BRUSSELS — Euro zone leaders argued into the morning Monday 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 persuade his 18 partners in the euro zone to release immediate funds to avert a state bankruptcy and start negotiations on a third bailout program estimated at up to $95.5 billion.
Six sweeping measures, including tax and pension reforms, must be enacted by Wednesday night and the entire package must be endorsed by Parliament before talks can start, according to a draft decision by Eurogroup finance ministers that was sent to the leaders.
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 European Union 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 that 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 weren't 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."
Related: Euro Zone Leaders: Greece Must Do More to Earn Rescue
If Greece meets the conditions, the German Parliament would meet Thursday to authorize Merkel and Finance Minister Wolfgang Schaeuble to open the talks on a new loan. Then Eurogroup finance ministers could meet again Friday or next 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 E.U. leaders, markets in Asia-Pacific marked the euro down and bought safe-haven bonds. The absence of a deal in Brussels also hit pre-market trading in the U.S.
Finance ministers said Greece needs 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 fire ministers who didn't support his negotiating position in a vote Friday and to make dissident lawmakers in his Syriza party resign their seats, people close to the government said.