Germany, France press Greece to make fast, credible proposals

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Merkel Urges Greece to Act Quickly to Submit New Proposal

France and Germany told Greece on Monday to come up with serious proposals in order to restart financial aid talks, a day after Greeks voted overwhelmingly to reject more austerity.

German Chancellor Angela Merkel and French President Francois Hollande, the euro zone's most powerful leaders, said Athens must move quickly if it wants to secure a cash-for-reform deal with creditors and avoid crashing out of the single currency.

Raising the pressure on Greek Prime Minister Alexis Tsipras before a euro zone summit on Tuesday, the European Central Bank (ECB) decided to keep a tight grip on funding to Greek banks.

By voting decisively against tough bailout conditions, as Tsipras had urged them to do, Greeks have strengthened his negotiating hand. But the crisis remains acute, with the country's banks already closed for more than a week to avoid a massive outflow of money that could lead to their collapse.

Only emergency support from the ECB is keeping the banks afloat and saving Greece from a chaotic euro exit that would inflict more pain on its people and gravely damage the currency, the strongest symbol of the EU's drive for an "ever closer union" on a continent once ravaged by two world wars.

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Germany, France press Greece to make fast, credible proposals
ATHENS, GREECE - JULY 13: Pensioners talk to bank staff as they wait to collect their pensions outside a National Bank of Greece branch in Kotzia Square on July 13, 2015 in Athens, Greece. Eurozone leaders have reportedly made an 'agreement' on the Greek debt crisis in Brussels. After lengthy talks EU President Donald Tusk tweeted that a bailout programme was 'all ready to go'. (Photo by Christopher Furlong/Getty Images)
Demonstrators hold a poster against the austerity policy of Germany prior to a special session of the parliament Bundestag on negotiations with Greece for a new bailout in Berlin, Germany, Friday, July 17, 2015. (AP Photo/Markus Schreiber)
A woman burns the flag of the ruling party Syriza, surrounded by journalists, in front of the Greek parliament in Athens, during an anti-EU demonstration in Athens calling for a no to any agreement with the creditors on July 13 , 2015. Eurozone leaders struck a deal on a bailout to prevent debt-stricken Greece from crashing out of the euro forcing Athens to push through draconian reforms in a matter of days. AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
Leftist protester holds a greek flag in front of the Greek parliament as they take part an anti-EU demonstration in Athens calling for a 'NO' to any agreement with the creditors on July 13, 2015. Eurozone leaders struck a deal Monday on a bailout to prevent debt-stricken Greece from crashing out of the euro, forcing Athens to push through draconian reforms in a matter of days. AFP PHOTO / ANDREAS SOLARO (Photo credit should read ANDREAS SOLARO/AFP/Getty Images)
People read newspaper headlines in central Athens on July 13, 2015. Greece reached a desperately-needed bailout deal with the eurozone on July 13 after marathon overnight talks, in a historic agreement to prevent the country crashing out of the European single currency. The country's leftist Prime Minister Alexis Tsipras agreed to tough reforms after 17 hours of gruelling negotiations in return for a three-year bailout worth up to 86 billion euros ($96 billion), Greece's third rescue programme in five years. AFP PHOTO / ARIS MESSINIS (Photo credit should read ARIS MESSINIS/AFP/Getty Images)
A elderly man In a wheelchair waits with other pensioners outside a national bank branch to withdraw a maximum of 120 euros ($134) for the week in central Athens, Monday, July 13, 2015. A Eurozone summit has reached a tentative agreement with Athens on a bailout program that includes “serious reforms” and aid, removing an immediate threat of financial collapse in Greece. (AP Photo/Petros Giannakouris)
A bank employee distributes tag queue positions to elderly people to enter into the bank to withdraw a maximum of 120 euros ($134) for the week in central Athens, Monday, July 13, 2015. A Eurozone summit has reached a tentative agreement with Athens on a bailout program that includes “serious reforms” and aid, removing an immediate threat of financial collapse in Greece. (AP Photo/Emilio Morenatti)
Pensioners wait outside the main gate of the national bank of Greece to withdraw a maximum of 120 euros ($134) in central Athens, Thursday, July 9, 2015. With a deadline just hours away to come up with a detailed economic reform plan, Greece requested a new three-year rescue from its European partners Wednesday as signs grew its economy was sliding toward free-fall without an urgently needed bailout. (AP Photo/Emilio Morenatti)
A man passes in front of "NO" referendum posters in central Athens, Sunday, July 12, 2015. Greece has another chance Sunday to convince skeptical European creditors that it can be trusted to enact wide-ranging economic reforms which would safeguard its future in the common euro currency. (AP Photo/Petros Karadjias)
A presidential guard, right, stands guard at the tomb of the unknown soldier as riot police officers guard one of the entrances to the parliament during a demonstration of supporters of the no vote in central Athens, Sunday, July 12, 2015. Greece has another chance Sunday to convince skeptical European creditors that it can be trusted to enact wide-ranging economic reforms which would safeguard its future in the common euro currency. (AP Photo/Emilio Morenatti)
A man holds a tag queue position as he waits next to others pensioners outside the main gate of the national bank of Greece to withdraw a maximum of 120 euros ($134) in central Athens, Friday, July 10, 2015. Greece's Prime Minister Alexis Tsipras will seek backing for a harsh new austerity package from his party Friday to keep his country in the euro — less than a week after urging Greeks to reject milder cuts in a referendum. (AP Photo/Emilio Morenatti)
A pro-Euro demonstrator is seen behind a European Union flag during a rally in the northern Greek port city of Thessaloniki, Thursday, July 9, 2015. Hopes that Greece can get a rescue deal that will prevent a catastrophic exit from the euro rose on Thursday, after key creditors said they were open to discussing how to ease the country's debt load, a long-time sticking point in their talks. (AP Photo/Giannis Papanikos)
