(REUTERS) European Council President Donald Tusk joined on Thursday (July 9) growing international calls for Greece to be granted debt restructuring as part of any new loan deal if it delivers convincing reforms to avert imminent bankruptcy.
The call was an implicit challenge to Germany, Athens’ biggest creditor, which has so far ruled out any write-offs as illegal and taken a restrictive view of reprofiling the debt to help Greece over a major repayment hump this year.
Greek Prime Minister Alexis Tsipras was finalising a tough package of tax hikes and pension reforms to send to euro zone authorities by midnight in a race to secure agreement at the weekend on a third financial rescue for his country.
Tusk, who is to chair a special euro group summit on Sunday that will decide Greece’s fate, hoped the plans would be concrete and realistic.
“The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation,” Tusk told a news conference after meeting with Luxembourg’s Prime Minister Xavier Bettel in Luxembourg.
Failure to reach a deal on Sunday, including releasing some money to enable Athens to cover debt service over the next few weeks could lead to a collapse of Greek banks next week, sending the economy into freefall and possibly catapulting the country out of the euro zone.
Tusk added that national parliaments should be convinced to vote in favour of helping Greece if European leaders can reach a good agreement on Sunday.
“I’m quite sure that if we have a good agreement on Sunday this is, I think, a strong enough recommendation also for the national parliaments,” he said.
If there is no agreement, all 28 European Union leaders will discuss measures to limit the damage from a Greek collapse, including humanitarian aid, possible border controls and steps to mitigate the impact on neighbours, EU officials said.