Greek Prime Minister Alexis Tsipras appealed to his party's lawmakers on Friday to back a tough reforms package after abruptly reversing course and offering last-minute concessions to try to save his country from financial meltdown.
Tsipras asked his Syriza lawmakers to throw their weight behind the new proposals, urging them to help keep Greece in the euro.
"We are confronted with crucial decisions," a government official quoted Tspiras telling his Syriza lawmakers.
"We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not ... a mandate to take Greece out of the eurozone," he said.
It is unclear whether all the creditors would back the latest reforms package, which was strikingly similar to the terms Greece had rejected in a referendum that Tsipras had called in June.
German Chancellor Angela Merkel’s government withheld judgment on the package proposed by Greece in return for a 53.5 billion-euro ($59.4 billion) bailout, saying it will wait for creditors to make a first assessment.
The German response allows room for the package of spending cuts, pension savings and tax increases to go to the next stage without being shot down after it was submitted to creditor institutions late on Thursday.
Euro-area officials will examine the proposals in Brussels on Friday, while the Greek Parliament takes it up later the same day.
"There will be a judgment, probably later today," Dutch Finance Minister Jeroen Dijsselbloem, who will chair an emergency session of his euro-area counterparts scheduled in Brussels on Saturday. "If there’s broad support in Greece it gives more credibility.
"But also then we have to see whether the proposals are good, if it gets Greece really out of the crisis."
The package almost mirrored that from creditors on June 26, which was rejected by Greek voters in a July 5 referendum. The program request by Tsipras’s government would last a number of years, so it would have to go beyond what was discussed two weeks ago with tougher conditions, a German government official said by phone, asking not be named because the negotiations are private.
France, Greece's strongest supporter in the eurozone, rushed to offer praise with President Francois Hollande calling the offer "serious and credible."
The lenders' backing is crucial for eurozone leaders to support the proposals.
Dijsselbloem, European Commission President Jean-Claude Juncker, European Central Bank President Mario Draghi and International Monetary Fund head Christine Lagarde will make a first assessment of the plans by teleconference at 1100 GMT, EU sources said.
European markets rallied on the improved prospects for a last-ditch deal to keep Greece in the currency area, while Italian, Spanish and Portuguese bond yields fell, reflecting perception of reduced risk.
Nevertheless, Greece would have to overcome a hardening of attitudes toward it among its eurozone partners, including Germany, which has contributed more to Greek bailouts than any other country. Some, including a senior member of Merkel's party, greeted the latest reform proposals with skepticism.
Latvia's prime minister said flatly that he would not accept any proposal that includes a debt writedown.
In addition to asking for 53.5 billion euros to help cover its debts until 2018, Greece also wants a "reprofiling" of the country's long-term debt.
The plan could cause trouble for Tsipras at home, from hardliners in his own party as well as his junior coalition ally.
"The proposals are not compatible with the Syriza program," Energy Minister Panagiotis Lafazanis, who belongs to the hard-left wing in Syriza, told Reuters.
He declined to say how he would vote. "We will take it step by step."
A small group of pensioners held a protest outside the finance ministry in Athens and an anti-austerity demonstration is planned for Friday evening.
"The new measures are suffocating," said Irini Skordara, a 79-year-old pensioner, one of dozens of pensioners queuing outside a bank to withdraw their pension. "Better we live poor than to plunge into chaos."
Tsipras has called a snap vote in parliament asking for its backing to negotiate a list of "prior actions" — measures his government would take to convince creditors of its intent ahead of negotiations and to secure the first disbursement.
'The Right Choice'
The latest offer includes defense spending cuts, a timetable for privatizing state assets such as Piraeus port and regional airports, hikes in value added tax for hotels and restaurants, and slashing a top-up payment for poorer pensioners.
"The 'No' in the referendum appears to be turning into a 'Yes' from Tsipras," Commerzbank analyst Markus Koch said.
Greek banks have been closed since June 29, when capital controls were imposed and cash withdrawals rationed after the collapse of previous bailout talks. Greece defaulted on an IMF loan repayment the following day, and now faces a critical July 20 bond redemption to the ECB of 3.49 billion euros, which it cannot make without aid.
The country has had two bailouts worth 240 billion euros from the eurozone and the IMF since 2010, but its economy has shrunk by a quarter, unemployment is at more than 25 percent and one in two young people is out of work.
"The prime minister seems to have made the right choice between his party and the interest of Greece," an editorial in the center-right daily Kathimerini said.
"His decision to accept a tough package of measures will ensure the country stays in the euro. This is not the time for gripes and assessing the damage, what's most important is securing the country's interests and its place in the eurozone."
Germany made a small concession on Thursday by acknowledging that Greece will need some debt restructuring as part of the new program to make its public finances viable in the medium-term.
"What is most important is that the package of measures will have the parliament's authorization, not only from the two ruling parties but also the other three pro-European parties of the opposition — New Democracy, Potami and PASOK," the Greek newspaper Ethnos said.
"It is a consensus that has been delayed for five years, costing Greek people a lot. But what really counts is that it came about at last, perhaps at the most appropriate time."
Information from Bloomberg was also used in this report.
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