TEMPO.CO, Brussels - Euro zone leaders told near-bankrupt Greece at an emergency summit on Sunday it must enact key reforms this week to restore trust before they will open talks on a financial rescue to keep it in the European currency area.
Leftist Prime Minister Alexis Tsipras will be required to push legislation through parliament to convince his 18 partners in the euro zone to release immediate funds to avert a state bankruptcy and start negotiations on a third bailout programme estimated at up to 86 billion euros (62 billion pounds).
Six sweeping measures including tax and pension reforms must be enacted by Wednesday night and the entire package endorsed by parliament before talks can start, a draft decision by Eurogroup finance ministers sent to the leaders showed.
The document included a German proposal to make Greece take a "time-out" from the euro zone if it fails to meet the conditions. But not all ministers endorsed the idea, which a senior EU source said was illegal and would not survive in the summit statement.
Tsipras said on arrival in Brussels he wanted "another honest compromise" to keep Europe united.
But German Chancellor Angela Merkel, whose country is the biggest contributor to euro zone bailouts, said the conditions were not yet right to start negotiations, sounding cautious in deference to mounting opposition at home to more aid for Greece.
"The most important currency has been lost and that is trust," she told reporters. "That means that we will have tough discussions and there will be no agreement at any price."
If Greece meets the conditions, the German parliament would meet on Thursday to mandate Merkel and Finance Minister Wolfgang Schaeuble to open the talks on a new loan. Then Eurogroup finance ministers would meet again on Friday or at the weekend to formally launch the negotiations.
A Greek government official, in a first reaction to the draft, said: "How can they demand all these measures at the last minute without securing a lifeline to see us through till next week?"
A European official said a Eurogroup meeting on Monday could discuss ways to provide emergency finance to keep Athens afloat.
As the summit dragged into the late evening, officials said the biggest of a series of sticking points was Germany's insistence that Greek assets worth 50 billion euros earmarked for privatisation be placed in a trust fund in Luxembourg to be sold with proceeds going directly to pay down debt.
One diplomat said that was tantamount to turning Greece into a "German protectorate".
Another diplomat said Merkel had declared the matter a "red line" for Germany. Tsipras, for his part, was insisting on a stronger commitment by the creditors to restructuring Greek debt to make it more sustainable in the medium-term.
Some questioned whether it was feasible to rush the package through the Greek parliament in just three days. Tsipras is set to sack ministers who did not support his negotiating position in a vote last Friday and make dissident lawmakers in his Syriza party resign their seats, people close to the government said.
Earlier, there were angry exchanges at a finance ministers' meeting that ended without a firm recommendation on Greece's application for a three-year loan on the basis of reform proposals submitted by Tsipras.
Eurogroup chairman Jeroen Dijsselbloem said that while ministers had made good progress, a couple of big issues were left for the leaders to resolve.
The draft said Greece needed 7 billion euros by July 20 in immediate funding, when it must make a crucial bond redemption to the European Central Bank, and a total of 12 billion euros by mid-August when another ECB payment falls due.
It did not say how those needs would be met, and EU officials said finance ministers had been unable to agree on emergency finance.
REUTERS
