Renzi 'hopeful' on Greek deal

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Italian Prime Minister Matteo Renzi (L) with Greek counterpart, Alexis Tsipras. Photo: Andreas Solaro/AFP
12:55 CEST+02:00
UPDATED: Italian premier Matteo Renzi is hopeful that a deal to avert a Greek default will soon be reached after Athens presented its proposals on a fresh bailout.

Renzi is feeling so upbeat that he said an agreement might even by reached on Saturday, avoiding the need for another EU summit on Sunday, Ansa reported.

“Let’s hope we don’t see each other again on Sunday,” Renzi reportedly said after meeting Irish Prime Minister Enda Kenny in Rome, adding that he was “more optimistic than in the past”.

Meanwhile, French President Francois Hollande welcomed the latest proposals from Greece as "serious and credible".

"The Greeks have shown a determination to want to stay in the eurozone because the programme they are presenting is serious and credible," he said.

Germany, the eurozone's de facto paymaster, has been the driving force behind requiring austerity policies to accompany bailout help for Greece.

But Italy’s Foreign Minister Paolo Gentiloni said earlier this week that Greeks have their own leaders to blame for the crisis in their country, and not "mean Germans".

The current crisis " not the fault of mean Germans, but is the responsibility of the Greek governments which have followed one another these past 15-20 years," he told the Italian daily Corriere della Sera.

European stock markets rose on news of the Greek proposals. Germany's DAX index rose over 2.0 percent, France's CAC leapt more than 3.0 percent, and the FTSE index of the London exchange -- outside the eurozone - added more than 1.0 percent. The euro surged to $1.116.

Tsipras's gamble

The reforms agree to creditors' demands to overhaul pensions, increase sales taxes, and commit to privatisations. But they seek to limit changes on other thorny issues, including tax breaks for Greece's islands and cuts to military spending.

The proposal aims to procure a financing deal "for three years, debt adjustment and a front-loaded investment package of €35 billion ($38 billion)," a Greek government source said.

Tsipras is taking a political gamble by making any concessions to creditors' demands.

Hardliners in Syriza and coalition partner the Independent Greeks have obstinately rejected further austerity.

And Greek voters last Sunday roundly voted 'No' to accepting tough conditions attached to the last bailout that expired June 30th.

But the alternative for Greece is grim.

Germany has led a majority bloc of eurozone nations saying that, after two bailouts over the past five years totalling €240 billion euros, and €107 billion in debt forgiveness in 2012, Greece is looking like an irredeemable moneypit.

Kicking Greece out of the eurozone, and possibly even the EU itself, was an even call this week, according to analysts. But several on Friday said the odds of Greece keeping the euro had now improved.

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Greeks overwhelmingly want to keep the euro. Nearly two weeks of capital controls that have limited daily ATM withdrawals to €60 ($67) have alarmed them.

"The government has to find a deal with its European partners no matter what. We didn't vote 'No' to leave the eurozone," said a pensioner in Athens, Nikos Eftekidis.

But another pensioner, Giorgos, said the "government's proposed measures are very tough, I wasn't expecting that. That's not what the Greeks voted for."

Tsipras hopes the measures will pass muster with Germany and other hostile eurozone countries, and open the door to the creditors discussing another round of relief from Greece's suffocating €320 billion ($350-billion) mountain of debt.

Germany, Europe's largest economy, has ruled out forgiving more of Greece's debt, with Chancellor Angela Merkel saying "a classic 'haircut' is out of the question for me".

But her careful choice of words, and an acknowledgement from German Finance Minister Wolfgang Schaeuble that Greece was in need of debt restructuring, hinted Berlin might yet consider a different form of relief, perhaps involving pushing back repayments or lowering interest on loans.

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