Athens submits three-year bail-out plan


Greece applies for a new three-year bail-out program after Tsipras is warned banking collapse and humanitarian crisis are four days away
 

• Greeks make formal bid for new three-year ESM loan
• ECB to take ELA decision later today
• Banks to remain shut for rest of the week
• Final 28 EU leaders summit to convene on Sunday
• Tsipras attacked by MEPs at European Parliament this morning
• Five days to save Greece from the abyss warn European leaders
• AEP: Europe is tearing itself apart over Greece
Latest
16.23
France refuses to consider Grexit
French prime minister Manuel Valls has told his Parliament that France “refuses” to consider a Greek exit from the euro.
Nous sommes à un moment crucial. Pour le peuple grec, pour nous et pour la construction européenne #Grèce pic.twitter.com/hjWEHk3Gt7
— Manuel Valls (@manuelvalls) July 8, 2015
From AFP below:
He said Greece’s earlier request for help shows “real advances” toward dialogue in the latest crisis – even though the Greek government has yet to submit details of its proposed economic reforms in exchange for the new aid money.
Mr Valls warned of geopolitical consequences if Greece sinks into financial catastrophe, such as trouble dealing with high flows of immigrants from outside the European Union or worsening tensions with Russia.
He said France is pushing for compromises between Greece and creditors, because that’s “how Europe was built.”
French PM: keeping #Greece in €=utmost geostrategic, geopolitical importance. Allowing to leave=admission of impotence. France refuses that
— Mark Lowen (@marklowen) July 8, 2015
15.45
Merkel’s red lines
Die Welt’s Olaf Gersemann has helpfully laid out the sticking points for Angela Merkel over a new Greek deal.
They include IMF involvement, no debt write-offs, and no bridging funds. Nein nein nein.

15.15
Majority of economists now forsee Grexit
Reuters poll of economists has, for the first time, shown most those surveyed (55pc) now think Grexit will happen.
For the first time economists in Reuters poll are now saying Greece’s exit from euro zone is more likely than not
— Mathieu von Rohr (@mathieuvonrohr) July 8, 2015
First time we’ve ever had a consensus for #Grexit since crisis began: 55% up from 45% median probability last week.
— Ross Finley (@rossfinley) July 8, 2015
15.05
The dividing lines over a deal
Here’s a very very good summary of where creditors and Greece remain split over where cuts and fiscal reforms still need to come to clinch an agreement. Courtesy of the very clever people at Credit Suisse.

14.50
New Greek deal will be tougher than before
George Saravelos at Deutsche Bank thinks Athens will have to bow down and accept much harsher bail-out conditions than those they have previously had rejected by creditors.
With banks closed, economic activity stalled, and the prospect of IOUs only days away, Mr Saravelos estimates any new three-year bail-out will come with harsher fiscal measures attached.
From his morning note:
The exact list of “prior actions” and “comprehensive proposals” has not yet been determined. Statements from Commissioner Juncker, President Tusk and Chancellor Merkel made it clear that the previous EFSF negotiations will be the frame of reference, but that an even greater level of commitment and detail is likely to be required. In effect, Greece has a few days to negotiate the outline of a full third ESM program.
The exact detail will be determined in co-ordination with the three institutions (ECB, IMF, EC) over the next few days. But our best guess is that creditor demands are likely to be more strict than under the prior EFSF proposals: on the one hand, Greece’s macroeconomic conditions have deteriorated. On the other hand, these commitments will need to refer to a potential third ESM program spanning over a longer time horizon and with greater financing needs
14.34
White House intervenes (again)
Washington has been forced to watch on the sidelines as Europe has lurched from fresh crisis to crisis over Greece. Last night, president Obama made his first personal intervention in many a month, phoning both Angela Merkel and PM Tsipras to call for a solution.
It didn’t seem to do the trick as the summit ended without agreement. Jack Lews, treasury secretary, is speaking at the Brookings Institute today and has again warned of the geopolitical risks associated with Grexit.
You can watch his address here.
US Treasury Secy Jack Lew Says: Deal In Greece Important For Economic & Geopolitical Stability Of Europe #GreekCrisis
— CNBC-TV18 (@CNBCTV18Live) July 8, 2015
US Treasury Secy Jack Lew Says: ‘Europe & Greece Need A Deal’ #GreekCrisis
— CNBC-TV18 (@CNBCTV18Live) July 8, 2015
14.06
Farage gets his Oxi taken away from him
The story behind these pictures
#Juncker just scored against populists in European Parl: #Farage had #OXI banner. #Juncker went to him & took it away. @JunckerEU #Greece
— Siegfried Muresan (@SMuresan) July 8, 2015