Pensioners wait outside the main gate of the national bank of Greece to withdraw a maximum of 120 euros ($134) in central Athens, Thursday, July 9, 2015. With a deadline just hours away to come up with a detailed economic reform plan, Greece requested a new three-year rescue from its European partners Wednesday as signs grew its economy was sliding toward free-fall without an urgently needed bailout. (AP Photo/Emilio Morenatti)
A pensioner leans against the main gate of the national bank of Greece as he waits to withdraw a maximum of 120 euros ($134) for the week in Athens in central Athens, Tuesday, July 7, 2015. Greek Prime Minister Alexis Tsipras heads Tuesday to Brussels, where he will try to use a bailout referendum victory to obtain a rescue deal with European leaders. (AP Photo/Emilio Morenatti)
Greek soldiers leave the ancient Acropolis hill, after they raised the Greek flag, in Athens, on Tuesday, July 7, 2015. Greek Prime Minister Alexis Tsipras was heading Tuesday to Brussels for an emergency meeting of euro zone leaders, where he will try to use a resounding referendum victory to eke out concessions from European creditors over a bailout for the crisis-ridden country. (AP Photo/Petros Giannakouris)
In this photo taken on Saturday, July 11, 2015, Mary Cromba, left, owner of a beachside restaurant is seen with her employees, as she prepares to add paper in the cashier machine in the village of Psatha about 65km (40 miles) west of Athens. The meal sales tax clause in the bailout proposal considered Sunday by European leaders would boost it from 13 percent to 23 percent, while hotels would see room sales taxes rise from 6.5 percent to 13 percent. (AP Photo/Spyros Tsakiris)
A butcher makes calculations inside his shop in central Athens, Tuesday, July 7, 2015. Greek Prime Minister Alexis Tsipras heads Tuesday to Brussels, where he will try to use a bailout referendum victory to obtain a rescue deal with European leaders. (AP Photo/Emilio Morenatti)
Pensioners wait outside the main gate of the national bank of Greece to withdraw a maximum of 120 euros ($134) in central Athens, Thursday, July 9, 2015. With a deadline just hours away to come up with a detailed economic reform plan, Greece requested a new three-year rescue from its European partners Wednesday as signs grew its economy was sliding toward free-fall without an urgently needed bailout. (AP Photo/Emilio Morenatti)
A man stands-in front of a discount shop that reads in Greek " you give a little you take a lot" in Athens, on Tuesday, July 7, 2015. Greek Prime Minister Alexis Tsipras was heading Tuesday to Brussels for an emergency meeting of eurozone leaders, where he will try to use a resounding referendum victory to eke out concessions from European creditors over a bailout for the crisis-ridden country. (AP Photo/Petros Giannakouris)
A man sells items in central Athens, Tuesday, July 7, 2015. Greek Prime Minister Alexis Tsipras heads Tuesday to Brussels, where he will try to use a bailout referendum victory to obtain a rescue deal with European leaders. (AP Photo/Emilio Morenatti)
A woman pays at a market in central Athens, Tuesday, July 7, 2015. Greek Prime Minister Alexis Tsipras heads Tuesday to Brussels, where he will try to use a bailout referendum victory to obtain a rescue deal with European leaders. (AP Photo/Emilio Morenatti)
Red spray paint covers a French-language Bank of Greece sign to read 'Bank of Merkel' in reference to German Chancellor Angela Merkel in Athens, Monday, July 6, 2015. Greek Finance Minister Yanis Varoufakis resigned Monday, saying he was told shortly after Greece's decisive referendum result that some other eurozone finance ministers and the country's other creditors would appreciate his not attending the ministers' meetings. (AP Photo/Thanassis Stavrakis)
A homeless sleeps at the entrance of a closed store with posters reading ''No'' in central Athens, Monday, July 6, 2015. Greece’s Finance Minister Yanis Varoufakis has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
Homeless sleep on the ground in central Athens, Monday, July 6, 2015. Greece’s finance minister has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
Needy people pray before eating at the Church-run Galini charity's soup kitchen in central Athens on Monday, July 6, 2015. Greece’s finance minister has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
A construction worker carries a wooden plank near a board with the Greek flag that reads in Portuguese: "I love you Greece, because of the courage against the imperialism!", in Lisbon, Monday, July 6, 2015. Greece's Finance Minister Yanis Varoufakis has resigned following Sunday's referendum in which the majority of voters said "no" to more austerity measures in exchange for another financial bailout. The board also reads in Greek: "No", in reference to Sunday's referendum. (AP Photo/Francisco Seco)
Needy people eat at the Church-run Galini charity's soup kitchen in central Athens on Monday, July 6, 2015. Greece’s finance minister has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
A pensioner holds a tag queue position as he lines up before entering into a bank to withdraw a maximum of 120 euros ($134) for the week in Athens, Monday, July 6, 2015. Greece’s Finance Minister Yanis Varoufakis has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
A bank employee distributes tag queue positions to elderly people to enter into the bank to withdraw a maximum of 120 euros ($134) for the week in Athens, Monday, July 6, 2015. Greece’s Finance Minister Yanis Varoufakis has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
People wait to enter into the national bank of Greece in Athens, Monday, July 6, 2015. Greece’s finance minister has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
A bank employee speaks to elderly people before allowing them to enter into the bank to withdraw a maximum of 120 euros ($134) for the week in Athens, Monday, July 6, 2015. Greece’s Finance Minister Yanis Varoufakis has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
Elderly people argue with a bank worker as they wait to be allowed into the bank to withdraw a maximum of 120 euros ($134) for the week in Athens, Monday, July 6, 2015. Greece’s Finance Minister Yanis Varoufakis has resigned following Sunday’s referendum in which the majority of voters said “no” to more austerity measures in exchange for another financial bailout. (AP Photo/Emilio Morenatti)
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In a warning shot to the banks, the ECB raised the amount of collateral they must post for any loans. The move does not affect the lenders right away, but served as a reminder that their fate lies in its hands.

