Though Wednesday’s emergency meeting of the eurozone’s 19 finance ministers failed to yield a plan of action, markets were buoyant on hopes that a deal will be reached in time for Greece to avoid a potential exit from the euro.
“We will need to find a solution that respects the positions of all parties, so this agreement will have to be based on the core values of Europe, democracy and the vote of the people, but also on the necessity to respect the European rules,” Greek leader Alexis Tsipras said.
Europe has been embroiled in another Greek crisis following the election of Mr Tsipras’ radical-left Syriza party last month. The new government was elected on a mandate to reduce the burden of the country’s bailout and the associated budget austerity measures, which Mr Tsipras blames in large part for the country’s economic woes.
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Despite a recent modest return to growth, the Greek economy is around 25 per cent smaller than it was before the crisis and poverty and unemployment have swelled.
Greece has huge debts, which stand at around 175 per cent of GDP and it has repayments this year that it will have trouble meeting without outside help.
Mr Tsipras wants Greece’s current bailout deal, which runs out at the end of the month, to be scrapped and replaced by a new one. But a group of eurozone countries, led by Germany, insists that discussions can only proceed if the current bailout programme is extended.
Without the bailout’s financial support, Greece faces bankruptcy and a possible exit from the eurozone, a development that would damage Greece’s economy and throw global financial markets into turmoil.
Mr Tsipras said his government was willing to launch further structural reforms “against tax evasion, fighting against corruption, fighting against a state based on clientelism”.
The European creditors, particularly Germany, are hesitant to give in to Greece too easily for fear of setting a precedent.
The €240 billion (£177bn) in rescue loans Greece is getting comes from taxpayers in other countries.
“We have all possible understanding for Greece, but they need to have all understanding for us too,” said Dutch prime minister Mark Rutte.
Many analysts think Europe will once again achieve a deal at the last-minute, with Greece agreeing to a bailout extension.