NEWS

Athens proposes third program as second lapses

TAGS: Euro, Economy

As Greece’s second bailout program came to an abrupt end on Tuesday night, the Greek government made a new last-ditch proposal to its lenders amid disputes within the cabinet about what route the coalition should follow.

Eurozone finance ministers are to convene by teleconference Wednesday morning after an emergency session on Tuesday to discuss a last-minute request by the Greek government for an extension to the country’s second bailout and a new aid package. The finance ministers rejected the request for the extension almost immediately, as the second bailout had been due to expire in just a few hours. But they are to hold talks again on Tuesday on Greece’s request for a two-year program with the European Stability Mechanism which foresees some 30 billion euros in funding. Greek Finance Minister Yanis Varoufakis promised to submit to his eurozone peers a document setting out specific economic measures that will be based on the proposals submitted by creditors.

Greece’s request for the extension and the new program were submitted to eurozone officials on Monday in a letter from Prime Minister Alexis Tsipras which also seeks a restructuring of the country’s debt. The debt request was basically rejected by eurozone finance ministers who said the issue cannot be addressed at the current time, Kathimerini understands.

After Monday’s meeting Eurogroup President Jeroen Dijsselbloem said the Greek government stance toward its creditors would have to change before they could consider further financial assistance. Dijsselbloem said Greece was welcome to request a new aid program, as a member of the eurozone, but indicated that it would come with tough conditions. “That is quite a procedure to go through.” “In the meantime the situation in Greece – the economy, the Greek banks – has deteriorated, unfortunately even more, so that’s a difficult path to consider.”

The new proposal came after disagreements within the government about the decision not to reach an agreement with creditors last week and Tsipras’s choice of holding a referendum on the institutions’ proposals.

Deputy Prime Minister Yiannis Dragasakis, Economy Minister Giorgos Stathakis, Alternate Minister for International Economic Affairs Euclid Tsakalotos and cabinet secretary Spyros Sagias are all thought to have objected to the failure to seal a deal with the lenders. They opposed the decision to hold a referendum on the institutions’ proposals.

Sources said that two government ministers submitted letters of complaint when Tsipras decided on Friday night to call a referendum. It also appears that some ministers have even hinted at resignation but have held off because of the upcoming plebiscite.

Speaking to ERT on Tuesday night, Dragasakis suggested that the coalition could call off the referendum if it reaches an agreement with lenders. “The government can decide to do something different,” he said. “This is a political issue, after all. The referendum was called so it would lead to an agreement with specific criteria but this displeased some people because our partners have become used to people saying yes.”

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