In a sign that Athens is keen to seek a new deal, Greece's combative finance minister, Yanis Varoufakis, resigned, apparently under pressure from other euro zone finance ministers who did not want him as a negotiating partner.

Tsipras had earlier promised Merkel that Greece would bring a proposal for a deal to Tuesday's summit, a Greek official said. It was unclear how much it would differ from other proposals rejected in the past.

Late on Monday, the prime minister's office said Tsipras had spoken with EU Commission President Jean-Claude Juncker and Hollande. His office did not provide details about the conversations.

After talks with Hollande earlier in the day in Paris, Merkel said, "We say very clearly that the door for talks remains open and the meeting of euro zone leaders tomorrow should be understood in this sense."

But, she added, the requirements were not in place at the moment to start negotiations about a concrete euro zone bailout fund program.

A German finance ministry official dismissed the idea that Berlin would be willing to concede some debt relief to Athens, a position that Tsipras' government has long sought.

But an ECB governing council member, Ewald Nowotny, held out the possibility of bridge funding for Greece while a new bailout program is being negotiated. "Whether it's possible is something that has to be discussed," he told Austrian state TV.

Hollande said, "It's now up to the government of Alexis Tsipras to offer serious, credible proposals so that this can be turned into a program which gives a long-term perspective, because Greece needs a long-term perspective in the euro zone with stable rules, as the euro zone itself does."

