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Greek debt crisis: Eurozone finance ministers fail to reach agreement - as it happened

Greek Finance minister Euclid Tsakalotos leaving tonight’s eurogroup meeting
Greek finance minister Euclid Tsakalotos leaving tonight’s eurogroup meeting. Photograph: Olivier Hoslet/EPA

Closing summary: Greece nears euro exit as bailout talks break up


Greek Finance minister Euclid Tsakalotos leaves tonight’s Eurogroup meeting.
Greek Finance minister Euclid Tsakalotos leaves tonight’s Eurogroup meeting. Photograph: Olivier Hoslet/EPA

So, another crunch meeting fails to deliver a breakthough.

But this wasn’t any old failed eurogroup meeting. This might be remembered as a classic.

We had Germany producing a half-baked scheme to boot Greece out for five years, Finland’s new government on the edge of meltdown, and Italy preparing to raise the stakes on Sunday by telling Germany that enough is enough.

Meanwhile, Greece’s economy is in freefall, its banks are on the edge, and its political class are reeling after Alexis Tsipras offered billions of euros in fresh austerity to get a deal.

From Brussels, our Europe editor Ian Traynor sums up the situation after another frustrating, and sometimes bizarre, day:

Greece’s final attempt to avoid being kicked out of the euro by securing a new three-year bailout worth up to €80bn ran into a wall of resistance from the eurozone’s fiscal hawks on Saturday.

Finland rejected any more funding for the country and Germany called for Greece to be turfed out of the currency bloc for at least five years.

The last chance talks between the 19 eurozone finance ministers in Brussels ran into the early hours of the morning as they struggled to draft a policy paper for national leaders at yet another emergency summit on Sunday that was billed as the decisive meeting.

With Greece on the edge of financial and social implosion, eurozone finance ministers met to decide on the country’s fate and on what to do about its debt crisis, after experts from the troika of creditors said that new fiscal rigour proposals from Athens were good enough to form “the basis for negotiations”.

But the German finance minister, Wolfgang Schäuble, dismissed that view, supported by a number of northern and eastern European states.

A German finance ministry paper said:

“These proposals cannot build the basis for a completely new, three-year [bailout] programme, as requested by Greece.”

It called for Greece to be expelled from the eurozone for a minimum of five years and demanded that the Greek government transfer €50bn of state assets to an outside agency for sell-off.

Timo Soini, the nationalist True Finns leader, meanwhile, threatened to bring down the government in Helsinki if Alex Stubb, the finance minister, agreed to a new bailout for Greece. Stubb apparently came to the crunch meeting on a new bailout without a mandate to agree one.....

Here’s Ian’s full story:

Tomorrow’s leaders’ summit could be explosive, given we’re expecting Matteo Renzi to urge Angela Merkel to show some leadership and end the crisis.

And with eurogroup president Dijsselbloem warning that the situation is “very difficult”, there’s no guarantee of a breakthrough when ministers resume talks. But a good night’s sleep might help.

So in that spirit, I’m going to end this liveblog until the morning. (unless anything sensational happens). Thanks, as ever, for reading and helping. Goodnight! GW

Updated

The message from Greece tonight - don’t blame us, we’re doing our best:

European solidarity, eh?

If eurozone finance ministers cannot reach a deal on Sunday morning, they will pass the hot potato onto the 28 leaders of EU countries in the afternoon:

Updated

The FT’s Duncan Robinson confirms that the eurogroup is far from a deal.

Spain’s Luis de Guindos spoke to the media before hotfooting it into the darkness.

Updated

I missed Christine Lagarde’s departure, but a replay shows that the IMF chief only gave a wave to the cameras.

Updated

Euclid Tsakalotos
Euclid Tsakalotos, Greece’s finance minister, leaving tonight’s meeting Photograph: EbS

Here comes Euclid Tsakalotos.....and there goes Euclid Tsakalotos!

Greece’s finance minister exited the building at a marching pace, mobile phone glued to his ear, deep in conversation. Not a word for the press, alas.

Here’s a video clip of Pierre Moscovici’s comments tonight:

Some ministers are walking past the media and refusing to speak, including Ireland’s Michael Noonan. I guess they’ve got nothing encouraging to say.

Mario Draghi just got into a car without comment.

Pierre Moscovici
Commissioner Pierre Moscovici tonight Photograph: EbS

Here comes Pierre Moscovici....and actually he (for once) doesn’t look too upbeat.

He tells reporters (in French) that there is always hope.

Michel Sapin’s optimism is unquenchable!

Finland’s Alex Stubb told reporters that tonight’s meeting made ‘good progress’

This is the same Alex Stubb who apparently can’t back a third bailout?

Dijsselbloem: It is still very difficult

Jerosn Dijsselbloem, head of the eurogroup, is speaking now at the exit.

He confirms that the meeting is adjourned until 11am tomorrow morning.

We have had an in-depth discussion of the Greek proposals. The issue of credibility and trust was discussed, and also of course the financial issues involved.

It is still very difficult, but work is still in progress.

Eurozone meeting ends without agreement

It does NOT look good, I’m afraid.

Eurozone ministers are being collared as they leave the meeting - here’s a live feed.

Ian adds that there won’t be a press conference tonight. No statement either. We’re basically in limbo until the morning.

Ian confirms that the eurogroup is breaking up, to resume in the morning

Eurogroup ministers are going to resume talks in 11 hours time:

The prime minister of Malta has tweeted that the eurogroup meeting failed to reach an agreement (as had become clear in recent hours)

Muscat, like other EU leaders, will be attending Sunday’s emergency summit on Greece. But is that to discuss Grexit, or to hammer out political agreement on a third bailout?

The Eurogroup meeting is over! Until the morning......

