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World / Europe

Greece seeks new EU loan deal in race to avert collapse

(Agencies) Updated: 2015-07-09 07:02

Greece seeks new EU loan deal in race to avert collapse

French Prime Minister Manuel Valls delivers a government statement on Greece at the National Assembly in Paris, France, July 8, 2015. France will do all it can to keep Greece in the euro zone, Prime Minister Manuel Valls said on Wednesday, saying a "Grexit" could have major geopolitical consequences for Europe and damage the world economy. [Photo/Agencies]

"ADMISSION OF IMPOTENCE"

France, which has tried to mediate between Athens and Berlin, nailed its colours to the mast on Wednesday, warning of the perils of a "Grexit".

Socialist Prime Minister Manuel Valls told parliament in Paris: "Keeping Greece in the euro and therefore in the heart of Europe and the EU is something of the utmost geostrategic and geopolitical importance." To let Greece go would be "an admission of impotence", he added.

Despite the last-minute efforts to conjure up a deal, a Reuters poll of economists found the probability of Greece leaving the euro zone had risen to 55 percent from 45 percent last week, the first time it was deemed more likely than not.

Tsipras admitted that after winning power on a promise to end austerity, his government had "spent more time negotiating than governing" but he disappointed those who had hoped to hear concrete immediate measures to transform the shattered economy.

Having secured a referendum victory and the unprecedented support of the five main parties in parliament, Tsipras also made clear he wanted to act fast to pre-empt any possible revolt against the painful concessions he will need to make.

He was strongly critical of Greece's failings as a society, citing a history of clientelism, corruption, tax evasion that had "run riot", inequality and "the nexus of political and economic power".

While Athens has made strides since 2010 in turning around its public finances to post a budget surplus before debt service, it has lagged on implementing structural reforms.

In particular, it has fallen far short of targets on privatising state assets and struggled to improve tax collection and reform labour laws and a costly pension system.

Centrist EU lawmaker Sylvie Goulard told Tsipras: "In the words of a well known advertising slogan, 'Just do it!'"

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