Tusk urges creditors to mellow on Greek debt

European Council president Donald Tusk i has said Greece's creditors should consider debt sustainability if Athens tables realistic reform proposals, something it is meant to do by midnight today.

"The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation”, Tusk said on Thursday (9 July), after speaking with Greek leader Alexis Tsipras i by phone earlier in the day.

The comment comes on top of a widely publicised report by the International Monetary Fund (IMF), one of Greece's creditors, which also said the country's debt mountain is hindering growth.

IMF chief Christine Lagarde i repeated the stance on Wednesday, saying that while Greece needs structural reforms and fiscal consolidation, "the other leg is debt restructuring, which we believe is needed in the case of Greece for it to have debt sustainability”.

Debt sustainability - along with the various formats for getting there - has been a central sticking point for the Greek government, which says it cannot support its debt.

Germany, Athens' biggest eurozone creditor, has already rejected an outright debt write-off as illegal under the EU treaties, amid a general hardening of euro countries' attitudes to the Tsipras government.

The hardening came after Tsipras called a snap referendum on creditors' terms, resulting in a rejection of them by Greek citizens.

Since then, creditors have insisted Greece will have to commit to more reforms as the economic situation has deteriorated further, amid closed banks and capital controls, now in place for over a week.

Greece, for its part, asked for a three-year bailout on Wednesday, with the European Commission and the European Central Bank currently looking at whether it is eligible for a further (third) loan.

The loan request is meant to be accompanied by detailed reform proposals by midnight tonight. Once these are in, it will kick off a flurry of activity culminating in what is being billed as a make-or-break summit on Sunday evening (12 July).

The proposals will have to be assessed by technical experts on Friday before hitting the table of euro finance ministers on Saturday.

Euro leaders will then gather at 4pm on Sunday for a summit in Brussels, followed by all 28 leaders at 6pm.

Pressure has mounted on both sides to find a deal to prevent Greece exiting the eurozone, an event that is expected to cause economic trauma for Greece itself, while killing the idea that the euro is an irrevocable currency.

However, the 11th hour moves come after five months of mistrust between Brussels and Athens.

German chancellor Angela Merkel i Tuesday said she was not very optimistic that a deal could be reached, while several leaders, especially from poorer eastern states, openly talk of a Grexit. The European Commission has said it is actively preparing for Greece's euro exit.

Still, both sides are bound to look for a solution.

Tsipras leads an electorate that largely does not want to leave the euro, while Merkel - although domestic opinion has hardened on Greece - is loath to preside over a Grexit, for which she is likely to get the blame.

Tusk, for his part, struck an upbeat tone on Thursday, saying that a good agreement on Sunday should be enough to get through parliaments that have greenlighted another bailout.

"I'm quite sure that if we have a good agreement on Sunday this is, I think, a strong enough recommendation also for the national parliaments”, he said.

Tusk has also started to play a more active role in the Greece crisis, which until recently had been dominated in Brussels by European Commission president Jean-Claude Juncker.