Greece prepares for emergency debt meeting with EU

Greece’s new government has been preparing details of a reform deal it hopes to seal with sceptical European Union creditors at critical talks this week in order to liberate the country from a “toxic” bailout.

At talks kicking off with an emergency meeting of eurozone finance ministers on Wednesday, Greece will plead its case for stop-gap financing, with a view to clinching an austerity-free reform deal to run from September 1.

Prime Minister Alexis Tsipras will meet Angel Gurria, chairman of the Organisation of Economic Cooperation and Development (OECD), on Wednesday to discuss the government’s proposals a day before a full EU summit in Brussels on Thursday.

Tsipras is pushing for creditors to loosen the tough conditions of the $270bn bailout Greece was forced to accept in the aftermath of the 2007 financial crisis, to allow it to spend more in order to give its economy a boost.

Athens will propose that the “toxic” fiscal obligations of its present EU-IMF bailout deal – which has seen it saddled with debt worth 1.75 times the country’s entire annual economic output – be replaced by a 10-step reform blueprint drawn up in cooperation with the OECD, a Greek finance ministry source said on Monday.

EU and Germany unmoved

Germany and the EU have been unwilling to meet the proposals by Tsipras, whose Syriza party stormed to victory in elections last month.

European Commission chief Jean-Claude Juncker told Greece it “must not assume that the overall mood in Europe has changed so much that the eurozone will unconditionally adopt” Tsipras’ proposals.

Greece is under pressure to woo its international creditors as quickly as possible because the European portion of the EU-IMF bailout is due to expire at the end of the month.

So far, the suggestions have found the European Commission and main paymaster Germany unreceptive.

Germany’s economy minister rejected calls by Greece for Berlin to pay reparations for World War II damage by the Nazis, insisting the issue was concluded 25 years ago.

“The likelihood is zero,” said Sigmar Gabriel.

British Prime Minister David Cameron on Monday moved to draw up contingency plans if Greece exit the eurozone.

A follow-up meeting of eurozone finance ministers next Monday is seen as the last chance for Greece to back down and request an extension to the current bailout or reach an interim deal.