Euro zone argues into the night with Greece on bailout terms

Greek Prime Minister Alexis Tsipras speaks with German Chancellor Angela Merkel (L) and French President Francois Hollande at a euro zone leaders summit in Brussels, Belgium, July 12, 2015. [Photo/Agencies]

BRUSSELS - Euro zone leaders argued late into the night with near-bankrupt Greece at an emergency summit, demanding that Athens enact key reforms this week to restore trust before they will open talks on a financial rescue to keep it in the European currency area.

Leftist Prime Minister Alexis Tsipras was told to push legislation through parliament to convince his 18 partners in the euro zone to release immediate funds to avert a state bankruptcy and start negotiations on a third bailout programme estimated at up to 86 billion euros ($95.5 billion).

Six sweeping measures including tax and pension reforms must be enacted by Wednesday night and the entire package endorsed by parliament before talks can start, a draft decision by Eurogroup finance ministers sent to the leaders showed.

The document included a German proposal to make Greece take a "time-out" from the euro zone if it fails to meet the conditions. But a senior EU source said the idea was illegal and would be dropped from the summit statement if Tsipras accepted other deeply unpalatable terms.

Tsipras said on arrival in Brussels he wanted "another honest compromise" to keep Europe united.

But German Chancellor Angela Merkel, whose country is the biggest contributor to euro zone bailouts, said the conditions were not yet right to start negotiations, sounding cautious in deference to mounting opposition at home to more aid for Greece.

"The most important currency has been lost and that is trust," she told reporters. "That means that we will have tough discussions and there will be no agreement at any price."

If Greece meets the conditions, the German parliament would meet on Thursday to mandate Merkel and Finance Minister Wolfgang Schaeuble to open the talks on a new loan. Then Eurogroup finance ministers could meet again on Friday or at the weekend to formally launch the negotiations.

As the marathon summit dragged into early Monday morning, with breaks for private meetings between Tsipras and the French, German and EU leaders, markets in Asia-Pacific marked the euro down and bought safe-haven bonds. The absence of deal in Brussels also hit pre-market trading in the United States.