The Finns really have put a spanner in the works, by the sound of it:

So the source isn’t Euclid, anyway.

Hopes of an early finish are being trampled into the carpet. The Brussels press pack are heading that the eurogroup may run for another three hours.

Here’s something to chew on. A eurozone bailout, as Jennifer flagged up earlier, only needs 85% support if the situation is an emergency.

But some country’s have rather more muscle than others, reflecting their financial contribution to bailout funds. Many of the smaller countries only have a tiny share of the vote.

Finland and Slokavia may have hard-talking finance ministers, but when the chips are actually down, it’s France, Italy, and of course Germany who actually have veto power, while Spain just needs a few allies. The Netherlands, Belgium, Portugal, and Austria also have enough power to influence a really tight vote.

So much for finishing at 10pm Brussels time.....

Greek Finance Minister Euklid Tsakalotos prior to the Eurogroup , finance ministers of the single currency EURO zone meeting at EU headquarters in Brussels, Belgium on 11.07.2015 Finance Ministers meet to evaluate Greece’s request for a new bailout package by Wiktor Dabkowski --- Image by © Wiktor Dabkowski/dpa/Corbis
Greek Finance Minister Euklid Tsakalotos earlier today. Photograph: Wiktor Dabkowski/dpa/Corbis

Italy to tell Germany: enough is enough.

Tomorrow, Italy is reportedly going to demand that Germany hammers out an agreement with Greece, our datablog editor, Alberto Nardelli, hears tonight.

Italian prime minister Matteo Renzi has had enough, Alberto understands. It’s time to stop humiliating Greece, and end this crisis.

Tomorrow, at the summit of eurozone leaders, Renzi will insist that chancellor Angela Merkel finds an agreement, for the good of the European Union.

This crisis just gets more, and more, and more serious. And compelling.

Updated

Greek capital controls could last two more months - minister

Back in Greece, economy minister George Stathakis has warned that the country could face some capital controls all though the summer.

Reuters has the details:

Stathakis told Greece’s Mega TV that the banks could reopen as soon as next week, if an agreement with creditors is reached this weekend, but other restrictions on withdrawals and currency exports would remain in place for most.

“That will stay in play for two months or some months,” he said.

Here's Germany's plan for temporary Grexit

This appears to be the German finance ministry’s paper, which suggests Greece could be offered a ‘temporary’ exit from the eurozone.

As you can see, it argues that this would allow Greece to restructure its debts, and also get humanitarian support.

Finnish TV is reporting that the Helsinki government will not support a new Greek aid package.

So, it’s over?

Not necessarily. There’s an emergency procedure which allows financial assistance to be granted from the ESM with just 85% support, in a real emergency:

That may not help get an agreement through the eurogroup tonight, though.....

Sounds like a statement is being drawn up tonight....but it’s not a decisive Yes or No to a Greek deal. It sounds more like an Ummmmm....:

The Eurogroup meeting is buzzing with talk that the Finnish government might collapse, if it backs a third Greek bailout.

My colleagues Ian and Jennifer have the latest:

(that’s Timo Soini, leader of the True Finns)

A quick recap....

Eurozone ministers have been discussing Greece’s bailout request for hours, with no signs of an major breakthrough.

The meeting may end soon, though, after around six hours which began with smiles, and frowns.

EU sources say that creditors are demanding tougher measures, on top of the €13bn plan of tax rises, pension reforms and spending cuts already offered.

Several countries have already questioned whether Greece has done enough, and warned that trust in the Greek government has been badly hit by the last few weeks’ events.

Germany has reportedly drawn up a paper suggesting Greece could temporarily exit the eurozone, to general disbelief:

And Finland’s government is rumoured to be taking a very hard line, with reports suggesting its coalition could break up over Greece.

It could all be bargaining tactics, though, ahead of tomorrow’s leaders summits

Economists have warned that Greece needs a deal urgently, so that its banking sector can be replenished with desperately needed liquidity.

And in Athens, a senior government minister has suggested that Syriza MPs who can’t support the austerity plan should quit.

Updated

Life has been carrying on in Athens tonight, as the eurogroup meeting rolls on:

Tourist walk at a main street at Monastiraki area in central Athens, Saturday, July 11, 2015. Greece’s negotiators head to Brussels on Saturday armed with their reform proposals and parliamentary backing to seek a third bailout, but with the shadow of severe dissent from governing lawmakers hanging over them. (AP Photo/Petros Karadjias)
Tourist walk at a main street at Monastiraki area in the Grek capital tonight. Photograph: Petros Karadjias/AP
People walk at Plaka over the Acropolis hill in central Athens tonight
People walk at Plaka over the Acropolis hill. Photograph: Petros Karadjias/AP

Finland taking tough line over Grexit - reports

The Greek crisis is putting serious strain on Finland’s new government.

Maria Stenroos, EU correspondent for state broadcaster Yle, reports that the Finnish delegation is taking an even tougher line than Germany.

(The right-wing, euro-sceptic True Finns are coalition partners in the new government, which was formed in May)

This is getting a lot of play on Finnish TV tonight. But would Helsinki really outflank Berlin on this?

Jarno Hartikainen of business newspaper Kauppalehti reckons not:

The BBC’s Chris Morris has more details on the measures that Greece is being pushed for tonight (as Ian reported earlier)

A week of nail-biting votes in Athens, as well as crunch meetings in Brussels? Oh great.

Could ministers come back in the morning for another crack at the problem?

Apparently, tonight’s dinner isn’t going too well:

Given the sheer number of eurogroup meetings in recent weeks, ministers must have exhausted their reserves of small talk.

“Been anywhere nice recently?”

