“Promising things happened since I called #EuroSummit; Greek proposals first real proposals in many weeks,” EU Council President Donald Tusk tweeted before the 11th hour summit he convened yesterday. “Require assessment & further work.” French President Francois Hollande later agreed, calling the initiative “bolder and clearer.” Jean-Claude Juncker, the president of the European commission, dubbed the proposal a “major step.”

But as Eurozone leaders convened Monday night in an emergency session, sign-off on a deal was unlikely, with German Chancellor Angela Merkel calling it a "consultation summit" because an earlier meeting of finance ministers had not cleared a definitive proposal, citing the need for a detailed review. No statement was issued afterwards. (A list of the meetings appears at the end.)

The package put forth by Greece’s President Alex Tsipras, according to press reports and “leaked” documents on Twitter, included:

• • New taxes on businesses and the wealthy;
• • Increases in the Value Added Tax for select items but not electricity and medicine that will raise €800 million next year and €1.36 billion by 2016;
• • Reductions in pension costs by raising the effective age of retirement to 67 and increasing contributions from employers and workers (these savings would equal about 1.4 percent of Greece’s GDP by year-end 2016, exceeding creditors’ demands);
• • A cap on public-sector wages but no lay-offs; and,
• • A commitment to achieve a budget surplus of one percent of either GDP or national income this year, two percent next year, and three percent the year after 2016.

“I think this is time for a substantial and viable solution that would allow Greece to come back to growth within the eurozone,” Tsipras said.

Complicating the negotiations now is Tsipras’s demand for a restructuring of Greece’s debt, which exceeds 180 per cent of the country’s GDP. He, though, left unclear the trade-offs he would make in exchange for this relief.

The €245 billion five-year-old rescue program expires June 30. Without the release of the last tranche –€7.2 billion euros ($8.2 billion) -- Athens is set to default on a €1.54 ($1.8) billion payment to the IMF due June 30. Releasing that last tranche was blocked because Greece’s reforms and budget cuts were dismissed by the “troika” -- the International Monetary Fund, the European Central Bank, and the European Commission – as insufficient to reach debt-reduction targets Athens originally committed to when receiving the bailout.

Other large payments are owed to the IMF and the ECB this summer, heightening the need for an increase in EU funding beyond the original program.

Meanwhile, the ECB pumped more liquidity into Greek banks yesterday and today as the banks informally limited depositor withdrawals to €3,000 daily. “Another €1.6 billion-worth of deposits left the Greek banking system on Monday, following withdrawals of €2 billion on Friday and over the weekend according to two senior bankers,” the Financial Times reported. The bank also raised ceiling on emergency liquidity funds for Greek banks by €2 billion.

Concern over the pace of withdrawals dominated the meeting of Eurozone finance ministers, with the finance ministers of Germany and Ireland, Wolfgang Schäuble and Michael Noonan, pushing for ECB limits on its funds to Greek banks unless capital controls are imposed. Greece’s Finance Minister Yannis Varoufakis dismissed the idea, drawing an analogy to Cyprus, where such controls are in place. “We’re not an island with no borders and one airport,” he is quoted as saying.

Despite the ups and downs of officials’ assessment of the likely outcome, investors drove Europe’s stock market up sharply. “Greek stocks led the way, climbing 9%, while Germany’s DAX index surged 3.8%, its biggest one-day gain since August 2012,” the Wall Street Journal reported yesterday. “The pan-European Stoxx Europe 600 closed 2.3% higher.” The gains continued today with the Athens stock Exchange Index up nearly 5%, while the French and German markets rose 1% and the FTSE 100 edged ahead 0.25% rise. Yield on two-year sovereign bonds fell 197 basis points to 22.4 percent in morning trading in Athens. Analysts today expressed caution that the markets were overly confident than the fundamentals argue for Europe’s growth.

EUROPEAN INDICES RISE ON MONDAY

What matters now is time. Greece’s parliament must approve the package before the IMF payment deadline on Tuesday next week. Before that, Eurozone finance ministers are scheduled to meet Wednesday evening to sign off on the deal. Other complications are emerging. Most are fine points, including verification of the revenue from sales-tax rates a “chief sticking point,” Bloomberg reports.^[1] However, according to The Guardian, “The creditor side will put pressure on Greece to come up with further reforms to its VAT system and tear down protectionist barriers that it says artificially inflate prices for hundreds of products from food to medicines.”^[2]

BACK TO BACK MEETINGS MONDAY YIELDS PROGRESS

^[1]Mark Deen, Arne Delfs, and Christos Ziotis, “Greece Given 48 Hours to Reach Deal as EU Weighs Debt.” Bloomberg, June 23, 2015. http://www.bloomberg.com/news/articles/2015-06-22/eu-leaders-prod-greece-for-more-to-clinch-aid-accord-this-week

^[2]Jennifer Rankin, “Greek debt crisis enters crucial 48 hours as optimism over bailout rises.” The Guardian, June 23, 2015. http://www.theguardian.com/business/2015/jun/23/greek-crisis-bailout-deal-eurozone-crucial-optimism-rises