Obama Steps Into Greek Crisis

Obama has been forced to intervene in Greece's protracted debt negotiations after European leaders openly threatened Athens with an imminent eurozone exit.

Barack Obama has been forced to intervene in Greece's protracted debt negotiations after European leaders openly threatened Athens with an imminent eurozone exit during a stunted round of emergency talks.

The US president spoke to Alexis Tsipras, the Greek prime minister, and Angela Merkel, the German chancellor, as eurozone leaders gathered in Brussels last night (Tuesday), in his first personal involvement for months.

Mr Obama and Ms Merkel "agreed it is in everyone's interest to reach a durable agreement that will allow Greece to resume reforms, return to growth, and achieve debt sustainability within the eurozone", said a White House statement.

Greece's negotiating team - led by new finance minister Euclid Tsakalotos - had earlier arrived empty-handed to the first finance ministers' meeting since the country's No vote against their lenders' bail-out conditions. Greece's failure to put forward any new reforms - in return for the bail-out cash it desperately needs to reopen banks and lift draconian capital controls - caused exasperation among its European partners.

Ilmars Rimsevics, an ECB governing board member and Latvia's central bank chief, admitted the single currency was now openly preparing for a future without Greece. "The Greek nation has been brave and has voted itself out of the eurozone," he said.

"A state, which has not kept its promises, which has not done the necessary homework, might be out of the eurozone one day. And it means that the eurozone might become stronger," he added.

The Greek government is expected to make a formal request for a new two-year rescue programme today. A similar deal, using funds from the European Stability Mechanism - the bloc's joint rescue fund - was rejected out of hand last week.

Athens wants a firm commitment to write off some portion of its euros 330bn (pounds 235bn) debt mountain, as well as short-term bridging funds to help to stave off a euros 4.3bn default to the European Central Bank on July 20.

The cash-starved government, whose banks have been shut for over a week and where ATM machines are running out, is likely to be cut off from all central bank funds should it fail to make the payment, hastening its exit from the single currency.

But finance ministers said they would be ready to "assess and analyse Greece's financing needs and the debt sustainability" if a credible programme was put before them.

Mr Tsipras' government is fast running out of patience among its remaining allies.

Italian prime minister Matteo Renzi said Greece had to decide if it wanted to stay in the euro: "In order to stay in the euro, rules need to be followed," he said.

European leaders may hold another emergency summit on Sunday.

"We have very little time" said Jeroen Dijssebloem, head of the bloc's finance ministers.

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