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Greece Given Until Sunday to Settle Debt Crisis or Face Disaster

Frustrated European leaders gave Greece until Sunday to reach an agreement to save its collapsing economy from catastrophe after an emergency summit meeting here on Tuesday ended without the Athens government offering a substantive new proposal to resolve its debt crisis.

“The situation is really critical and unfortunately we can’t exclude the black scenarios of no agreement,” said Donald Tusk, the president of the European Council, warning that those possibilities included “the bankruptcy of Greece and the insolvency of its banking system” and great pain for the Greek people. Also looming ever larger was the prospect of Greece leaving the European currency union. Mr. Tusk said that the government of Prime Minister Alexis Tsipras had until Thursday to deliver a new plan to Greece’s creditors.

And for the first time, Grexit — Greece’s exit from the euro — has surfaced as a serious option. Jean-Claude Juncker, the president of the European Commission, the European Union’s executive arm, said at a brief news conference late Tuesday night that his staff had drawn up plans for several possible outcomes.

“We have a Grexit scenario prepared in detail,” he said. Mr. Juncker expressed fury at a barrage of verbal attacks on Greece’s European creditors by officials of Syriza, the left-wing party, led by Mr. Tsipras, that won Greek parliamentary elections in January on a platform of rejecting the austerity policies that were a condition of European bailouts. He singled out a remark by the recently departed finance minister, Yanis Varoufakis, accusing creditors of “terrorism.”

Asked if the eurozone would consider easing the debt burden on Greece — a key demand by Athens — Ms. Merkel emphasized that Greece would first be required to convince its lenders that it stood ready to meet the conditions for a new bailout. The decision by Mr. Tsipras to hold a referendum on whether to accept previous terms set by creditors only made matters worse, Ms. Merkel added.

In comments to reporters after the meeting, Mr. Tsipras struck an almost sunny tone by contrast, saying that the talks had been held in “a positive climate” and that his government would continue efforts to secure “a final exit” from the crisis. “The process will be fast,” he said, “beginning in the coming hours with the aim of concluding by the end of the week, at the latest.”

Tuesday’s efforts to break the deadlock got off to an inauspicious start when Greece’s new finance minister, Euclid Tsakalotos, on his second day in the job after replacing Mr. Varoufakis, failed to present a detailed plan at a meeting of finance ministers called to review Syriza’s demands after Greek voters rejected previous terms on offer. The failure to present concrete proposals turned what had been billed as a last-chance opportunity for Greece into another display of the substantive and stylistic gulf between Mr. Tsipras’s government and his country’s big creditors, starting with Germany and other European countries that use the euro.

Still, it appears that no one wants to take the blame for a Greek departure from the eurozone. That means that all sides seem ready to keep talking even as the crisis, which began more than five years ago, reaches new levels of intensity, and even as Greece hurtles toward a July 20 deadline to make a payment of 3.5 billion euros, or about $3.8 billion, to the European Central Bank. Many analysts say Greece cannot miss that payment without leaving the eurozone.