Greek prime minister proposes reforms ahead of crucial eurozone summit | News | DW | 21.06.2015
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Greek prime minister proposes reforms ahead of crucial eurozone summit

Greek Prime Minister Alexis Tsipras has spoken to European leaders in a last-ditch attempt to negotiate a solution to the ongoing crisis. At the moment, uncertainty still has everyone at the negotiating table.

Speaking to German Chancellor Angela Merkel, French President Francois Hollande and EU Commission President Jean-Claude Juncker on Sunday, Tsipras laid out proposals for a "mutually beneficial agreement," according to a statement released by the Greek government.

On a visit to Milan, Hollande confirmed that Greece had put forward new proposals, but he did not elaborate on the details of the new suggestions.

Any proposals submitted by Tsipras would have to be concrete to convince eurozone partners and would probably have focused on pensions and value-added tax, according to Alexander Kritikos of the German Institute for Economic Research in Berlin.

The proposals come before leaders of the 19-nation eurozone are due to meet on Monday for an emergency summit to discuss Greece's fate.

Symbolbild Griechenland EU

As Greece's creditors discussed Tsipras' proposals, Syriza held a protest against concessions

The current bailout program for Greece comes to an end on June 30 when it will owe the International Monetary Fund 1.6 billion euros ($1.8 billion) - money it doesn't have. Athens is set to default unless the government can negotiate conditions, including cuts on spending and tax increases, to allow it to access the last 7.2 billion euros available as part of the package.

But weeks of wrangling have left both sides frustrated. Greece's creditors were due on Sunday to discuss Tsipras' proposals to see whether a solution can be found that is acceptable to both sides.

'Grexit' in the cards?

Analysts, however, are divided over whether Monday's meeting would end with a "Grexit" in the cards.

"Countries will prefer to keep Greece inside the eurozone because they are too unsure of what will happen if it leaves," said Kritikos, adding that he expected leaders to come up with a road map on how to proceed in the future.

However, Julian Rappold, an EU expert at the German Council of Foreign Relations, said the outcome is unpredictable. "There is some willingness to reach an agreement, but time is pressing and a decision needs to be ultimately taken," he said.

Germany's role in the negotiation will be crucial, he added, saying that Merkel's reaction to proposals would likely be followed by other eurozone members.

Still, more crucial will be how Greeks respond to any concessions made by Tsipras, who was elected in January on an anti-austerity platform. Many equate reforms with additional cuts they say they can no longer afford to make.

"As soon as the measures are implemented he will face repercussions and could face the same fate as his predecessors," said Rappold.

Agenda of austerity a disaster

Cuts imposed by the IMF, European Union and European Central Bank have led to a 25 percent fall in Greece's economic output, severe cuts in wages and pensions and soaring unemployment with a quarter of Greeks out of work.

"Democracy cannot be blackmailed, dignity cannot be bargained. Workers, the unemployed, young people, the Greek people and the rest of the peoples of Europe will send a loud message of resistance to the alleged one-way path of austerity, resistance to the blackmail and scare-mongering," Tsipras' Syriza party said in a statement on Sunday, announcing a protest.

With Greece already in crisis and no end in sight, Kritikos said what's really needed is a change in tactics in dealing with the situation.

"The crucial issue of the whole process is how Greece can achieve positive economic development," he said. "The last months have seen an agenda of austerity and this has been a disaster. Future reforms need to open up the road to growth and investment."