“Brussels, Brussels, Brussels, Brussels, oh yes Luxembourg..... and Brussels.”

Updated

Rumour watch: the eurogroup meeting might finish in just over an hour’s time:

(there’s a scheduled Eurogroup meeting on Monday, but a second meeting would be unscheduled)

So much for kicking out the Troika....

Creditors drawing up extra demands on Greece

Greece’s creditors are drafting a response to Athen’s bailout proposal - outlining what extra measures are needed, reports our Europe editor:

Ian also hears that eurozone ministers may fail to reach an agreement tonight - kicking the can upstairs to the euro leaders meeting tomorrow.

Channel 4’s Paul Mason has a handy summary of the state of play this evening:

Now here’s a tasty rumour:

We’ve been told that French officials provided “invaluable” help in drawing up the current Greek proposals. Can’t imagine why Berlin would be cross.....

More head-shaking in Brussels:

The Lex Building where the Eurogroup discusses their new proposals by the Greek authorities on July 11, 2015.
Somewhere inside the Lex Building, eurozone finance ministers are having dinner and discussing Greece’s bailout request..... Photograph: Sander de Wilde/Demotix/Corbis

Wolfango Piccoli, analyst at Teneo Intelligence, reckons that Alexis Tsipras has four options following the mini-rebellion at last night’s vote over his reform plan:

  • He could resign and trigger snap polls after reaching a deal with his lenders. This would leave Greece in limbo for around 3-4 weeks, a development that would raise significant concerns among the lenders and complicate meeting the relevant targets (milestones) attached to the likely sub-tranches of a new bailout.
  • He could decide to tackle decisively the situation by breaking with the dissenters and replacing those MPs who voted “No” or abstained, including the two ministers and the parliament speaker. This could be achieved by enforcing SYRIZA’s internal rule forcing (on paper) MPs to give up their seats after leaving the parliamentary group.
  • He could seek to enlarge the governing coalition by including one or more of the opposition parties, notably POTAMI and Pasok. The creation of a wider coalition would reassure the lenders but it is, in our view, the least likely of the available options.
  • Finally, he could decide to move cautiously (as he has done in the past) by replacing only the two MPs who voted “No”, meaning that an unstable balance would prevail in the short-term, at least.

But whatever Tsipras chooses, there’s a high chance of another general election this year, Wolf adds.

Greek minister: Syriza rebels should resign

Over in Athens, economy minister Giorgos Stathakis has said he’s confident the government will be able to get parliamentary approval for its reform plans.

And he also warned that any Syriza MP who disagrees should resign their seat.

Stathakis told Mega TV that:

“If a lawmaker of a leftist party disagrees with the policies of the government...they should follow the rules and if they strongly disagree resign their seat.

Stathakis added that “if it were me, I would resign”.

(that’s via Reuters)

Last night, 17 Syriza MPs either opposed the plan, abstained or were absent during the vote. That included energy minister, and influential Syriza member, Panagiotis Lafazanis.

Updated

Greece’s former finance minister, Yanis Varoufakis, may feel vindicated by the news of a German government paper proposing a temporary Grexit.

He’s written an opinion piece in today’s Guardian, claiming Schäuble wanted to drive Greece out to “put the fear of God” into the French.

And he’s just tweeted:

Eurozone finance ministers are pausing to refuel after three hours of talks, Cyprus government spokesman Nikos Christodoulides flags up.

Talks could go well into the night, we hear....

Although there is growing optimism in Athens, there is also fear for the future after weeks of unsettling drama, as Helena Smith reports:

I just chatted with Vicky Pryce, the prominent economist. She says she has been taken aback not only by the yearning for normality she has encountered since arriving in Athens but the sheer level of anxiety she has also seen.

“Everyone wants the banks to reopen so that some normality can return and businesses can re-open,” she told me.

“People are really very, very, fearful, a lot have been telling me they have been having panic attacks because of the anxiety that this situation has produced. No one wants to even go to the beach [in the southern suburbs]. When I asked why, I was told they are all at home guarding their money!”

There were mass withdrawals of savings by Greeks fearing the collapse of the banking system, before capital controls were imposed nearly two weeks ago.

Pryce, who has openly opposed the tough austerity measures being asked of Athens, said it was now crucial that an agreement was reached with the country’s creditors.

“It’s going to be very painful but we are where we are and right now so very much hangs on signing it,” she said.

“If Greece gets this bailout it will not only bring liquidity into the system but open the possibility of the country entering the quantitative easing scheme [set up] by the European Central Bank which would then allow rates to come down in the capital markets.

That would be terribly, terribly important in helping to turn things around.”

Updated

Maybe Wolfgang’s just waiting for the right moment to drop it into the conversation....

Reuters: Greece told to offer more

More leaks, as ministers take a break after three hour of talks.

Reuters says that Euro zone finance ministers told Euclid Tsakalotos that Athens must offer deeper reforms to persuade them to open talks on a third bailout.

Two sources said there was consensus among the other 18 ministers around the table that the leftist government in Athens must take further steps to convince them it would honour any new debts.

That fits with the noises coming out of Germany, that Athens can’t simply propose measures ‘left undone’ from its second bailout to qualify for a third aid package.

The Telegraph’s Mehreen Khan points out another reason that temporary Grexit is somewhat bonkers:

Ie, it reduces the eurozone to a mere fixed exchange rate system, not an expression (however flawed) of European solidarity.

Updated

Sky News’s economics editor, Ed Conway, agrees that ‘temporary’ Grexit is a non-starter:

But it might reassure German voters and MPs:

Greek officials have denied that Germany has suggested they clear off for five years, reports Euronews’s Efi Koutsokosta.

