Greece Pressured to Bow to Deal, Tsipras Said to Plan Referendum

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Making Sense of the Proposed Greek Creditors Extension

Greek officials are bracing themselves for a final round of negotiations with their creditors as Skai reported that Prime Minister Alexis Tsipras is poised to call a referendum on whether to accept the terms of a new bailout.

Going into the 2 p.m. Saturday meeting in Brussels, the Greek position was that the offer was unacceptable. While German Chancellor Angela Merkel touted the five-month bailout extension as “very generous,” Tsipras compared its terms to an “ultimatum” and “blackmail.”

The Greek leader -- with a mandate to end austerity, yet keep the country in the euro -- faces a hard choice. A proposal by creditors to unlock as much as 15.5 billion euros ($17.3 billion) and extend Greece’s program through November does not include the debt relief he’s adamant about and still demands cuts that are anathema to many lawmakers back home.

Skai said the referendum could take place on July 5, without giving further details.

As nerves fray after months of brinkmanship, the pressure is on for a weekend deal. Failure to get one by the time markets open puts at risk a payment due June 30 to the International Monetary Fund and raises the specter of capital controls. Parties have to chip away at their differences or prepare for worst-case scenarios to contain the fallout.

“At this moment it is really mostly about how, not whether the Greek government agrees to the demands, as the technical negotiations have in my opinion reached their conclusion,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.

Good Odds?

For all of Tsipras’s protesting, talks continue on the offer creditors put forward with limited flexibility to accommodate Greek concerns, a European Union official said.

The prospects for reaching a deal with its trio of creditors -- the IMF, the European Central Bank and the European Commission -- are better than 50 percent even as the final outcome won’t become clear until Saturday, the official said.

Those odds are not far off from those by German Finance Minister Wolfgang Schaeuble, one of Greece’s sterner critics.

“The outcome is 50/50, 50 percent, and we will see,” he said in Frankfurt on Friday.

The Athens Stock Exchange Index closed 2 percent higher Friday as details of the proposed package emerged. The index ended the week with a gain of 16 percent as investors remained hopeful that an accord would be reached.

So far, a frenetic week of discussions has failed to end a five-month standoff with Greece. As deadlines come and go, European leaders have signaled they’re fed up.

Only Hope

“One can only hope that the internal processes on the Greek side lead to all involved in the negotiations finding a solution” on Saturday, Merkel told reporters after an EU summit ended in Brussels on Friday.

With Greece’s bailout set to expire at the end of the month, the offer by the creditor institutions hinges on the Greece taking further action on pensions and taxation. Those are sticking points that finance chiefs still need to untangle.

On the summit’s sidelines, Tsipras told Merkel and French President Francois Hollande that his government couldn’t understand why creditors insisted on harsh austerity measures, according to a Greek government official.

Nevertheless, technical talks are ongoing in preparation for the finance chiefs’ meeting, the fifth session of the so-called Eurogroup on Greece in little more than a week.

Saturday is shaping up to be “a crucial day not only for Greece but also for the euro area as a whole,” said EU Commission President Jean-Claude Juncker. “I’m quite optimistic, but not overly optimistic.”

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