14.01
5 is the magic number
Finland’s Alex Stubb reflects on five years of euro crisis, five months of Greek impasse, and five days to save the single currency
5-5-5. Five difficult years. Five mixed months. Five intersting days. A solution has to be found by Sunday. One way or the other. #Greece
— Alexander Stubb (@alexstubb) July 8, 2015
14.00
Tsipras and Schulz kiss and make up?
European parliament president Martin Schulz has not been short of words for the Greek government. Last week, the German called for a technocratic government to replace Mr Tsipras and said the country could not use the euro if they voted ‘No’ in last weekend’s referendum.
Following his address at the parliament in Strasbourg this morning, Mr Tsipras has been seen engaging in an intense chat with his colleague. They’ve got a lot to sort out.
Tsipras being friendly with Schulz. /via @danikulcsar #EPlenary #euparliament #Greece pic.twitter.com/YI7Twh57Nt
— The Greek Analyst (@GreekAnalyst) July 8, 2015
13.50
Greek banks to remain shut
Not a huge surprise given that there will be no release of liqudity for the banking system before next week. The ECB are due to make a decision on ELA today. Most likely outcome is a “no change”. But such inaction is a liquidity squeeze in itself as Greece is still in the throes of a very slow moving bank run.
Capital controls are sticky thing to get rid of, history tells us.
GREECE TO EXTEND BANK HOLIDAY, CAPITAL CONTROLS THROUGH FRIDAY
— zerohedge (@zerohedge) July 8, 2015
13.12
Germany: You can’t touch the debt
Berlin’s finance ministry spokesman has said this afternoon there is no chance that Germany will countenance any measures that could be considered as providing debt relief for Greece.
This includes a bold attempt to wipe off any of the nominal value of the €330bn debt mountain, or a more modest plan to further extend maturities into the century, as the Greek government has requested.
German FinMin spoxman: we reject not only a classic debt haircut but also measures that reduce the current value of debt such as reprofiling
— Fabrizio Goria (@FGoria) July 8, 2015
Despite only having four days to keep the single currency in tact, the Germans aren’t for turning. Chancellor Merkel last night also ruled out debt reprofiling measures and the prospect of short-term funds being released to Greece to make sure they don’t default on the ECB on July 20. She hinted that any such action could be seen as a “new” bail-out and thus illegal if not ratified by the Bundestag in advance.
As mentioned earlier, Greece’s new ESM letter mentions getting the country back on a sustainable debt path. And last night, eurogroup finance ministers also issued a statement which seems to suggest creditors will take another look at the debt problem.
German FinMin spoxman: we reject not only a classic debt haircut but also measures that reduce the current value of debt such as reprofiling
— Fabrizio Goria (@FGoria) July 8, 2015
12.50
What is Grexit?
Matthew Holehouse is at today’s Commission briefing in Brussels where everyone is getting tied up in knots about Grexit plans. Do they really exist?
  Mr Juncker spokesman Mina Andreeva is explain what the Grexit plan he mentioned last night. Or is it just a piece of paper.
“You wouldn’t expect me to go beyond what the president said,” she says.
“I am not now going to outline the scenarios we are working on.”
She declines to say who is working on the plan, or when it was drawn up.
What if Greece refuses to do what is required of it? Are you just waiting for the ECB to cut off money supply?
“It is premature to speculate as we are not yet talking about it.”
The spokesman refuses to give a definition for the term Grexit.
But the deadline is midnight on Thursday, for assessment on Friday morning.
Does Mr Juncker agree with Mr Moscovici that Grexit would be a collective failure, or does it entirely lie in the Greek court at the moment?
“We are a mediator, and we are not engaged in a blame game”, says Ms Andreeva.
12.37
Greece ESM application
Here it is in its fully glory. There are no numbers on the size of the package, but it has been estimated to be over €51bn by the IMF for the next three years.
The government says “the Republic is committed to a comprehensive set of reforms and measures to be implemented in the areas of fiscal sustainability, financial stability and long term economic growth.”
The letter says that measures on tax and pensions reforms will be implemented as early as next week. Tomorrow, Athens intends to provide a complete detailed list of their measures for creditors to mull over.
On debt restructuring it adds: Greece “welcomes opportunity to explore potential measures to be take so that its official sector debt becomes both sustainabile over the long term.”
And just in case anyone is confused: For avoidance of doubt, this letter supersedes our previous request letter dated