FAS: Germany proposing temporary Grexit

Germany’s Frankfurter Allgemeine Sonntagszeitung newspaper is reporting that the German finance ministry has proposed two options for Greece - including a temporary ‘timeout’ from the eurozone!

Under the first course, Greece would improve its existing proposals, and also transfer some €50bn of property assets to sell off to pay debts (not clear which assets they have in mind. Islands? The Parthenon perhaps?)

The second option would see Greece leaves the monetary union for at least five years and restructures its debt. It would remain as the EU Member and receives further “growth-enhancing, humanitarian and technical assistance”.

Here’s the story:

Schäuble bringt „Grexit“ auf Zeit ins Gespräch

The finance ministry are declining to comment:

I suppose they could be serious (assuming FAS are right). But it’s riddled with problems.

For starters, if Greece shifts to a depreciated Drachma it’ll find it even harder to service its existing euro debts. What happens to the banking sector once the emergency liquidity is removed, and the euro deposits locked inside.

And once you’re left the eurozone, even ‘temporarily’, can you really be certain you’ll be allowed back in?

Updated

T-shirts on display in a shop in Athens, Greece<br>Tee shirts are seen on display in a shop in Athens, Greece July 11, 2015.
T-shirts on display in a shop in Athens, today. Photograph: Cathal Mcnaughton/Reuters

Over in Athens our correspondent Helena Smith reports that despite the obstacles Greece and its creditors have to overcome, there is optimism that a deal can be reached. And it is beginning to show.

The age-old adage that psychology is everything in economics was evident for all to see on the streets of Athens today. A deal may be as far away as ever, but prime minister Alexis Tsipras’ abrupt decision to embrace reforms he once vehemently opposed has raised optimism.

Taverna owners, shop keepers and families enjoying the summer sun in Athens’ old town of Plaka, this afternoon, spoke of relief that the drama of recent weeks might, finally, be coming to an end.

“Everyone is praying for this uncertainty to end,” said Georgia Poulidou who owns a local gift shop.

“Everyone just looks a lot happier and I am not talking about tourists. Let’s hope Germany doesn’t make it too difficult.”

The improved psychology was also reflected in business with firms reporting an increase in turnover on hopes of a financial lifeline being thrown to Greece. “Since yesterday Greeks have started eating again,” said Michalis Alexiou an employee in a catering firm in the northern suburb of Maroussi.

“It’s incredible, people are suddenly no longer afraid to spend. Everyone is hoping for a solution,” he told me.

Analysts said despite the political tumult Tsipras was bound to face, almost six months after assuming power, he had “crossed the rubicon” by agreeing to take on the cost of reforms and hardliners in the ranks of his own Syriza party.

“He is going to confront a lot of problems with former comrades, some of the more extremist elements in Syriza’s ranks,” said Aristides Hatzis, professor of economics and law at Athens University.

“I see a reshuffle very soon and many of those who refused to endorse the proposed reforms in the parliament will probably resign.”

Across the room, Italy’s Pier Carlo Padoan (left) and France’s Michel Sapin (right) discussed matters with commissioner Pierre Moscovici....

(From L) Italian Finance Minister Pier Carlo Padoan, European Commissioner for Economic and Financial Affairs Pierre Moscovici, and French Finance Minister Michel Sapin chat prior to a meeting of the Eurogroup finance ministers in Brussel on July 11, 2015. German Finance Minister Wolfgang Schaeuble said that last-ditch talks with Greece on a new debt rescue needed to keep it in the eurozone will be “extremely difficult.”AFP PHOTO / JOHN MACDOUGALLJOHN MACDOUGALL/AFP/Getty Images
Photograph: John Macdougall/AFP/Getty Images

While Slovakia’s Peter Kazimir caught up with Portugal’s Maria Luis Albuquerque:

Eurogroup Finance ministers meeting<br>epa04842344 Slovak Finance Minister Peter Kazimir (L) and Portuguese Finance minister Maria Luis Albuquerque (R)
Eurogroup Finance ministers meeting
epa04842344 S Photograph: Olivier Hoslet/EPA

And Christine Lagarde gave Euclid Tsakalotos quite a look:....

Greek Finance Minister Tsakalotos and IMF Managing Director Lagarde attend an euro zone finance ministers meeting in Brussels<br>Greek Finance Minister Euclid Tsakalotos (L) and International Monetary Fund (IMF) Managing Director Christine Lagarde (C) during an euro zone finance ministers meeting in Brussels, Belgium, July 11, 2015. Greek Prime Minister Alexis Tsipras won backing from lawmakers on Saturday for painful reforms but it remained unclear whether it would be enough to secure a bailout from German and other euro zone ministers meeting in Brussels. REUTERS/Francois Lenoir
IMF Managing Director Lagarde arrives to attend an euro zone finance ministers meeting in Brussels

Photos: Inside the eurogroup

This is Euclid Tsakalotos’s second eurogroup meeting as Greece’s finance minister, and he got a friendly welcome from, among others, France’s Michel Sapin:

New Greek Finance minister Euclid Tsakalotos (L) is welcomed by French finance minister Michel Sapin (2-R) at the start of a special Eurogroup meeting on Greece, at European Council headquarters in Brussels, Belgium, 11 July 2015.
. Photograph: Laurent Dubrule/EPA

He’s next to Spain’s Luis de Guindos (taking his seat here), who hopes to be elected as the eurogroup’s new president on Monday.

Spanish Minister of Economy Luis de Guindos (2-L) and Greek Finance Minister Euclid Tsakalotos (R) at the start of a special Eurogroup meeting on Greece, at European Council headquarters in Brussels, Belgium, 11 July 2015.
Spanish Minister of Economy Luis de Guindos (2-L) and Greek Finance Minister Euclid Tsakalotos (R) at the start of a special Eurogroup meeting on Greece, at European Council headquarters in Brussels, Belgium, 11 July 2015. Photograph: Olivier Hoslet/EPA

The current incumbent, Jeroen Dijsselbloem has been giving the thumbs-up:....

