Sunday Deadline Set for Greece on Debt Plan

Brussels: Frustrated European leaders gave Greece until Sunday to reach an agreement to save its collapsing economy from outright catastrophe after an emergency summit meeting here on Tuesday ended without the Athens government offering a substantive new proposal to resolve its debt crisis.

"The situation is really critical and unfortunately we can't exclude the black scenarios of no agreement," said Donald Tusk, the president of the European Council, warning that those scenarios included "the bankruptcy of Greece and the insolvency of its banking system" and great pain for the Greek people. Also looming ever larger was the prospect of Greece leaving the European currency union.

"Until now I have avoided talking about deadlines," Tusk, a former prime minister of Poland, told reporters after a day of fruitless meetings. "But tonight I have to say it loud and clear - the final deadline ends this week."

"I have no doubt that this is the most critical moment in our history," Tusk added. And Sunday was not the only deadline fast approaching for the Greeks: Tusk said that the government of Prime Minister Alexis Tsipras had until Thursday to deliver a new plan to Greece's creditors.

Then, on Sunday, all 28 European Union leaders will gather at yet another emergency summit meeting for what might well be the last chance to resolve a crisis that began more than five years ago and, after a period of calm following huge bailout deals, resumed with fierce intensity in January following the victory of Syriza, the left-wing party led by Tsipras, in Greek parliamentary elections.

Deadlines have repeatedly slipped in the past, but the emergency gathering on Sunday might really be a crunch point. "This could be the last meeting about Greece," Prime Minister Matteo Renzi of Italy told reporters on Tuesday night.

In a sign of how the previously taboo topic of "Grexit" - Greece's exit from the euro - has surfaced as a serious option, Jean-Claude Juncker, the president of the European Commission, the European Union's executive arm, said at a brief news conference late Tuesday night that his staff had drawn up plans for several possible outcomes. "We have a Grexit scenario prepared in detail," he said.

Juncker expressed fury at a barrage of verbal attacks on Greece's European creditors by Syriza officials, particularly a remark made by the recently departed Greek finance minister, Yanis Varoufakis, accusing creditors of "terrorism."

"Who are they and who do they think I am?" Juncker said, sputtering with rage. He asserted that he was "strongly against" Greece leaving the euro but "I cannot prevent it if the Greek government is not doing what we expect it to do to respect the dignity of the Greek people."

Tuesday's efforts to break the deadlock got off to an inauspicious start when Greece's new finance minister, Euclid Tsakalotos, on his second day in the job after replacing Varoufakis, failed to present a detailed plan at a meeting of finance ministers called to review Syriza's demands after Greek voters rejected previous terms on offer from Europe in a referendum last Sunday.

The failure to present concrete proposals turned what had been billed as a last-chance opportunity for Greece into another display of the substantive and stylistic gulf between Tsipras' government and his country's big creditors, starting with Germany and other European countries that use the euro.

Chancellor Angela Merkel of Germany, speaking after an inconclusive meeting attended by Tsipras and leaders of 17 other countries that use the euro, made it clear that eurozone leaders were determined to set a very high bar for Athens before the Thursday deadline.

"There are only a few days left for a discussion on what's going to happen in the future," she said. Yet if a Greek offer made by Thursday won a preliminary green light, that would "pave the way for negotiations," she said.

The decision by Tsipras to hold the referendum on whether to accept previous terms by creditors had only made matters worse for Greece's chances of a favorable deal, Merkel added.

Still, it appears that no one wants to take the blame for a Greek departure from the eurozone. That means that all sides seem ready to keep talking even as the crisis reaches new levels of intensity, and even as Greece hurtles toward a July 20 deadline to make a payment of 3.5 billion euros, or about $3.8 billion, to the European Central Bank. Many analysts say Greece cannot miss that payment without leaving the eurozone.

Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels, agreed that time was running out to keep Greece in the currency union. "If there is no progress whatsoever this week, the prospects for Greece staying in the eurozone would become grim," Véron said.

The continuation of emergency financing for Greek banks by the European Central Bank "is clearly dependent on the likelihood of an agreement between Greece and its creditors," Véron said. But if that source of aid is "stopped and no agreement is in sight, it is difficult to imagine a scenario in which Greece stays in the eurozone for long," he said.

The day's events continued what has become a pattern of crossed wires and mutual incomprehension between Greece and its creditors, frustrating expectations that the dismissal on Monday of Varoufakis, a combative former professor, might drain some of the poison or at least uncertainty from Greece's tumultuous relations with the rest of Europe.

Yet Tsakalotos, surprised his peers by turning up for the emergency meeting with only a vague outline of Greece's proposal for breaking the long standoff. A person with direct knowledge of the talks, who requested anonymity because of the sensitivity of the closed-door meeting, said that Tsakalotos had at least struck a far less abrasive tone than his predecessor and seemed open to constructive discussion.

Some of the finance ministers, summoned to Brussels on Tuesday for the sixth crisis meeting in three weeks, expressed deep frustration at what they considered a further delay by Greece. Late last month, Athens infuriated fellow European countries by calling off negotiations as they came close to yielding a deal and announcing it would instead call a referendum on creditors' terms that the Tsipras government then denounced as unacceptable and the work of "extremist conservative forces."

In Athens, a Greek government official, speaking on the condition of anonymity to discuss a sensitive diplomatic matter, said the Greek proposals, once they arrived in Brussels, would be a revised version of measures submitted early last week in a letter from Tsipras to creditors. Those proposals largely matched the ones Tsipras called on Greek voters to reject. But the official, without elaborating, said the revised offer would reflect the outcome of Sunday's referendum.

Shortly before meeting Merkel and other leaders in Brussels, Tsipras spoke by telephone with President Barack Obama and explained Greece's position. The White House said that the president told the Greek prime minister that it was crucial that both sides reach "a mutually-acceptable agreement."

Obama also spoke with Merkel on Tuesday and the White House said the two leaders agreed that a deal to keep Greece in the eurozone was "in everyone's interest."

Greece's departure from the euro would not necessarily destabilize other weaker members of the eurozone or spread havoc in global markets, which have so far reacted relatively calmly to Greece's troubles. Yet it would upend one of the European Union's fundamental principles, a commitment to "ever closer union" in place since 1957, and throw into reverse decades of steady integration.

Finance ministers were in some cases even encouraging the idea that Greece should leave. Janis Reirs, finance minister of Latvia, a small Baltic nation that endured its own grinding austerity program and has now returned to economic growth, said indicated that a Greek departure might even be beneficial.

"If in a system there is an element that doesn't work, the departure of this element won't harm the system and in some cases can even be positive," Reirs said in response to a question about whether Greece might have to ditch the euro.

Merkel said she did not know whether Greece would put forward viable proposals as demanded by Thursday to avoid a disruptive rupture with Europe. "Are we convinced that Greece is in a position to table this in such a way?" asked Merkel, "I am not in a position to say so at this point in time otherwise I would not have said that we need to meet on Sunday," she said.

Merkel said the leaders of all 28 European Union member states would meet on Sunday because any decision would affect future members of the single currency. The presence of leaders from the full bloc could also be needed to approve European Union humanitarian aid for Greece in case a bailout deal for the country remains out of reach.