12.29
“This is our last chance”
Mr Tusk says “the last chance procedure has started” in a very powerful closing address to parliamentarians in Strasbourg today.
“Seek help among your friends, not your enemies – especially when they are unable to help you. And if you want to help your friend in need, do not humiliate him.”
“Without unity we will wake up in four days in a different Europe.”
“This is really and truly the final wake up call for Greece.”
He says Mr Dijsselbloem has received a new ESM request from the Greeks: “I hope this is a good sign for tomorrow.”
Wow. @eucopresident is a good speaker – so many times better than @JunckerEU, @MartinSchulz et al. Speaks to point not me, me, me
— Bruno Waterfield (@BrunoBrussels) July 8, 2015
12.24
Jean Claude-Juncker defends himself
The Commission president is on his feet, and delivers another impassioned address on his tireless role in trying to secure a deal.

He repeats the Commission is not looking for reforms which will hurt the poorest pensioners, or those on the minimum wage. Mr Juncker has been called out on this before. The Commission has in fact called for an abolition of supplementary (EKAS) pensions for the poorest to be phased out by 2018.
Now EU council president Tusk speaks: “Morality means paying off your debts.”
The source of the crisis in Greece is over-spending, “not the common currency” says Mr Tusk.
12.21
Tsipras: I have no secret plan
The Greek PM takes the lectern again after sitting through three hours of debate about his country’s woes.
He says “I have no secret plan for Grexit. I want a viable agreement, that’s what I’m fighting for.”
“We don’t want new loans to pay off the new ones.”