Eurogroup President Dijsselbloem gestures during a euro zone finance ministers meeting in Brussels<br>REFILE - CORRECTING GRAMMAR Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem (C) gestures during a euro zone finance ministers meeting in Brussels, Belgium, July 11, 2015. Greek Prime Minister Alexis Tsipras won backing from lawmakers on Saturday for painful reforms but it remained unclear whether it would be enough to secure a bailout from German and other euro zone ministers meeting in Brussels. REUTERS/Francois Lenoir
. Photograph: Francois Lenoir/Reuters

But also looking rather gloomy as he spoke with Finland’s Alex Stubb (centre)

Finnish Finance Minister Alexander Stubb (C) and Dutch Finance Minister and Eurogroup president Jeroen Dijsselbloem (R) at a special Eurogroup Finance ministers meeting on Greek crisis in Brussels, Belgium, 11 July 2015.
Photograph: Laurent Dubrule/EPA

IMF chief Christine Lagarde is in the room too:

Managing Director of the International Monetary Fund (IMF) Christine Lagarde (C) greets President of the Eurogroup Jeroen Dijsselbloem (R) prior to a meeting of the Eurogroup finance ministers in Brussels on July 11, 2015.
Photograph: John Macdougall/AFP/Getty Images

And has been comparing notes with Klaus Regling, who runs the European Financial Stability Facility (EFSF)

Eurogroup Finance ministers meeting<br>epa04842313 International Monetary Fund managing director Christine Lagarde (L) chats with Managing Director of European Financial Stability Facility (EFSF), German Klaus Regling at the start of a special Eurogroup meeting on Greece, at European Council headquarters in Brussels, Belgium, 11 July 2015.
Photograph: Olivier Hoslet/EPA

While Germany’s Wolfgang Schäuble looked like a man expecting “extraordinarily difficult negotiations” today:

Eurogroup Finance ministers meeting<br>epa04842328 German Finance Minister Wolfgang Schaeuble at the start of a special Eurogroup finance ministers meeting on Greece, in Brussels, Belgium, 11 July 2015.
Photograph: Olivier Hoslet/EPA

My colleague Jennifer Rankin in Brussels has rounded up events so far today:

Here’s the video of Germany’s Wolfgang Schäuble’s caustic remarks on Greece as he arrived at the Eurogroup meeting (in German):

Updated

Away from Brussels and back to some of the people most affected by the current crisis. From Thessaloniki:

Vassilis, 48, is exactly the kind of Greek who will be most affected by whatever is or isn’t agreed in Brussels tonight. Today he sells Thessaloniki’s version of the Big Issue on one of the city’s main streets – the result of losing his job as a truck driver three years ago, and ending up homeless.

The deal as it currently stands would bring Vassilis more pain: a huge rise in VAT on food. But perhaps surprisingly, he is in favour of it passing. “I didn’t vote in the referendum,” he says. “But with difficulty and with pain, I would have voted yes.”

A hike in food prices will hurt Vassilis as much as it’ll hurt everyone. But that’s why it’s needed, he claims: the government doesn’t have too many alternative means of levying tax. “Only the restaurants and cafes are making money,” reckons Vassilis. “With 50 euros, people will buy food not clothes, and so [the government] doesn’t have any other way of making money.” Apart from slashing public sector salaries, he adds. “But they won’t do that.”

Resignation to more austerity extends even to ‘no’ voters, people who only a week ago rejected more cuts and debts. “For the people who don’t have money, the VAT will be an issue,” says Giorgios Voutas, a 56-year-old no-voter who sells rice, nuts and spices in a market in central Thessaloniki. “But what I’m guessing is that the increase will be absorbed by us sellers – and we’ll try to make the money back by finding new wholesalers, or reducing the packaging.”

Giorgios Voutas
Giorgios Voutas Photograph: Patrick Kingsley/Patrick Kingsley

As a no-voter, does he feel betrayed by Alexis Tsipras? The prime minister has agreed to more austerity, despite a mandate for the opposite from the electorate. “No way,” says Voutas, arguing Tsipras tried his best against an intransigent Europe. “The Europeans aren’t capable of surprising us with something good.”

But austerity doesn’t really make any sense, Voutas adds. “Would these European countries like their money back?” he asks. “In order to find the money to pay them we need investment and economic development – but when will we see all this?”

Here is the Associated Press take on the German finance minister’s tough comments as he arrived for the Eurogroup meeting:

Wolfgang Schäuble, Germany’s finance minister, warned that that Saturday’s meeting of the eurozone’s 19 finance ministers over Greece’s bailout request was going to be tough.

Schaeuble, who has taken a hard line on Greece over recent months, says the Greek government will have to do a lot more than just say it wants to reform if it’s going to get the three-year bailout it requested for earlier this week.

“We will definitely not be able to rely on promises,” he said when arriving at the talks in Brussels.

Schaeuble put the blame for the current crisis firmly on the shoulders of the radical left Syriza government that was elected in January. The “hopeful” situation regarding Greece at the end of last year has been “destroyed by the last months,” he said.

Schaeuble said Saturday’s discussions would be “extraordinarily difficult.”

Updated

Finance ministers point to progress, but trust is a problem

So the tone from finance ministers going into the meeting was that the Greeks have made some progress with their latest proposals, but can they be trusted to implement what they have promised?

Given that the Greek government called its referendum and advised voting against the proposals which were then on the table, only to put forward broadly similar plans a few days later, you can understand the scepticism.

