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MORNING BID EUROPE-A daily note from our Economics/Politics Editors

* A daily view from European Affairs Editor Paul Taylor. The views expressed are his own.

LONDON, July 7 (Reuters) - It's G-Day for Greece.

Either Prime Minister Alexis Tsipras comes up with convincing proposals at a euro zone summit in Brussels this evening that persuade sceptical partners to reopen negotiations with Athens on a new loan, or his banks will run out of money within days, forcing the government to recapitalise them and print some form of new currency.

We've written often enough that meetings were last-ditch, 11th hour etc. Today is really the last chance. Most major bank economists now argue that Grexit - a disorderly Greece exit from the currency area - is the most likely outcome, not because anyone necessarily wants it, but because no one is prepared to make a grand concession to stop it.


Germany could theoretically shift and agree to include a stronger commitment to debt rescheduling in a new agreement, giving Tsipras grounds to make bigger concessions on painful reforms of pensions and labour laws.

But public opinion in Germany is pulling in the opposite direction, and Chancellor Angela Merkel is boxed in by her own conservative lawmakers, her hawkish finance minister and the orthodox German financial establishment.

Other countries have their own reasons for staying tough with Greece - the new east European members because their citizens are poorer than Greeks, get smaller pensions, and swallowed their own dose of austerity to get into the euro; the Iberian countries and Ireland (Other OTC: IRLD - news) because they too accepted austerity stoically in their bailout programmes and have returned to growth; and the Dutch, Finns and Belgians because they care as much as the Germans about upholding the rules.

So Tsipras' only allies around the table tonight will be France, Italy and the European Commission, and the person they have to convince is Merkel.

Summit fatigue is so great at this point, and the EU is so well versed in the art of muddling through, that we should not forget the historic nature of what is at stake tonight.

It's about whether a country can leave the euro zone and what that means for the future of an incomplete and flawed European Monetary Union.

It's about whether there may soon be a failed state in southeastern Europe with all the geopolitical consequences that could entail in a fragile region.

It's about whether the EU's 58-year-old project of "ever closer union" goes into reverse, and whether the objective forces of economic divergence finally overwhelm the political will on which the euro was founded.

The United States, China and Japan understand what's at issue and all have expressed concern in the last 24 hours that Europeans should find a solution to keep Greece in the euro. Yet at this point, that does not appear the most likely outcome.

If European leaders effectively abandon a defiant Greece to its fate, neither the euro zone nor the European Union will be the same again. Some, notably among the growing ranks of Eurosceptics around the continent, will think that is for the better.

The glee with which Nigel Farage, Marine Le Pen (Other OTC: PENC - news) and Geert Wilders greeted the prospect of the unravelling of European integration may give euro zone leaders pause when they meet in Brussels tonight.

(editing by John Stonestreet)