Greek PM urged to table serious options

Alexis Tsipras will address European heads of state which include Germany, France, Italy and Spain.

A screengrab shows Greek Prime Minister Alexis Tsipras addressing the nation in Athens on 1 July 2015. Picture: AFP.

ATHENS - After the historic "NO" vote against austerity proposals on how Greece should pay back its debt, the Eurozone says that the country's Prime Minister Alexis Tsipras must table serious options at a summit of euro leaders today.

Tsipras, who promised new Greek proposals, will address the meeting of European heads of state which include Germany, France, Italy and Spain.

Banks remain closed in Greece today but the European Central Bank is expected to maintain emergency cash support as financial institutions run out of money.

A resounding "NO" to a European regime of austerity and a resounding resignation of Finance Minister Yanis Varoufakis, sent a strong message to Europe, that Athens and the Syriza government are serious about rewriting the negotiations for a viable new aid package with Greece s creditors.

Yet there is no easy way for Tsipras to regain the confidence of his partners, as he very quickly found out during extended calls to German Chancellor Angela Merkel and French President Francois Hollande, both of whom said that they respect the Greek Vote, but that they will not give Greece another chance to avoid Grexit, unless Tsipras faces reality and understands that Greece should follow a path of hard reforms.

The International Monetary Fund will not participate in tomorrow's meeting, while the ECB has not come up with an agreement to extend Greek bank funding.

By voting decisively against tough bailout conditions, as Tsipras had urged them to do, Greeks have strengthened his negotiating hand. But the crisis remains acute, with the country's banks already closed for more than a week to avoid a massive outflow of money that could lead to their collapse.

Only emergency support from the ECB is keeping the banks afloat and saving Greece from a chaotic euro exit that would inflict more pain on its people and gravely damage the currency, the strongest symbol of the EU's drive for an ever closer union on a continent once ravaged by two world wars.

n a warning shot to the banks, the ECB raised the amount of collateral they must post for any loans. The move does not affect the lenders right away, but served as a reminder that their fate lies in its hands.

In a sign that Athens is keen to seek a new deal, Greece's combative finance minister, Yanis Varoufakis, resigned, apparently under pressure from other euro zone finance ministers who did not want him as a negotiating partner.

Late on Monday, the prime minister's office said Tsipras had spoken with EU Commission President Jean-Claude Juncker and Hollande. His office did not provide details about the conversations.

After talks with Hollande earlier in the day in Paris, Merkel said, "We say very clearly that the door for talks remains open and the meeting of euro zone leaders tomorrow should be understood in this sense."

But, she added, the requirements were not in place at the moment to start negotiations about a concrete euro zone bailout fund programme.

A German finance ministry official dismissed the idea that Berlin would be willing to concede some debt relief to Athens, a position that Tsipras' government has long sought.

But an ECB governing council member, Ewald Nowotny, held out the possibility of bridge funding for Greece while a new bailout programme is being negotiated. "Whether it's possible is something that has to be discussed," he told Austrian state TV.

Hollande said, "It's now up to the government of Alexis Tsipras to offer serious, credible proposals so that this can be turned into a programme which gives a long-term perspective, because Greece needs a long-term perspective in the euro zone with stable rules, as the euro zone itself does."

NOT MUCH TIME

Hollande stressed that there was not much time left, while Merkel urged Greece to put proposals on the table this week.

Dutch Prime Minister Mark Rutte said Greece must accept deep reforms if it wants to remain in the euro.

He told his parliament that creditors had no plans to draft a new proposal after the "No" vote and Greece had to come up with a new proposal ahead of Tuesday's summit.

"They must make a decision, this evening or tonight, what they are going to do," Rutte said. If the Greeks went to Brussels demanding changes because they felt supported by the "No" vote and refused reforms "then I think it is over".

After the Greek 'No' vote, gloomy officials in Brussels and Berlin said a Greek exit from the currency area now looked ever more likely.

But they also said talks to avert it would be easier without Varoufakis, an avowed "erratic Marxist" economist who infuriated fellow euro zone finance ministers with his casual style and indignant lectures. He had campaigned for Sunday's 'No' vote, accusing Greece' creditors of "terrorism".

His sacrifice suggested Tsipras was determined to try to reach a last-ditch compromise with European leaders.

Is the Greek 'crisis' a storm in a tea cup?

Greece's political leaders, more accustomed to screaming abuse at each other in parliament, issued an unprecedented joint statement after a day of talks at the president's office backing efforts to reach a deal with creditors.

Huge ATM lines are still testing the Greek s patience.

Mr Varoufakis successor, Marxist professor and former key negotiator with the creditors Euklid Tsakalotos , has nothing of Varoufakis's rock star attitude and certainly has no enemies among partners in the Eurogroup.