It almost seemed that if Alexis Tsipras received a euro for every time the word “trust” was mentioned, Greece’s financial problems would be over immediately.

Germany’s Wolfgang Schäuble of course put it most bluntly, saying trust had been destroyed “in an incredible manner.”

But there were plenty of officials trying to keep an open mind, clearly aware that pushing Greece over the brink would be an irreversible step.

There were even suggestions that the thorny issue of debt relief was up for discussion, even if reaching an agreement would seem rather unlikely.

Still, with the institutions (the EU, ECB and IMF) sounding cautiously positive about the Greek proposals, albeit with some reservations, there is at least the basis for discussion.

Updated

And they’re off.

(Just when we thought Finland’s finance minister was being uncommunicative)

Spain’s Luis de Guindos said he hoped Greece would not leave the eurozone:

Not ready to accept calculations that are not believable -Schäuble

And here is German finance minister Wolfgang Schäuble:

In a broadside at the Greeks he said we cannot only rely on promises. Trust has been destroyed over the past months in an incredible manner.

Schaeuble
Schaeuble. Photograph: Virginia Mayo/AP

Updated

Pierre Gramegna, finance minister of Luxembourg which currently holds the EU presidency, said he was “in a lighter heart than two days ago.”

We have proposals on the table, which are comprehensive.

What can Greece do about the lack of trust?

It is important to find out about the concrete steps [which will be taken] and how they are prepared to translate that into legislative initiatives which can be voted for in parliament. Draft bills, the prospect of a vote will build confidence.

On debt:

We are prepared to discuss debt restructuring today, whether we all agree is another matter.

Pierre Gramegna.
Pierre Gramegna. Photograph: Stephanie Lecocq/EPA

Updated

He said the Greek proposals were enough for a second bailout programme but not a third.

Slovakia’s Peter Kazimir sees debt sustainability as “a huge problem’.

It will be difficult, can Greeks be trusted, says Dijsselbloem

It’s going to be a difficult meeting, says Eurogroup president Jeroen Dijsselbloem.

We are not there yet, there is still some criticisms of the proposals, on the fiscal front and the reforms.

But there is the issue of trust. Can the Greek government be trusted to do what they are proposing.

How can they prove trust?

They’ll have to listen to the institutions and show their commitment to implementing [the proposals]

Jeroen Dijsselbloem (r) with Alexander Stubb.
Jeroen Dijsselbloem (r) with Alexander Stubb. Photograph: Virginia Mayo/AP

Updated

And speaking of France.

French finance minister Michel Sapin said there were two positive signs, that the Greek government had shown courage and determination in presenting its proposals to parliament, and secondly that the institutions see them as a good basis for discussions.

He added that the topic of debt was not taboo: “We have the right to talk about debt.”

Sapin.
Sapin. Photograph: Ralph Orlowski/Reuters

Updated

Meanwhile the conciliatory tone by France, which helped with the Greek proposals, continues. Reuters reports:

A bailout package for Greece needs to include a reduction in the country’s debt burden, French Economy Minister Emmanuel Macron told German daily Die Welt in an interview published on Saturday.

The German government has resisted a restructuring of Greece’s debts... but Macron insisted the burden must be eased.

“It is necessary to reduce the debt burden so that the Greek economy does not go under,” he told Die Welt.

Outlining the path to solving the Greek problem, Macron said structural reforms needed to be deepened, adding: “More competition doesn’t mean saving more!”

Investment was also essential to supporting growth in Greece, said.

“Not to try everything possible to keep Greece in the euro zone would be to accept a step backwards in Europe,” Macron said.

Italian finance minister Pier Carlo Padoan said:

The purpose of the meeting is to kick off negotiations on [an] ESM [bailout].

We are all here with open minds.

It is the beginning of negotiations, not about striking a deal tonight.

Malta’s finance minister Edward Scicluna said the Greek issue has to be solved today, but he summed up the mood:

There are some who are very sceptical, some less so.


This doesn’t sound particularly helpful:

It’s hard to call how things will go at the Eurogroup meeting, with much talk from the arriving officials of progress being made, but also many calls for the Greek government to actually implement whatever may be agreed.

Alexander Stubb, the Finnish finance minister who has taken to tweeting developments, has not been so forthcoming today:

Updated

More from Noonan’s comments, courtesy of Open Europe:

Irish finance minister Michael Noonan said Greece must get on with implementing agreed proposals:

It is hard to deliver if your parliamentary majority diminishes.

While they have a majority I believe they should move to carry out the legislative changes.

[Presumably a reference to those Greek MPs who did not support the proposals in the earlier vote]

Noonan.
Noonan. Photograph: Stephanie Lecocq/EPA

Updated

EU commissioner Valdis Dombrovskis sounds more positive:

We are clearly making progress. The Greek government proposal is pretty much along the lines of what the institutions proposal was before the referendum.

There is a willingness on the Greek side to reach an agreement.

[But] there are still many issues and many concerns of the member states to be addressed.

Today we are discussing giving a mandate to [the EU, ECB and IMF] to start negotiations about an ESM programme.

Greek plan is weaker than it should be - Dutch finance minister

Dutch finance minister Eric Wiebes is taking a fairly tough line:

The Greeks have clearly made a step forward.

At the same time the institutions have been critical.. the plan is weaker in some areas than it should be.

Their suggestion is we can only start negotiations when these conditions are filled in.

Many governments including my own [are worried about] implementation.

We are discussing a proposal that was rejected [in the referendum].

Clearly there has to be a step made towards restoring trust.

What if there is no agreement tonight?

That is up to the Greek government.

