Greece has one week to decide on bailout terms

Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe’s currency bloc and into economic ruin.

“Our inability to find agreement may lead to the bankruptcy of Greece and the insolvency of its banking system. And for sure, it will be most painful for the Greek people. I have no doubt that this will affect all of Europe, also in the geo-political sense. If someone has any illusion that it will not be so, they are naive. The stark reality is that we only have five days left to find the ultimate agreement,” European Council President Donald Tusk told a news conference on Tuesday.

“Until now I have avoided talking about deadlines, but tonight I have to say it loud and clear that the final deadline ends this week. All of us are responsible for the crisis and all of us have a responsibility to resolve it,” he continued to say.

Greek Prime Minister Alexis Tsipras has until Friday to present the proposal, but German Chancellor Angela Merkel said she hoped to have convincing reform commitments from Tsipras on Thursday so she could ask the German parliament to authorise negotiations on a new aid programme.

Merkel said she was “not exaggeratedly optimistic” for a solution.

At an emergency summit in Brussels on Tuesday, representatives of the 19-country euro zone said all 28 European Union leaders would meet on Sunday to decide Greece’s fate. The talks were organised after Greeks voted in a referendum on Sunday against a bailout that carried stringent austerity measures.

French President Francois Hollande said the European Central Bank would ensure that Greek banks had the minimum necessary liquidity to stay afloat until Sunday.

The situation in Greece worsened with banks closed for a second week, limited cash withdrawals and businesses feeling the crunch of demands from vendors for cash payments.

Tsipras sounded upbeat as he left the summit, even though many of the reforms demanded by his partners would inflict more pain on Greeks who voted at his behest to reject the austerity measures in return for financial aid.

“The discussion took place in a positive climate,” he said. “The process will be extremely fast. It starts in the coming hours, with the aim to conclude by the end of the week at the latest.”

He promised to work for a socially just deal that would bring a “final exit” from the crisis, return Greece to growth and restructure Greek debt to make it viable.