ATHENS: Greece requested a two-year rescue deal with the EU in a race down to the wire before its current bailout expires Tuesday, after admitting it would fail to make an IMF payment.

The eleventh-hour appeal came amid a flurry of actions aimed at preventing a chaotic eurozone exit which could have untold repercussions on international markets and the European Union.

The Greek premier’s office said Athens has requested an agreement with the European Stability Mechanism “to fully cover its financing needs and the simultaneous restructuring of debt”.

The ESM, created in 2012, is designed as a means to handle financial crises in the eurozone and keep the single currency region stable.

The move prompted quick reaction from Eurogroup chief Jeroen Dijsselbloem who tweeted that the eurozone finance ministers would hold a conference call later Tuesday to discuss the Greek request.

Athens’s proposal followed European Commission chief Jean-Claude Juncker’s attempt to clinch a “last-minute” solution before the referendum.

Juncker told the Greek premier that a deal would involve accepting reform proposals that Greece’s EU-IMF creditors made at the weekend and backing a ‘Yes’ vote in Sunday’s plebiscite.

Prime Minister Alexis Tsipras has urged Greeks to vote ‘No’ and reject creditors’ tough reform demands in a referendum on Sunday, but has also pleaded for an extension of the European part of its bailout which expires Tuesday to keep Athens afloat.

Chancellor Angela Merkel of Germany, Europe’s paymaster, said she would not discuss any new Greek request until after Sunday’s referendum.

“Before the referendum Germany can’t negotiate a new request” for assistance, Merkel was quoted as saying by a lawmaker of her conservative Christian Democrats.

Europe’s main stock markets ended the day firmly lower Tuesday with London’s FTSE 100 index falling 1.50 per cent, the DAX 30 in Frankfurt down 1.25pc and the CAC 40 in Paris losing 1.63pc.

The Athens market, like the country’s banks, is closed this week.

On Wednesday, the ECB’s governing council will meet and discuss the crisis in Greece.

It was the ECB’s decision on Sunday to not increase emergency funding for Greek banks that pushed Athens to close lenders and impose capital controls.

The ECB will probably stick with its current stance on Greek banks but could take measures to ensure problems don’t spread to other eurozone markets.

‘CREATING BAD HISTORY’: Whether an accord was in the offing or not, Greece said it would miss a 2200 GMT deadline to make a debt repayment of about 1.5 billion euros ($1.7bn) to the International Monetary Fund.

It would then become the first country to default on the IMF since Zimbabwe in 2001, and the wealthiest, in terms of standards of living.

Negotiations fell apart after Tsipras called a shock referendum on Greece’s creditors’ latest proposals.

Tsipras sought to calm nerves on Monday by leaving the door open, saying the July 5 plebiscite on the creditors’ cash-for-reform plans would leave Greece “better armed” in the fight for a debt deal.

EU leaders Merkel, France’s Francois Hollande and Italy’s Matteo Renzi have warned that the referendum would effectively be a vote in Greece’s place in the eurozone.

Published in Dawn, July 1st, 2015

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