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Greek debt crisis: Eurozone leaders mull demands as Athens imposes new laws and commits to privatisation

German chancellor warms Greece must re-established trust with creditors as heads of state take over talks from finance ministers

Alexander Sehmer
Sunday 12 July 2015 12:27 EDT
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German Chancellor Angela Merkel, left, confers with European Parliament President Martin Schulz
German Chancellor Angela Merkel, left, confers with European Parliament President Martin Schulz (Getty)

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Eurozone leaders are considering demands that Athens enact reforms to re-establish 'lost trust' before talks on a new rescue package can get under way.

Angela Merkel, the German chancellor, warned that talks would be tough, saying that "the most important currency has been lost: that is trust and reliability".

The proposed conditions include putting in place new laws by Wednesday; tough labour market and tax reforms; and a commitment to privatisation, according to Alex Stubb, the Finish finance minister.

He said the eurogroup ministers had drafted a "very ambitious proposal and report" for the leaders to debate.

The proposals follow two-days of discussions by ministers in the 19-member eurogroup.

The heads of state picked up the baton at an emergency summit on Sunday, after the eurogroup discussions came to a close.

Jeroen Dijsselbloem, the head of the eurogroup, said: "We've come a long way but a couple of big issues are still open so we're going to put it to the government leaders and it's up to them."

A split appears to have developed between France and Germany, with Germany, backed by the more fiscally conservative eurozone members, taking a firmer line.

Schulz said the 'broad majority' in the European parliament did not view 'Grexit' as an option
Schulz said the 'broad majority' in the European parliament did not view 'Grexit' as an option (Getty)

A German proposal for Greece to take a temporary "time-out" from the euro appeared to be dismissed by Francois Hollande, the French president, who said Greece was either in or out of the euro.

Martin Schulz, the president of the European parliament, also told a media conference that the "broad majority" of his colleagues in the parliament "subscribe to the view that Grexit is not an option".

Germany has also proposed the transfer of €50bn of Greek state assets into a fund to be managed by an external agency.

As the talks continue Greece is struggling to avoid financial chaos.

A €60 per day limit on cash machine withdrawals has been in place since June 28 and Greek banks have been closed for two weeks.

Greeks rejected an earlier bailout and its attached austerity conditions in a referendum this month, but a new proposal by Prime Minister Alexis Tsipras appeared largely in line with the creditors' initial proposals.

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