Greece demands $120 billion payout for WWII

Greece and its creditors are at loggerheads as the new government refuses to back down in its bid to renegotiate its massive bailout while Germany and the EU have led calls for Athens to be more realistic.

Germany's economy minister has rejected calls by Greece for Berlin to pay reparations for World War II damages by the Nazis, insisting the issue was concluded 25 years ago.

"The likelihood is zero," said Sigmar Gabriel, who is also Germany's vice chancellor, in response to new Greek Prime Minister Alexis Tsipras's claim that his country had a "moral obligation" to request reparations and payment for a forced wartime loan.

European Commission chief Jean-Claude Juncker told the Greek government it "must not assume that the overall mood in Europe has changed so much that the eurozone will unconditionally adopt the government programme" of Mr Tsipras.

Athens is under pressure to woo its international creditors as quickly as possible because the European portion of Greece's EU-IMF bailout is due to expire at the end of the month.

A follow-up meeting of eurozone finance ministers next Monday is seen as the last chance for Greece to back down and request an extension to the current bailout or reach an interim deal.

Mr Juncker also said he did not expect any new deal on Athens' demands to be reached at an EU summit in Brussels on Thursday, despite Mr Tsipras saying he was "optimistic that we can reach a compromise".

German Chancellor Angela Merkel yesterday pressed Greece to present a "sustainable" finance plan as Athens' insistence sparked fresh fears of a euro exit.

With time running out for Athens to convince the EU to grant it a temporary loan lifeline, Ms Merkel held out the slimmest of hopes for a deal.

"I've always said I'll wait for Greece to come with a sustainable proposal and then we'll talk about this," she said.

Greece will plead its case for stop-gap bridging finance at a special meeting of eurozone finance ministers tomorrow, with a view to clinching an austerity-free reform deal to run from September 1.

"What counts is what Greece will put on the table at that meeting, or perhaps a few days later," Ms Merkel said.

Greece will propose that "toxic" fiscal obligations under the present EU-IMF bailout deal be replaced by a 10-step reform blueprint drawn up in cooperation with the Organisation of Economic Cooperation and Development, a Greek finance ministry source said Monday.

OECD chairman Angel Gurria will visit Athens today to confer with the government on the reforms to be tabled.

In addition, Athens is only ready to deliver a surplus of 1.5 percent of output, rather than the 3.0 percent forecast for this year under the previous conservative administration, the ministry source said.

And Greece continues to request its share of European Central Bank profits from Greek state bonds.

So far, Greece's suggestions have left the European Commission and main paymaster Germany cold.

The new leftist Greek premier's approach also appeared to baffle German Finance Minister Wolfgang Schaeuble.

"If they want our help, there needs to be a programme" agreed with creditors, rather than emergency assistance, the German minister said, adding: "I still don't understand how they (Greece) want to do it."

Mr Schaeuble, who is known for his acerbic comments on Greece's situation, added: "It is not us who need a programme. Germany has no need of a programme."

Greek Finance Minister Yanis Varoufakis said he would go to Brussels as "neither a 'yes man' nor a 'no man'," but promised to temper his aim to please the Greek people with his "duty to find a solution".

Fears that the country is heading into the financial mire were fuelled by Tsipras's rousing speech to parliament Sunday in which he swore he would stick to his anti-austerity guns.

British Prime Minister David Cameron yesterday moved to draw up contingency plans for a Greek exit from the euro, or "Grexit".

The Greek stock exchange plunged nearly 5.0 percent on Monday, led by the banking sector, after Tsipras refused to apply for an extension to the much-loathed 240 billion euro ($364 billion) bailout, with Berenberg financial analysts putting the chances of a Grexit at 35 percent.

Varoufakis had earlier warned of the damage a Greek exit could inflict on the eurozone, telling Italian state television that Athens' departure would spark a domino effect leading to the collapse of the single currency bloc.

The eurozone "is like building a house of cards. If you take out the Greek card, the others will collapse," he said.

Swiss global financial services UBS said "crunch time" was approaching but thought a compromise was possible through an extension of debt maturities and reduction in Greece's primary surplus.