Euro zone argues into the night with Greece on bailout terms

Youths hold a placard that reads 'Do we stay in Euro?' during an anti-austerity protest in central Athens, Greece, July 12, 2015. [Photo/Agencies]

EU officials said the biggest of several sticking points was Germany's insistence that Greek state assets worth 50 billion euros be placed in a trust fund in Luxembourg to be sold off with proceeds going directly to pay down debt. The EU says experts evaluate Greek assets earmarked for privatisation at just 7 billion euros.

One diplomat said that was tantamount to turning Greece into a "German protectorate", stripping it of more sovereignty.

Another diplomat said Merkel had declared the matter a "red line" for Germany and insisted that the International Monetary Fund be fully involved in any third bailout for Greece, despite resistance from Athens.

Tsipras, for his part, was insisting on a stronger commitment by the creditors to restructure Greek debt to make it sustainable in the medium-term.

An EU official said several options were being discussed to give Greece bridging funds once it passed the laws, including releasing European Central Bank profits on Greek bonds, tapping an emergency fund run by the European Commission, or bilateral loans from friendly countries such as France. Two official French sources denied that any bridging loan was planned.

Finance ministers said Greece needed 7 billion euros of funding by July 20, when it must make a crucial bond redemption to the European Central Bank, and a total of 12 billion euros by mid-August when another ECB payment falls due.

Some diplomats questioned whether it was feasible to rush the package through the Greek parliament in just three days. Tsipras is set to sack ministers who did not support his negotiating position in a vote last Friday and make dissident lawmakers in his Syriza party resign their seats, people close to the government said.