Athens and eurozone leaders appeared to have found a possible way forward in their attempts to keep Greece in the eurozone at a summit Tuesday, the first positive signal in weeks of deadlock.
Diplomats said a temporary program was in the works to buy time for finding a longer-term solution, though the last five months have often seen such hopes dashed.
“There’s political will for another good go [at an agreement],” Greek Finance Minister Euclid Tsakalotos told reporters in Brussels.
Sources said the next steps would involve the Greeks submitting a written proposal for a third bailout program as a sign of good faith in return for temporary financing, which would then be approved by the Eurogroup in a conference call on Wednesday.
That would give the institutions representing creditors — the European Commission, European Central Bank and International Monetary Fund — time to work on the longer-term proposal before yet another summit on Sunday, which would give final approval.
“The atmosphere is much better than what it looks like, everyone is playing ball,” said an EU diplomat.
The meeting began with Greek Prime Minister Alexis Tsipras speaking, which EU sources said was an opportunity for him to show he was negotiating in good faith.
An EU source in the room said Tsipras proposed a third program “that is not even there yet” and that the European Central Bank was looking for a “political nod” from Eurozone leaders to increase emergency liquidity assistance to cash-starved Greek banks.
“At this point it will not be about content, but rather the procedure involved with ESM assistance, including obtaining a go-ahead from the German Bundestag before any formal talks can begin,” the source said.
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Earlier in the afternoon, the lack of any document from the Greeks to circulate among leaders at the emergency summit had cast serious doubt on whether they could make any progress towards a deal before the Greek economy collapses.
Greece’s creditors had insisted that Athens present a specific plan before negotiations could go forward.
“We’re starting on the wrong foot,” Malta’s Prime Minister Joseph Muscat told reporters on his way into the summit, where other leaders initially aired similar views. “It’s looking likely that it is a waste of time.”
Tsakalotos, on his second day as Greece’s finance minister, was apparently confused by the expectation that he should arrive at the Eurogroup meeting earlier Tuesday with a completely new proposal.
However, a source familiar with the negotiations said the Greeks “came with clear ideas. They haven’t circulated a paper at the Eurogroup, but nevertheless they are finalizing that document right now as we speak.”
Pierre Moscovici, the European economics commissioner, said the leaders “have assurances that it will come very soon.”
The scramble to come up with a new bailout plan has been made much more difficult by Sunday’s referendum, in which Greek voters rejected conditions set by creditors for more aid. Tsipras needs to quickly show some progress or he could face a political backlash at home, where banks have been closed for more than a week.
Tsipras arrived at the summit with what he views as a popular mandate to demand a reduction in his country’s debt load. He has made cutting public debt — a suffocating 180 percent of GDP — a key condition, but that ultimatum is running into political pushback from other countries in the common currency area, including Germany.
Peter Kažimir, Slovakia’s finance minister, ruled out the demand Tuesday: “Debt write-down is an absolute red line for my country.”
The demand is particularly unpalatable in countries like Slovakia and the Baltic republics, which have undertaken deep and painful reforms to make their economies competitive and wonder why Greece is incapable of doing the same.
“We are not willing to ease Greece’s debt burden,” said Finland’s Alexander Stubb, another hardliner.
Debt relief is an idea long promoted by the IMF; it issued a report just before the referendum finding that “haircuts on debt will become necessary” if reforms falter, which was touted by Tsipras as proof that there needs to be a rethink on Greece’s debt burden.
But there is a growing danger that Tsipras has left things too late. His surprise call for a referendum destroyed what little trust remained between him and his fellow EU leaders.
“It’s clear what kind of a deal needs to be done,” said Nicholas Spiro of Spiro Sovereign Strategy, a debt advisory firm. “There needs to be a firm commitment on the part of Athens to undertake fiscal and much-needed structural economic reforms. On the part of Germany there needs to be a firm commitment to some form of debt relief. But for the life of me I can’t see how these two sides can bridge the divide.”
Despite his popular mandate, time and money are both running out for Tsipras. Greece defaulted on a €1.5 billion repayment to the IMF last week. It is due to repay €3.5 billion to the European Central Bank on July 20, money it doesn’t have.
Greek banks are still closed. There are reports of problems in supplying drugs and other necessities, and growing worries that the country will not have the money to pay for crucial oil and gas imports.
Tara Palmeri and Jacopo Barigazzi contributed to this article.