By Barbara Lewis
STRASBOURG (Reuters) – Greek Prime Minister Alexis Tsipras pleaded in the European Parliament on Wednesday for a fair deal to keep his country in the euro zone, acknowledging Greece’s own responsibility for its plight, after EU leaders gave him five days to come up with reforms.
With its banks closed, cash withdrawals rationed and the economy in freefall, Greece has never been closer to a total state bankruptcy that would probably force it to print an alternative currency and leave the euro.
Yet the leftist premier seemed relaxed and confident, with a note of humility, when he appeared before EU lawmakers in Strasbourg to cheers and scattered boos.
Speaking hours after euro zone peers, at another emergency summit in Brussels, set Greece a deadline of the end of the week to come up with convincing reform proposals, Tsipras said Greeks had no choice but to demand a way out of this impasse.
We are determined not to have a clash with Europe but to tackle head on the establishment in our own country and to change the mindset which will take us and the euro zone down, he said to applause from the left.
He promised to deliver detailed reform proposals in the next 48 hours and mostly eschewed the angry rhetoric that has alienated many European partners, although he criticised attempts to terrorise Greeks into voting for never-ending austerity.
Speaking before him, European Council President Donald Tusk repeated 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, Tusk said. 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.
Some EU lawmakers held up Oxi (No) signs to back Greek voters’ rejection of more austerity.
Under a timetable agreed at Wednesday’s second emergency euro zone summit in less than two weeks, Greece will submit a formal application for a medium-term loan programme from the European Stability Mechanism bailout fund on Wednesday, along with a first reform programme, to be detailed on Thursday.
If experts from the European Commission, European Central Bank and International Monetary Fund deem the proposals viable, euro zone finance ministers would meet on Saturday to recommend opening negotiations with Athens, and a special summit of the 28-nation EU would meet on Sunday to approve an aid plan.
Before then, Greece is supposed to rush a first wave of reform measures through parliament, euro zone sources said, and German Chancellor Angela Merkel has said she would ask parliament in Berlin to authorise the opening of loan negotiations provided the Greek measures are deemed satisfactory.
NUMBERS IN DOUBT
Euro zone sources said the key question is whether the Greek reform 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.
The numbers have to add up, and the numbers have become vastly more unfavourable since the banks were shut and the economy seized up in the last 10 days, one euro zone finance official said.
Tsipras acknowledged his radical government’s share of responsibility for what had gone wrong in its 5-1/2 months in office but said the bulk of Greece’s problems lay in a failed austerity policy imposed over the last 5-1/2 years of crisis.
He was also strongly critical of Greece’s failings as a society, citing a history of clientelism, corruption, chronic tax evasion that had run riot, inequality and the nexus of political and economic power.
While Athens has made strides since 2010 in turning around its public finances to post a budget surplus before debt service, it has lagged on implementing structural reforms.
In particular, it has fallen far short of targets on privatising state assets and struggled to improve tax collection and reform labour laws and a costly, fragmented pension system.
The IMF in the past has demanded that Greece quickly implement a law allowing for collective dismissals since no such layoffs have been approved for 30 years. It also wants strike rules that cement union power changed and says Greece is an outlier in the EU in prohibiting lockouts.
Creditors have also pushed to end anti-competitive restrictions in product markets that have kept prices high, such as preventing the sale of bread in convenience stores.
NOT EXAGGERATEDLY OPTIMISTIC
Merkel made clear at a midnight news conference that she was not exaggeratedly optimistic that a deal could be found to save Greece by Sunday. But she also said euro zone leaders were aware of their joint responsibility for the common currency.
While European shares have lost nearly five percent in the last two days largely on concerns about a Greek collapse, sovereign bonds of the other weaker euro zone governments have held remarkably steady, buoyed partly by ECB bond-buying.
A chorus of second-ranking politicians in Germany demanded that Greece finally be ejected from the euro zone, but its supporters in France and Italy saw a glimmer of hope.
Peter Ramsauer, deputy leader of Merkel’s Bavarian CSU conservative allies, said Greece should leave and accused the Greek government of leading its partners by the nose like dancing bears round the ring. It was incomprehensible how the country kept being given last chances, he complained.
France’s finance minister urged the Greek government to use the big mandate it won in Sunday’s referendum to convince the population of the need for compromise with creditors.
Greek society maybe needed this renewed pride to reach the necessary compromises, Michel Sapin told reporters.
Several euro zone leaders and finance ministers voiced frustration that once again Tsipras and his new finance minister turned up at emergency meetings without any proposals on paper.
But a senior EU official said it made sense for them to gauge the mood of their European partners and work out with the creditors what measures would be expected before putting a plan on the table.
Having secured a referendum victory and the unprecedented support of the five main parties in parliament, Tsipras also made clear he wanted to act fast to pre-empt any possible revolt against the painful concessions he will need to make.
The process will be extremely fast. It starts in the coming hours, with the aim to conclude by the end of the week at the latest, he said before leaving Brussels early on Wednesday.
(Additional reporting by Renee Maltezou, Foo Yun Chee, Robert-Jan Bartunek, Alastair Macdonald and Tom Koerkemeier in Brussels, Susanna Twidale in Strasbourg, Deepa Babington in Athens and Madeline Chambers in Berlin; Writing by Paul Taylor; Editing by Giles Elgood)