By SUZANNE DALEY and NIKI KITSANTONIS News Clips By The Associated Press

The Greek prime minister Alexis Tsipras made a televised address on Wednesday during which he said the government remained committed to reaching an agreement with its creditors.

ATHENS — An unexpected new effort by Greece to compromise with its creditors on a bailout package prompted a cool response from most of the rest of Europe on Wednesday as the financial pressures on Athens intensified and efforts to find a way out of the crisis remained chaotic.

On another day of twists and turns, Prime Minister Alexis Tsipras’s government reversed course and said it would be willing to accept many of the terms of a bailout package that it had previously rejected, if they are part of a broader deal to address the country’s funding needs for the next two years.

While reviving hopes for a deal to end Greece’s latest financial crisis, the seeming reversal by Mr. Tsipras further underscored the confusion over his strategy as well as over where the monthslong muddle of negotiations now stood. The sudden turn of events raised questions about what offer was actually still on the table for Greece, whether Mr. Tsipras would still go ahead with a referendum scheduled for Sunday on a deal and, if so, what deal Greeks would actually be voting on.

In a letter sent on Tuesday to the creditors — the European Central Bank, the International Monetary Fund and other eurozone countries — Mr. Tsipras said Greece was “prepared to accept” a deal set out publicly over the weekend by the creditors, with small modifications to some of the central points of contention: pension cuts and tax increases. In the letter, released publicly on Wednesday, Mr. Tsipras linked Greece’s acceptance of the terms to a new package of bailout aid that would need to be negotiated.

The development initially raised the prospect of progress in resolving a financial crisis that has sent shudders through global markets and deeply strained European unity. President François Hollande of France called for talks in the hopes of getting a deal by the weekend, saying, according to Agence-France Presse: “We need to be clear. The time for a deal is now.”

But other European leaders, fed up with Mr. Tsipras and in no mood for quick compromise, dashed any hopes of an immediate breakthrough.

Chancellor Angela Merkel of Germany responded by repeating her position that there should be no further negotiations until Greece holds the referendum on Sunday — a vote that many European leaders hoped would amount to a rebuke of Mr. Tsipras.

Any further talks are likely to be complex and contentious. An existing bailout agreement expired at midnight Tuesday, meaning that Greece and its creditors would have to start over in assembling a package of aid and budget cuts. Moreover, many European officials remain deeply skeptical about whether Mr. Tsipras’s leftist government would implement the more painful elements of any agreement. The initial responses from European officials to the latest Greek proposal ranged from cautious to dismissive.

The European Union’s executive arm, which has played a central role in trying to broker a settlement between Greece and its creditors, dampened hopes of a swift deal by stressing that the revised terms offered by Greece addressed issues that had been raised during months of fruitless haggling over an old bailout program that is no longer under discussion as it expired at midnight and Tuesday.

Valdis Dombrovskis, a vice president of the European Commission who is responsible for the euro, said that the expiration of the old bailout program meant that “we are now in a new situation,” with far worse conditions than before. Greece’s decision to close banks and impose other capital controls, he said, “make the situation much more problematic.”

He added, “Now much more damage has been done and much more effort will be needed to restore the situation.”

The European Commission, he said, still hopes for an agreement so that Greece can meet loan payments to the European Central Bank that are due in late July.

“The doors for talks are open,” Mr. Dombrovskis said, blaming Greece for upending previous negotiations with its decision early Saturday to call a referendum. “There is certainly a possibility to reach an agreement before the next payments come due, but it is important that both sides have a willingness” to reach an accord, he added.

Mr. Tsipras went on public television Wednesday afternoon, telling Greeks that they should vote no on the referendum to improve his negotiating position.

He said that despite European characterizations, the vote was simply about a deal on how to manage the country’s debt crisis and not a vote on whether to leave the euro as the country’s currency.

“No does not mean a rift with Europe,” he said. “But a return to a Europe with principles.”

With shelves full of leather-bound books in the background, he also assured his country that he would continue to negotiate this week and after the referendum. And he thanked Greeks for staying calm in hard times. “This situation is short term and will not go on for long,” he said.

Finance ministers from the countries using the euro decided in a conference call on Wednesday to wait for the outcome of the referendum before any further negotiations. They had turned aside a last-minute plea for help on Tuesday night.

The German chancellor said on Wednesday that the door for negotiations with Greece remained open, but that Europe would stand by for the result of the referendum.

The change of tone from Mr. Tsipras, who in recent days had vehemently opposed the terms sought by the creditors, came hours after Greece missed a debt payment to the I.M.F., leaving Greece effectively in default and raising the pressure on the country to find a solution to its rapidly escalating financial squeeze. With its banking system shut down and access to more aid cut off, Greece faced the prospect of further debt defaults and the possibility of being forced to abandon the euro as its currency.

The letter from Mr. Tsipras was first reported by The Financial Times. The report sent stock prices in Europe higher.

News of the letter emerged ahead of a meeting of the European Central Bank’s Governing Council to consider whether to cut off entirely the line of credit that has kept the Greek banking system from collapsing.

In the letter, Mr. Tsipras said he was prepared to accept the European Commission’s proposal last Sunday, with five amendments on issues that had been particular sticking points.

He continued to ask for a lower value-added tax on Greek islands, for instance, to help bolster tourism and compensate for the high price of delivering goods to such areas. And he still objected to a system of automatically adjusting pension payments according to the financial strength of the underlying pension funds rather than relying on government assistance to maintain the payments.
But he accepted the bulk of what the Europeans had asked for in their last proposal, including creating strong disincentives to early retirement.

