By James G. Neuger
(Bloomberg) — European leaders set a Sunday deadline to rescue Greece, saying otherwise they’ll take the unprecedented step of propelling the country out of the euro.
At a summit in Brussels Greece’s anti-austerity government was given five days to make new economic reform proposals that could earn another aid package and save it from financial ruin.
“We have only a few days left to find a solution,” German Chancellor Angela Merkel told reporters late Tuesday after euro- area leaders met in Brussels. She conceded that she is “not especially optimistic.”
Sunday now looms as the climax of a five-year battle to contain Greece’s debts, potentially splintering a currency that was meant to be irreversible and throwing more than a half- century of economic and political integration into reverse.
“We have a Grexit scenario prepared in detail,” European Commission President Jean-Claude Juncker said, using the shorthand for expulsion from the now 19-nation currency area.
At the center of the storm is Greek Prime Minister Alexis Tsipras, who shored up his domestic position and claimed he’d gained leverage over creditors by winning last week’s anti- austerity referendum with 61 percent of the vote. Tsipras said after the summit that Greece had outlined its new proposals.
“Our inability to find agreement may lead to the bankruptcy of Greece and the insolvency of its banking system,” European Union President Donald Tusk said. “If someone has any illusions that it will not be so, they are naive.”
