Tsipras banking on last-minute debt deal

Greek prime minister Alexis Tsipras is banking on a political deal to save his country with just days to go to prevent default.

However, countries are warning he needs to put his name to firm proposals when eurozone leaders meet in emergency session in Brussels on Monday.

The clock is ticking with the European Central Bank agreeing to extend further liquidity of around €3bn to the Greek Central Bank during a conference call yesterday.

While banks reported relative calm in Athens, more than €3bn had been withdrawn over the previous few days, and the ELA agreed yesterday was “enough to see them through Monday”, sources said.

Many are expecting capital controls to be introduced as early as Monday with perhaps a bank holiday declared while the Greek Central Bank waits for an emergency law to be rushed through the Greek parliament.

While the ECB does not have a say in imposing capital controls, in reality they hold the whip hand as they can decide to end emergency liquidity to the Greeks at any time.

A two-thirds majority of eurozone central bankers on the ECB can block ELA but now the majority would favour such a move, including Ireland according to a source.

Several countries, including Ireland, have said they were preparing contingency plans in case of a Greek default on its IMF repayment due on Tuesday week and their possible exit from the eurozone — though how this would be done is unknown.

Ireland’s exposure to Greece’s €320bn debt is €347m through the EU’s bailout fund the EFSF while, according to the Bank of International Settlements, Irish banks’ exposure in December was €57m.

Monday’s meeting is seen as the last throw of the dice for Greece and there was an air of pessimism in Luxembourg yesterday where finance ministers were meeting for a second day.

The plan is for technical experts from the member states to work on Monday morning on any proposals received from Greece over the weekend that would detail how they intend to carry out reforms and make some changes to elements of their Vat and pension systems.

Eurozone finance ministers are scheduled to meet in the afternoon, on the supposition that the morning session has produced the fiscal measures being sought over the past few months.

They would then go to the prime ministers of the 19 eurozone countries in the evening who would be expected to deal with more political issues like debt relief — something the IMF is pushing the EU creditors hard for.

They could also be expected to extend the current programme possibly to the end of the year and possibly kick off talks on a third bail-out package.

However, Spanish finance minister Luis de Guindos warned: “Those who think a deal with Greece can be simply political are wrong. There are politics, but there are rules too”.

Trust between Mr Tsipras and the other leaders is at an all time low with his reneging on a deal that commission president Jean-Claude Juncker thought he had concluded earlier this month, but which Tsipras repudiated on his return to Athens, and following his visit to Moscow where he apparently asked Vladimir Putin for help.