“Grexit” or Reform, both should strengthen the value of the Euro in the long term. Euro denominated debt will be better trusted when members…

The situation left unclear what Greeks would be voting on in Sunday’s referendum, assuming it goes ahead as planned. The wording was to ask Greeks to vote yes or no on whether they supported the terms offered by creditors last week — an offer that in effect expired with the existing bailout package on Tuesday night, and that appears to have been supplanted in any case by the offer put forward by Mr. Tsipras.

A recent poll found majority support for Mr. Tsipras’s call to vote no in the referendum, though that support shrank after the banks were closed and a cap of 60 euros per day was put on the amount that Greeks could withdraw from A.T.M.s.

The poll, by ProRata, conducted from Sunday to Tuesday, found 57 percent of Greeks said they would vote against the deal the creditors proposed, with about 30 percent saying they would vote for it, and about 13 percent saying they were not sure. After the banks closed on Monday, the gap narrowed, with about 46 percent saying they would vote against the proposals, 37 percent said they would vote yes, and 17 percent said they were not sure.

In Berlin, Ms. Merkel indicated that Germany no longer considered the offer that the Eurogroup of eurozone finance ministers made to Greece over the weekend to be valid, telling lawmakers in an address to Parliament that the proposal had been coupled to the aid program that expired at midnight on Tuesday.

Photo
A woman is squeezed as she waits to receive part of her pension outside a National Bank branch in Athens on Wednesday. Credit Alkis Konstantinidis/Reuters

For more on this story and video go to: http://www.nytimes.com/2015/07/02/business/international/greece-bailout-tsipras.html?_r=0

Greece debt crisis: IMF payment missed as bailout expires

From BBC

It is feared Greece could be forced out of the European single currency

Greece has missed the deadline for a €1.5bn (£1.1bn) payment to the International Monetary Fund (IMF), hours after eurozone ministers refused to extend its bailout.

But the ministers say they will discuss a last-minute request from Greece for a new two-year bailout on Wednesday.

Greece is the first European Union country to fail to repay a loan to the IMF and is now formally in arrears.

There are fears that this could put Greece at risk of leaving the euro.

The IMF confirmed that Greece had failed to make the payment, shortly after 22:00 GMT on Tuesday.

“We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared,” said IMF spokesman Gerry Rice.

Close to 1,000 banks re-opened in Greece on Wednesday for pensioners without bank cards

Pensioners are being allowed a one-off withdrawal of up to €120

Mr Rice confirmed the IMF had received a request from Greece to extend the payment deadline, which he said would go to the board “in due course”.

With the eurozone bailout expired, Greece no longer has access to billions of euros in funds and could not meet its IMF repayment.

The European Central Bank (ECB) has also frozen its liquidity lifeline to Greek banks. Meanwhile, ratings agencies have further downgraded the country’s debt.

What happens next?

1 July – Eurogroup – the finance ministers of the eurozone – holds a telephone conference to discuss new proposal from Greek Prime Minister Alexis Tsipras

5 July – Referendum on creditors’ proposals takes place, which many say is effectively a vote on Greek membership of the eurzone

20 July – Greece must redeem €3.46bn of bonds held by the European Central Bank. If it fails to do so, the ECB can cut off Greece’s access to emergency loans

Meanwhile, the US Treasury said on Tuesday it was urging all parties to press forward with negotiations “that put Greece on a path toward economic growth within the eurozone”.

The European Commission – one of the “troika” of creditors along with the IMF and the eurozone’s European Central Bank – wants Athens to raise taxes and cut welfare spending to meet its debt obligations.

Ratings agency Fitch cut Greece’s credit rating from “CCC” to “CC” on Tuesday evening, which is one level above a full default.

Fears of a default on Greece’s huge public debt of €323bn have led to long queues of people at cash machines. Withdrawals are capped at just €60 a day.

Tens of thousands of “yes vote” supporters braved the stormy weather on Tuesday

Greek banks did not open this week after talks between Greece and its creditors broke down.

However, up to 1,000 bank branches are re-opening on Wednesday to allow pensioners – many of whom do not use bank cards – a one-off weekly withdrawal of up to €120.

On Tuesday evening, thousands of pro-EU protesters braved stormy weather and gathered outside the Greek parliament in Athens to urge a ‘Yes’ vote in a referendum on Sunday over whether the country should accept its creditors’ proposals.

It follows a similar demonstration by those advocating a ‘No’ vote – the path preferred by Mr Tsipras – on Monday.

EU leaders have warned that a ‘No’ vote rejecting creditors’ proposals would mean Greece leaving the eurozone – though Mr Tsipras says he does not want this to happen.

Only three other countries are still in arrears to the IMF – Sudan, Somalia and Zimbabwe. Between them, they owe €1.6bn, only marginally more than Greece.

Lenders’ proposals – key sticking points

VAT (sales tax): A new system to come in from 1 July, with three rates, aimed at boosting annual revenue by 1% of total output (GDP)

Most goods to be taxed at top rate of 23%, including restaurants and catering and processed foods

Reduced rate of 13% for basic food, electricity, hotels and water

Super-reduced rate of 6% for medicines, books and theatre

End exemptions and eliminate VAT discounts for Greek islands

Create strong disincentives to early retirement

Move retirement age up to 67 by 2022

End Ekas “solidarity” top-up grant that some 200,000 poorer pensioners get – immediate Ekas cut for wealthiest 20% of recipients, and cut completely by 2020

Pensioners’ healthcare contributions to rise to 6%, from 4%

Source: European Commission document, 26 Jun 15 (pdf)

For more on this story go to: http://www.bbc.com/news/world-europe-33339363