He now takes on German MEP Manfred Weber who attacked the PM for showing no solidarity. Mr Tsipras makes the point that Germany was a beneficiary of a 60pc debt write-off after the Second World War.
“The strongest moment of European solidarity was in 1953, when your country came out of two world wars, and the people of Europe showed the greatest solidarity at the London Conference. That was the most significant moment of solidarity in European history.”
12.03
Greeks submit three-year loan request
Details of that ESM letter tricking through now. Seems it is a three-year loan request – rather than the previous two years the Greeks applied for last week. No word yet on the conditions attached to the money or indeed how much they are asking for. A reminder that the IMF has placed the financing gap from 2015-2018 at over €51bn.
#Greece requests 3yr loan facility from ESM, document says. Proposes to implement reform measures from next week, BBG reports.
— Holger Zschaepitz (@Schuldensuehner) July 8, 2015
Meanwhile…
For the first time I feel for @atsipras. He’s been stuck in the EP for over 3 hours now, having to listen to progressively more obscure MEPs
— Michiel van Hulten (@mvanhulten) July 8, 2015
11.55
Time’s too tight to mention
The ever-helpful Bruno Waterfield of The Times has laid out a rough timetable of events that need to happen before now and Sunday’s emergency leaders summit, if Grexit really is to be avoided.
Donald Tusk said today creditors have “four days” before they reach the point of no return.
As Bruno mentions, the Greeks have plenty of hoops to jump through before then. They including setting out a list of “prior actions” (legislative plans to pass neccessary reforms), which have to be discussed by finance ministers, gain the consent of the IMF, and then find their way pass the Bundestag. Meanwhile, the ECB will probably have to keep ELA in place until at least the weekend to stop the banks from going bust.
Timetable for Greece & eurozone seems mission impossible – my understanding of sequence from today onwards pic.twitter.com/PPlu2fzuwm
— Bruno Waterfield (@BrunoBrussels) July 8, 2015
11.50
“We have reached the point of no return”
Former German foreign minister Joschka Fischer has said Grexit is now likely, telling newspaper Die Zeit that he “could not imagine what a future of Greece in the eurozone would look like”. Melanie Hall in Berlin reports:
“I see no new compromise in which no side loses face,” said Mr Fischer.
He adds Greece should be given a debt haircut in exchange for structural reforms, and that creditors begin to discuss the taboo over commonly issued eurobonds.
Mr Fischer criticised Mrs Merkel, saying: “Now we have probably reached the point of no return.”
The ex-minister reproached the German government for having let things go this far, saying: “It did not argue and act politically, but in accounting terms.”
Mr Fischer has called for a change of course in Europe towards a more growth-orientated policy. Trying to break even like in Germany’s federal budget, something which he said everyone is so proud of, would conversely bring the other euro countries nothing. Everyone would recognise this problem “except Germany”, he said.
11.40
Commission press briefing coming up
The European Parliament’s session is still going on. Mr Tsipras is manfully sitting through it all. Once it’s done, we expect the Commission to give their daily briefing.
11.20
What is the new Greek request?
So the European Stability Mechanism has confirmed they have received a letter from Athens. But, unlike reports yesterday, finance ministers will not be having a teleconference to discuss it today.
Instead, the technical teams who work on behalf of the finance ministers – the Euro working group – will pour over the plans
Request for ESM support received from Greek government, will be dealt with EWG today. No #Eurogroup teleconference #Greece
— Michel Reijns (@MichelReijns) July 8, 2015
However, today’s letter is probably not the “comprehensive” plan creditors are demanding before they can sit down and think about releasing any cash to the country, either on a short term basis to avoid an ECB default, or to approve the ESM loan, which will require a more complicated process of ratification.
This is what the last ESM request letter, which was rejected on June 30, looked like

Credit Suisse have put out this helpful table of what each eurozone government needs to do before approving an ESM loan package.
Credit Suisse on Greece: ESM capital share and parliament approval required for new aid programme pic.twitter.com/vmFx5Lft8d
— Fabrizio Goria (@FGoria) July 8, 2015
11.14
ECB’s Noyer: Greece could descend into riots
Greece will descend into “riots and chaos” if no deal to secure its euro future is found, Christian Noyer, the governor of France’s central bank and ECB board member has warned today.
He has also said ECB will not continue their emergency cash lifeline for Greek banks indefinitely.
Henry Samuel in Paris reports
“The Greek economy is on the brink of catastrophe. A deal absolutely must be reached on Sunday because it will be too late after that and the consequences will be grave,” France’s central bank governor told Europe 1 radio, adding that “there could be riots… and chaos in the country”.
Mr Noyer, a member of the ECB’s governing council, added it was “impossible” to re-open Greek banks while confidence was so low, saying there would be an “immediate run” if they did open for business.
Noyer said Greece’s ECB lifeline, which has stretched to €89bn in recent months, could not be carried on indefinitely.
“We have rules and we have interpreted the rules to their limit to maintain a lifeline to Greek banks, but we cannot continue indefinitely to increase the risks we are taking,” he said.
Noyer insisted, however, that Grexit “would not spell the end of the eurozone”.
read more at telegraph

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Updated: 08/07/2015 — 9:39 PM

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