July 6, 2015 / 9:59 AM / 2 years ago

France tries to keep path open for Greece accord

PARIS (Reuters) - France urged Greece on Monday to come back to the negotiating table with new proposals, insisting a cash-for-reform deal was possible even as the country's resounding 'No' vote prompted growing German calls for its exit from the euro zone.

President Francois Hollande, who welcomes Germany's Angela Merkel for talks in Paris on Monday before a euro zone summit on Tuesday, has sought in vain to bridge the gap between Greek Prime Minister Alexis Tsipras and other European leaders.

Hollande also has a tough balancing act at home. The far-right National Front is calling for the outright dissolution of the euro zone and the mainstream right wants "Grexit" while the left wing of his ruling Socialists want him to use his EU veto to defy German-led austerity and back the Greeks.

"There is a risk of (Greece) leaving the euro but there is no automatic exit, in the same way that the vote doesn't mean automatically that Greece stays in the euro. What will determine whether it stays or leaves is the quality of negotiations that will start," Finance Minister Michel Sapin said.

"If having won back their pride they can return to negotiations, so much the better ... "It is up to the Greek government to make proposals now," he told Europe 1 radio.

Sapin called on the European Central Bank not to cut current liquidity to the Greek banking system and reaffirmed that talks on Greek debt relief should be "no taboo".

"The debt burden in the months and years ahead is too high on Greece to allow it to get back on its feet again," he said.

Merkel is due to arrive in Paris around 6:00 pm local time (12.00 noon EDT) for talks in which she and Hollande will try to bridge the gap between France's more conciliatory line and the tough rhetoric heard across the political spectrum in Berlin. The two are expected to make a joint statement but not take questions.

DOMESTIC PRESSURES

The resurgence of the anti-EU FN and growing Euroscepticism among even mainstream French voters makes the Greek crisis all the harder to handle for Hollande, whose advisers fear "Grexit" could have repercussions for both the euro and wider EU.

Conservative ex-president Nicolas Sarkozy, looking to run again as president in 2017, has noisily attacked Hollande's handling of the saga and declared that Athens has de facto suspended its membership of the euro zone.

Retorting that Sarkozy was the "nutter" whose pro-austerity line as president had contributed to the crisis, Socialist Party chairman Jean-Christophe Cambadelis called for urgent talks.

"I would prefer a discussion, to reach a compromise that works, rather than pushing Greece out through the back door," Cambadelis, a backer of Hollande's center-leftist line, told France Info radio.

However the Greek 'No' has breathed new vigor into the traditional French left, which wants Hollande to go further. Already they successfully brought several thousand supporters onto the streets of Paris ahead of the referendum urging Greek voters to use the referendum to reject EU austerity measures.

Jean-Luc Melenchon, who quit the Socialists in 2008 to form the Left Party, signaled at the weekend he would himself run for president in 2017 on a platform of "up-ending the table".

Writing by Mark John; Editing by Keith Weir

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