Greece draws up reforms as emergency debt meeting looms

Greece's radical new premier meets Tuesday with the head of the OECD over reforms he is seeking to replace the "toxic" terms of his huge bailout, with Athens still at loggerheads with its international creditors.
The meeting between Prime Minister Alexis Tsipras and Angel Gurria, chairman of the Organisation of Economic Cooperation and Development, comes ahead of an emergency meeting of eurozone finance ministers Wednesday.
In those talks, Greece will plead its case for stop-gap financing, with a view to clinching an austerity-free reform deal to run from September 1.
Tsipras is pushing for creditors to loosen the tough conditions of the 240-billion-euro ($270-billion) bailout Greece was forced to accept in the aftermath of the 2007 financial crisis, to allow it to spend more in order to give its economy a boost.
Athens will propose that the "toxic" fiscal obligations of its present EU-IMF bailout deal -- which has seen it saddled with debt worth 1.75 times the country's entire annual economic output -- be replaced by a 10-step reform blueprint drawn up in cooperation with the OECD, a Greek finance ministry source said Monday.
But Germany and the EU have led calls for Tsipras, whose radical left Syriza party stormed to victory in elections last month, to be more realistic.
European Commission chief Jean-Claude Juncker told Greece it "must not assume that the overall mood in Europe has changed so much that the eurozone will unconditionally adopt" Tsipras' proposals.
Juncker also said he did not expect any new deal to be reached at a full EU summit in Brussels on Thursday, a day after the emergency finance ministers' meeting, despite Tsipras saying he was "optimistic that we can reach a compromise".
German Chancellor Angela Merkel on Monday pressed Greece to present a "sustainable" finance plan that respects the "basic rules" of the bailout programme, as Athens' insistence sparked fresh fears of a euro exit.
Greece is under pressure to woo its international creditors as quickly as possible because the European portion of the EU-IMF bailout is due to expire at the end of the month.
Tsipras and Gurria will meet in Athens on Tuesday to confer on the reforms to be tabled.
The new government is only ready to deliver a budget surplus of 1.5 percent of GDP, rather than the 3.0 percent forecast for this year under the previous conservative administration, a finance ministry source said.
And Greece continues to request its share of European Central Bank profits from Greek state bonds.
So far, the suggestions have left the European Commission and main paymaster Germany cold.
The Greek approach appeared to baffle German Finance Minister Wolfgang Schaeuble, who said: "I still don't understand how they want to do it."
He added: "If they want our help, there needs to be a programme" agreed with creditors, rather than emergency assistance.
- Rising fears of 'Grexit' -
Growing fears of a Greek default and eurozone exit -- dubbed a "Grexit" -- pushed Wall Street lower on Monday, following a gloomy lead from European markets.
Greek stocks plunged nearly 5.0 percent, led by the banking sector, after Tsipras refused to apply for an extension to the bailout, with Berenberg financial analysts putting the chances of a Greek eurozone exit at 35 percent.
Asian markets also slipped Tuesday, with Tokyo down 0.78 percent and Sydney 0.32 percent in early trade, as investors took fright at Tsipras's rousing speech to parliament Sunday in which he swore he would stick to his anti-austerity guns.
British Prime Minister David Cameron on Monday moved to draw up contingency plans for a "Grexit".
A follow-up meeting of eurozone finance ministers next Monday is seen as the last chance for Greece to back down and request an extension to the current bailout or reach an interim deal.
Varoufakis had earlier warned of the damage a Greek exit could inflict on the eurozone, comparing the single currency bloc to a house of cards.
"If you take out the Greek card, the others will collapse," he told Italian state television.
Swiss global financial services UBS said "crunch time" was approaching but thought a compromise was possible through an extension of debt maturities and reduction in Greece's primary surplus.
In comments likely to fuel the flames, Germany's economy minister rejected calls by Greece for Berlin to pay reparations for World War II damage by the Nazis, insisting the issue was concluded 25 years ago.
"The likelihood is zero," said Sigmar Gabriel.