Wolfgang Schaeuble (r) and Eric Wiebes.
Wolfgang Schaeuble (r) and Eric Wiebes. Photograph: Olivier Hoslet/EPA

Updated

More from Schelling:

And again, the emphasis on implementation, this time from Austria’s Schelling (almost as if the finance ministers do not trust the Greeks to do what they say.)

(and in the foreground Austrian finance minister Hans Jörg Schelling).

Here’s a video of EU economics commissioner Pierre Moscovici arriving for the Eurogroup meeting (in French):

EU Economics Commissioner Pierre Moscovici said the Greek government had made a significant gesture but it needed to implement reforms:

Moscovici
Moscovici Photograph: European Commission/European Commission

Updated

IMF managing director Christine Lagarde said, “We are here to make a lot more progress.”

Christine Lagarde arrives at the meeting.
Christine Lagarde arrives at the meeting. Photograph: Francois Walschaerts/AP

Updated

And the finance ministers are starting to arrive. Here is Greece’s Euclid Tsakalotos, keeping his own counsel:

Greek finance minister Euclid Tsakalotos.
Greek finance minister Euclid Tsakalotos. Photograph: Virginia Mayo/AP

Updated

If you haven’t yet seen the piece on Alexis Tsipras and Syriza from our economics editor Larry Elliott, it’s well worth a read (spoiler: he says untold damage has been caused to the Greek economy for no purpose whatsoever):

Cabinet reshuffle for Tsipras next week?

The lack of support from some members of his partly for Alexis Tsipras’ proposals in last night’s vote could have repercussions, according to Niki Kitsantonis of Greek newspaper Kathimerini:

Updated

And the chances of a deal seem to be getting worse by the minute:

In Thessaloniki, many Greeks appear resigned to further austerity even though theyi voted against that very thing in last Sunday’s referendum. Patrick Kingsley reports:

Clara Sklavounou, a toy-shop owner in central Thessaloniki, might have reason to feel let down. Sklavounou voted no in last week’s referendum – “no to austerity”, she says – and yet a week later her parliament has agreed to a deal that many feel is just as austere as what she said no to.

“But I don’t feel betrayed,” says Sklavounou, reiterating her backing for Alexis Tsipras. “He tried to find a viable solution but he couldn’t do anything else, and I hope he stays in government to try to do some of what he set out to do.”

Outside her shop there stands a life-size Playmobil pirate. Inside, though, the big, pricier brands like Playmobil and Lego aren’t shifting. And despite the sales of up to 80% in this shopping district, the footfall in her shop is less than half of what she’d expect for the sales season. The new deal, if it becomes the basis of a new bailout, will make matters worse – raising corporation tax, and making her pay it in advance.

“But what else can we do?” says Sklavanou. “I said no to austerity – not no to the EU.”

This sense of resignation is mirrored by shoppers at AB Vasilopoulos, a well-known supermarket chain down the road. Customers here face a price-hike for food if the deal goes ahead, with VAT on food set to rise to 23%. At the moment, says 50-year-old Fotini Toli as she leaves with a clutch of groceries, “I’m only buying the things that I need to buy, and nothing extra. I don’t know what will happen now.”

But like Sklavounou, Toli is resigned to further austerity. “We have to choose between the bad and the worse,” she says. “And so we have to prefer the bad.”

A woman shopping at the main meat market in Thessaloniki.
A woman shopping at the main meat market in Thessaloniki. Photograph: Sakis Mitrolidis/AFP/Getty Images

Hold the optimism.

Reuters is reporting two sources saying they are not so sure a deal will be done.

With the officials in the Euro Working Group meeting ahead of the gathering of finance ministers, a Reuters source who said late on Friday he was almost sure an agreement would be reached appeared to have had second thoughts:

The high figures for financing needs over the next three years may be too high and too sudden.

The second source told Reuters he put the chances of reaching an agreement which would allow talks to begin at 60-40.

Our Europe editor Ian Traynor says if a deal is to be done, there needs to be a lot of negotiation, and Alexis Tsipras may end up with tougher demands from the troika (the EU, IMF and ECB) than his predecessors:

Sky’s Ed Conway confirms that the proposals appear to be the basis for talks:

But he adds:

Yanis Varoufakis, the former Greek finance minister, continues to make waves. In a piece for the Guardian he has attacked eurozone policies towards Greece and said German finance minister Wolfgang Schäuble wanted the country out of the eurozone:

Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another...

Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

The full piece is here:

And here’s one interesting reaction:

Which has prompted a response from the man himself:

Merkel and Schäuble split on Greece, says Bild

Here’s the Bild story (in German).

The key part suggests German chancellor Angela Merkel wants an agreement but finance minister Schäuble “believes Athen’s plans are insufficient and is against further talks.”

This is not the first time, of course, that talk of a rift between Merkel and Schäuble has emerged.

Merkel and Schäuble,
Merkel and Schäuble, Photograph: Fabrizio Bensch/Reuters

Updated

The outcome of the day’s Eurogroup meeting is completely open, according to a German finance ministry spokesman.

According to Reuters, Frank Paul Weber refused to comment on a story in Germany’s Bild that finance minister Wolfgang Schäuble thought the Greek proposals were inadequate and he opposed further talks. Weber said:

The minister this afternoon will discuss with his eurozone colleagues the assessment of the institutions. The result of the discussion is completely open.

Greece may need up to €84bn - reports

There is growing talk that Greece will need more that the €53bn package it is asking for:|

And the Wall Street Journal has reported:

Greece will need €74 billion ($82.55 billion) in fresh funding, the three institutions overseeing the eurozone bailout program said in their assessment of the country’s request for a new aid package, according to three European officials.

The €74 billion could include €16 billion from the International Monetary Fund, should the Washington-based institution decide to participate in the new aid program, the officials said. A fourth official said some funding could come from Greece raising money on debt markets.