NOT MUCH TIME

Hollande stressed that there was not much time left, while Merkel urged Greece to put proposals on the table this week.

Dutch Prime Minister Mark Rutte said Greece must accept deep reforms if it wants to remain in the euro.

He told his parliament that creditors had no plans to draft a new proposal after the "No" vote and Greece had to come up with a new proposal ahead of Tuesday's summit.

"They must make a decision, this evening or tonight, what they are going to do," Rutte said. If the Greeks went to Brussels demanding changes because they felt supported by the "No" vote and refused reforms "then I think it is over".

After the Greek 'No' vote, gloomy officials in Brussels and Berlin said a Greek exit from the currency area now looked ever more likely.

But they also said talks to avert it would be easier without Varoufakis, an avowed "erratic Marxist" economist who infuriated fellow euro zone finance ministers with his casual style and indignant lectures. He had campaigned for Sunday's 'No' vote, accusing Greece' creditors of "terrorism".

His sacrifice suggested Tsipras was determined to try to reach a last-ditch compromise with European leaders.

Greece's political leaders, more accustomed to screaming abuse at each other in parliament, issued an unprecedented joint statement after a day of talks at the president's office backing efforts to reach a deal with creditors.

They called for immediate steps to reopen banks and said any deal must address debt sustainability - code for reducing Athens' crushing debt - but gave no hint of concessions from the Greek side towards its creditors' demands for deep spending cuts and far-reaching reforms of pensions and labor markets.

The chief negotiator in aid talks with international creditors, Euclid Tsakalotos, a soft-spoken academic economist, was appointed finance minister.

To win any new deal, Greece will have to overcome deep distrust among partners, above all Germany, Greece's biggest creditor and the EU's biggest economy, where public opinion has hardened in favor of cutting Greece loose from the euro.

Greek Unemployment Rate Over Time | FindTheData

DEFIANCE

While jubilant Greeks celebrated their national gesture of defiance late into the night, there was gloom in Brussels.

European Commission Vice President Valdis Dombrovskis said there was no easy way out of the crisis and the referendum result had widened the gap between Greece and othereuro zone countries.

An EU source said barring some major Greek concession, euro zone leaders were more likely to discuss on Tuesday how to cope with a Greek exit, and how to reinforce the remaining currency union, than any new aid program for Athens.

While France and Italy have emphasized the importance of more talks, a big majority of the 19 euro zone governments favor taking a hard line with Greece, diplomats said, and Germans are running out of patience.

Merkel's vice chancellor, Social Democrat Sigmar Gabriel, told a news conference, "If Greece wants to stay in the euro, the Greek government must quickly make a substantive offer that goes beyond its willingness thus far."

The Greek bank association chief said an eight-day-old bank closure that has crippled the economy would continue on Tuesday and Wednesday and the daily cash machine withdrawal limit of 60 euros would be maintained. There were long lines at ATMs, where 20-euro banknotes have largely run out.

In a sign of mounting preoccupation at the country's financial state, Tsipras told ECB President Mario Draghi during a phone call on Monday that there was an immediate need to lift the capital controls.

"BRAVE CHOICE"

After five years of economic crisis and mass unemployment, Greek electors voted 61.3 percent 'No' to the bailout conditions already rejected by their radical leftist government, casting Greece into uncharted territory.

"You made a very brave choice," Tsipras said in a televised address as jubilant supporters filled Athens' central Syntagma Square to celebrate the act of defiance towards Europe's political and financial establishment.

The euro slid against the dollar after the setback for Europe's monetary union, and European shares and bonds took a hit when markets opened after the weekend. But the losses were contained and there was no sign of serious contagion to other weaker euro zone sovereigns.

Analysts with several international banks said a "Grexit" from the euro zone was now their most likely scenario.

EU officials said it would be hard to give Greece easier terms, as its economy has plunged back into recession since Tsipras' Syriza party won power in January. Public finances were now in far worse condition than when the rejected bailout deal was put together.

But in Athens, citizens were unrepentant at their vote.

"I voted 'No' to austerity; I want this torture to end," said Katerina Sarri, 42, a mother of two.

(Additional reporting by Renee Maltezou, Deepa Babington, Lefteris Karagiorgiannis and Angeliki Koutantou in Athens, Paul Carrel and Andreas Rinke in Berlin, Julien Ponthus in Paris; Writing by Paul Taylor; Editing by Giles Elgood, Mark Trevelyan, Toni Reinhold)

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