a detailed plan of economic reforms in time to avoid the country’s descent into financial chaos.

With the banking system teetering on the edge of collapse, the government sought to reassure its European creditors that it would enact tax and pension reforms quickly in exchange for loans from Europe’s bailout fund, the European Stability Mechanism.

In its formal request to tap the fund, the Greek government said it would “immediately implement a set of measures as early as the beginning of next week.”

After months of fruitless negotiations with the Greek government, the skeptical European creditor states have said they want to see a detailed, cost-accounted plan of the reforms by Thursday. That is meant to give the creditors enough time to review the plan before leaders of the European Union’s 28 countries meet on Sunday in what has been termed as Greece’s last chance to stay in the euro.

In the letter, the Greek government said it was aiming to be able to finance itself once the new aid program is over in three years.

Without a deal, Greece faces an almost inevitable collapse of the banking system, which would be the first step for the country to fall out of the euro.

Markets are holding up despite the apparent ultimatum, with many investors predicting a last-minute deal. The Stoxx 50 index closed up 1 per cent.

“Guarded optimism is the theme today, as the eurozone gives Greece one final deadline,” said Chris Beauchamp, senior market analyst at IG in London.

Prime Minister Alexis Tsipras, addressing lawmakers at the European Parliament, said his country is seeking a deal that would bring a definitive end to his country’s financial crisis. Greece has had two bailouts from its European partners and the International Monetary Fund since May 2010, totalling 240 billion euros ($260 billion).

“We need to ensure the medium-term funding of our country with a development and growth program,” Tsipras told lawmakers in Strasbourg, France.

The head of France’s central bank said he feared the “collapse” of the Greek economy and “chaos” if Greece doesn’t strike a deal by Sunday.

In unusually strong language, Christian Noyer told Europe-1 radio he predicted “riots” in Greece if no deal is reached. He also indicated the European Central Bank would effectively pull the plug on its emergency liquidity measures for Greek banks if no deal is struck.

Greece’s main business and tourism associations predicted an “explosion of unemployment” if no deal is reached.

Tsipras insisted he has “no hidden agenda” to drive Greece out of the euro and that last Sunday’s referendum result, in which voters soundly rejected a previous creditors’ reform proposal, does not mean a break with Europe.

Applause rose from left-wing quarters in the EU Parliament when Tsipras said aid to Greece only helped out banks, not ordinary Greeks. A few called for compromise.

The head of a conservative group in the parliament, Belgium’s Guy Verhofstadt, said he was “furious” at Tsipras’ failure to spell out specifics of his reform plans.

In Greece, meanwhile, people were struggling with an eighth day of limits on money withdrawals and closed banks. Greeks cannot take out more than 60 euros ($67) a day from ATMs and are unable to send money abroad, including to pay bills or to stock their businesses, without special permission.

Tsipras said Greece’s troubles predated his arrival in office in January and condemned the “austerity experiment” his country has endured over the past five years that he blames for spiraling unemployment and poverty.

“We demand an agreement with our neighbours, but one that gives us a sign that we are on a long-lasting basis exiting from the crisis — which will demonstrate to us that there is light at the end of the tunnel,” he said.

Tsipras vowed to continue reforms but warned about the austerity-weariness of the public.

“This has exhausted the patience and resilience of the Greek people,” he said.

The Greek crisis has frayed the nerves of other European leaders, who have accused the Greek government, elected on promises to repeal austerity, of foot-dragging and exacerbating the situation.

Highlighting the rising anger with Tsipras, European Commission President Jean-Claude Juncker had a stark warning for Greece after Tuesday’s eurozone summit.

“We have a Grexit scenario, prepared in detail,” he said, apparently referring to the situation in which Greece would be forced out of the currency union.

One big sticking point has been Greece’s demand for some relief on its debt burden, which stands at around 320 billion euros ($350 billion), or around 180 per cent of the country’s annual GDP.

Germany appears to be particularly reluctant to help Greece deal with its debts if reforms aren’t forthcoming.

Germany’s stance is at odds with the IMF — another major creditor. In a report last week, it said European states should accept longer repayment periods and lower interest rates on their loans to Greece.

France’s government has appeared willing to play mediator, though even it has said it is up to Greece to present suitable proposals for a deal.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Trudeau cancels Caribbean trip amid pipeline protests

OTTAWA — Prime Minister Justin Trudeau is cancelling his planned trip to… Continue reading

Town of Ponoka facing lawsuit from pair of local residents

Ponoka town council members and administration have been served with a lawsuit… Continue reading

Trudeau confers with cabinet ministers as rail blockades continue

The Trudeau government has been criticized for not doing more to end the blockades

Minister reports ‘modest progress’ after blockade talks with First Nation

TYENDINAGA, Ont. — Hours of talks between the federal government and representatives… Continue reading

Red Deer County investing in fibre optics

County investing $7 million over two years to improve Internet connections

Fashion Fridays: Apple body types: What you need to know

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Your community calendar

Feb. 6 A Perogie Supper is being held Thursday, Feb. 6 from… Continue reading

Woman loses 50 pairs of shoes after boyfriend accidentally donates them to thrift store

Cassandra Converse can’t wait to go shoe shopping. Last month, Converse’s boyfriend… Continue reading

RDC Queens fall in double OT to MacEwan University Griffins

Griffins 4 Queens 3 (2OT) The RDC Queens managed to salvage a… Continue reading

Trump takes Daytona 500 warmup lap in presidential limousine

DAYTONA BEACH, Fla. — President Donald Trump gave an election-year embrace to… Continue reading

Canada expected to support heavy fuel ban in Arctic despite costs to northerners

The federal government is expected to support international measures that would reduce… Continue reading

Nurses’ unions warn national standards for coronavirus protection too low

OTTAWA — The Canadian Federation of Nurses Unions is warning that the… Continue reading

‘Sonic’ speeds to $57M debut; ‘Parasite’ sees big Oscar bump

NEW YORK — The redesigned “Sonic the Hedgehog” showed plenty of teeth… Continue reading

Justin Timberlake on ‘trauma’ of being pelted with bottles at SARS concert

TORONTO — Justin Timberlake is still haunted by being pelted with what… Continue reading

Most Read