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Greek Prime Minister Alexis Tsipras is expected to present new proposals to an emergency euro zone summit on Tuesday, under pressure from European leaders to come up with credible ideas as his country's banks face potential meltdown.
With Greek lenders down to their last few days of cash and the European Central Bank tightening the noose on their funding, Tsipras must persuade the bloc's other 18 leaders, many of whom are exasperated with five years of crisis, to open negotiations fast on a new loan to rescue Greece.
The leaders of Germany and France, the currency area's two main powers, said after conferring on Monday that the door was still open to a deal to save Greece from plunging into economic turmoil and ditching the euro.
But Chancellor Angela Merkel, under pressure in Germany to cut Greece loose, made clear it was up to Tsipras to come up with convincing proposals after Athens spurned the tax rises, spending cuts and pension and labor reforms that were on the table before its 240 billion euro bailout expired last week.
European Commission President Jean-Claude Juncker, under suspicion from both sides for trying to broker a last-minute deal, told the European Parliament: "There are some in the European Union who openly or secretly are working to exclude Greece from the euro zone."
He did not name names but may have been referring to German Finance Minister Wolfgang Schaeuble, who has made no secret of his scepticism about Greece's fitness to stay in the euro.
From the Greek side, the key to making any deal politically acceptable will be to win a stronger commitment from Merkel and other lenders to reschedule Greece's giant debt burden, which the International Monetary Fund says is unsustainable.
Without some firmer pledge of debt relief, neither Greece nor the IMF is likely to accept a deal. But that may be more than Germany and its northern allies can swallow.
"The door is open to negotiations, but there isn't much time left and the situation is urgent both for Greece and for Europe," French President Francois Hollande said in a joint media appearance with Merkel in Paris.
At stake at the emergency summit beginning at 6 p.m. (2.00 p.m. EDT) in Brussels is more than just the future of Greece, a nation of 11 million that makes up just 2 percent of the euro zone's economic output and population.
If Greek banks run out of money and the country has to print its own currency, it could mean a state leaving the euro for the first time since it was launched in 1999, creating a precedent and fuelling doubts about the long-term viability of an incomplete European monetary union.
"Even if it did not trigger a short-term domino effect, the integrity of the euro zone would come under fresh threat with each episode of political uncertainty within member countries," said Thibault Mercier, an analyst at BNP Paribas.
Read more at Reuters