Updated

Not everyone in Greece is overjoyed about the new proposals, of course, especially given that Sunday’s referendum - was it really less than a week ago - had rejected something very similar. Here’s some pictures from yesterday’s rallies as parliament voted:

Anti-austerity demonstration.
Anti-austerity demonstration. Photograph: ZUMA/REX Shutterstock/ZUMA/REX Shutterstock
Protests against the new deal.
Protests against the new deal. Photograph: NurP/REX Shutterstock/NurP/REX Shutterstock
In front of the Greek parliament.
In front of the Greek parliament. Photograph: ZUMA/REX Shutterstock/ZUMA/REX Shutterstock

Greek proposals well received but more steps needed - report

German newspaper Frankfurter Allgemeine is also reporting that the Greek proposals have been well received by the institutions, and are a basis for discussion but further steps may be needed (full story here in German).

The EU, IMF and ECB are “cautiously positive”, says the report but they want any new bailout programme to contain “structural benchmarks, milestones and quantitative benchmarks” for the future

And the reforms are not enough to meet primary budget surplus targets given the “significant deterioration in macroeconomic and financial conditions.”

Updated

The Eurogroup has now listed the press conference following the meeting for 22.00 Brussels time (21.00 BST).

That seems to indicate a long meeting. A good sign?

As a reminder, here’s what is in the latest Greek proposals, and how they differ from what has gone before:

And on Sunday there is a meeting of eurozone leaders and a separate gathering of the whole European Union.

If there is an agreement today to start loan talks, Sunday’s summit could well be cancelled although leaders may still want to hear more from Alexis Tsipras about his proposals in the wake of the turbulent events of the last few days.

However if there is no sign of a possible deal, then the summit is likely to be dedicated to coping with Greece’s removal from the single currency. Here is the formal agenda for Sunday’s get-together:

Following up the special Euro Summit on Greece on 7 July, EU leaders will meet again on Sunday 12 July to take stock of the situation and set out the political guidelines for the next steps.

On 7 July, leaders from the euro area member states discussed the situation in Greece following the referendum held on 5 July. President Donald Tusk confirmed that the euro area authorities were ready to do all that is necessary to ensure financial stability in the euro area.

What next?

This is the way the day ahead is looking.

Advisers to the finance ministers were due to begin a meeting of the Euro Working Group at 8.00 GMT (9.00 BST) to discuss the Greek proposals.

They will pass on their views to the ministers before the Eurogroup meets at 13.00 GMT (14.00 BST). A reminder of the agenda of the Eurogroup:

The Eurogroup will discuss the recent request by the Greek authorities for financial assistance from the European Stability Mechanism (ESM) and their new proposals for a reform agenda.

The European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF) will present their assessment of risk to financial stability in the euro area, Greece’s financing needs and the sustainability of its public debt.

Based on this assessment ministers will exchange views on whether there is a sufficient basis to start formal negotiations on a new financial assistance programme for Greece.

ESM financial assistance programmes are negotiated by the Commission, in liaison with the ECB, on the basis of a mandate by the Eurogroup. When possible, active participation of the IMF is sought.

The Eurogroup has confirmed it has received the initial assessment by the institutions - the EU, IMF and ECB - via the spokesman for Eurogroup president Jeroen Dijsselbloem.

More details on the reasons for optimism.

The European Commission, the European Central Bank and the International Monetary Fund have said the Greek proposals are a basis for negotiation, Reuters is reporting.

An unnamed EU official is quoted by the agency as saying:

The three institutions have made a first joint assessment of the Greek reform proposals submitted Thursday night. Under certain conditions, they jointly see the proposals as a basis for negotiating an ESM [bailout fund] programme. This assessment was sent to the Eurogroup president last night.

Updated

Introduction: Eurogroup meets amid signs of optimism

Good morning and welcome to what is one of the most crucial weekends since the eurozone crisis began more than five years ago.

Finance ministers from the 19 members of the single currency will meet in Brussels later to discuss whether the latest set of Greek proposals are enough to start negotiations on a desperately needed third bailout for the beleaguered country.

If they cannot agree, that could be the beginning of the end for Greece as a member of the eurozone, with a summit of EU leaders on Sunday likely to discuss the impact of such a move and how they can deal with the fallout. In that case the European Central Bank would be unlikely to offer any more assistance to Greek banks - which are still shut at the moment - and the country could be plunged into further chaos.

Greek prime minister Alexis Tsipras has proposed €13bn of austerity cuts in return for €53bn over three years, a plan which effectively amounts to a U-turn after last week’s No vote in the hastily called referendum rejected a pretty similar deal.

But late last night Tsipras managed to get the backing of the Greek parliament for his proposals, albeit not without some dissent.

Alexis Tsipras and Euclid Tsakalotos in parliament.
Alexis Tsipras and Euclid Tsakalotos in parliament. Photograph: Thanassis Stavrakis/AP

After a tense debate 251 MPs out of 300 voted to give Tsipras, and finance minister Euclid Tsakalotos, the go-ahead to negotiate with the Eurogroup of finance ministers.

But two MPs from the governing Syriza party voted no, eight abstained and seven were absent, which could prove a problem for the getting any agreed measures through law at a later stage. Some in the eurozone, notably in Germany, doubt whether they can trust the Greek government to live up to its promises.

Even so, Tsipras claimed the backing of parliament gave his a strong mandate to complete negotiations with the country’s creditors towards a viable solution.

Here is our report by Ian Traynor and Graeme Wearden of the night’s drama:

And there are some signs that the measures may be enough to restart talks, with EU officials saying today there was a basis for negotiations.

Updated

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