Greece to propose new bailout plan, aims to keep banks open

ATHENS – Greece intends to put forward new bailout proposals to its European partners at an emergency summit today, government sources here said, as officials sought to stave off a collapse of their country’s banking system and its potential ejection from the eurozone.

Prime Minister Alexis Tsipras huddled with leaders from across the political spectrum Monday morning and well into the afternoon to hash out a new bailout plan that they could support as a united front and that would be more palatable to international and European creditors.

Tsipras also spoke with German Chancellor Angela Merkel, the eurozone’s most powerful leader, by phone, and the two agreed he would present new bailout proposals to the leaders of the 19 nations that use the euro at a summit in Brussels this evening, according to a Greek government official, speaking on customary condition of anonymity.

Tsipras’ long huddle with fellow politicians in Athens was matched by similar crisis meetings in other European capitals as officials scrambled to respond to the resounding rejection of previous bailout proposals by Greek voters in a snap referendum Sunday.

There were mixed signals over whether a deal could be struck quickly, with some German and other Northern European officials digging in their heels over what they deem to be Greek irresponsibility and officials from Southern European countries such as France and Italy sounding more conciliatory.

A fast agreement is necessary for the European Central Bank, or ECB, to keep propping up Greece’s ailing financial system, which has hemorrhaged billions of euros in the last few weeks. Without a deal, the ECB, based in Frankfurt, Germany, could conclude that Greece’s banks are insolvent and would then be obliged by its rules to cut off aid.

Without that lifeline, Greek banks would run out of cash within days, if not hours. Banks have been closed since last Monday, and customers are permitted to withdraw only about $66 from ATMs each day. Reuters reported that the Greek government, which had previously promised to open the banks today, would extend the closure for a few more days.

At a late Monday meeting of ECB officials in Frankfurt, the stewards of European finances decided against any change to the level of emergency cash infusions for Greek banks. Before suspending the euro deliveries more than a week ago, the ECB had pumped $99 billion into the banks in recent weeks to prevent them from running out of money as depositors scrambled to withdraw their euros.

The ECB officials are likely waiting for a signal from the finance ministers after their meeting today to make any further liquidity infusions for the Greek banking system that is reportedly down to its last $555 million.

Earlier in the day, it emerged that Greece’s bailout negotiating team would be missing one prominent member: Yanis Varoufakis, the flamboyant finance minister.

Varoufakis abruptly resigned from his post Monday morning despite the rousing endorsement to his anti-austerity policies delivered just hours earlier by the Greek plebiscite. A short time later, lead bailout negotiator Euclid Tsakalotos was appointed as his replacement, the Associated Press reported.

Varoufakis said on his website that he was stepping down with the encouragement of Tsipras, who, though a close ally, had judged it “potentially helpful” to talks with Athens’ creditors if Varoufakis were not on the negotiating team.

The financial minister is a popular figure with many in Greece, and had become a media star with his leather-jacketed, motorcycle-riding style and penchant for blunt statements.

But those qualities also poisoned Varoufakis’ relations with the rest of the Eurogroup, the club of finance ministers from eurozone nations, some of whom did not hide their contempt for him. They found his repeated public accusations of “blackmail” and “terrorism” in their negotiations over a bailout package for Greece arrogant and deeply offensive.

“I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners,’ for my … ‘absence’ from its meetings,” Varoufakis said on his blog, in a post titled “Minister No More!”

“For this reason I am leaving the Ministry of Finance today,” he wrote.

Whether his resignation will help jump-start bailout talks between Greece and its European partners remains to be seen. Athens’ demands for less austerity and for some sort of debt relief, which other eurozone nations have so far spurned, have not changed.