1. Germany says surprise Greek referendum plan shuts door on negotiations

Germany says surprise Greek referendum plan shuts door on negotiations

Germany all but buried negotiations to keep Greece from default on Saturday, saying a surprise decision by Greek Prime Minister Alexis Tsipras to call a referendum...

By: | Athens/brussels | Published: June 27, 2015 8:03 PM
Greece bailout

Greek Prime Minister Alexis Tsipras has announced referendum on July 5. (AP)

Germany all but buried negotiations to keep Greece from default on Saturday, saying a surprise decision by Greek Prime Minister Alexis Tsipras to call a referendum had left nothing to discuss but how to cope with failure.

Worried the country could default and even leave the euro zone, some Greeks queued up at cash machines to withdraw funds, though there were no signs of panic in Athens. Many sounded defiant, saying Tsipras had offered them an important chance to determine their own fate.

European Finance Ministers met in Brussels for what had been intended as a final negotiation for a deal to rescue Greece from defaulting on a big debt payment on Tuesday, when an international bailout expires.

But after they were blindsided by Tsipras’s surprise middle-of-the-night announcement that he rejected their offer and would put it to voters only after Tuesday’s deadline, several said all that remained to discuss was “Plan B” – how to limit the damage.

“We have no basis for further negotiations,” German Finance Minister Wolfgang Schaeuble said. “Clearly we can never rule out surprises with Greece, so there can always be hope. But none of my colleagues with whom I’ve already spoken see any possibilities for what we can now do.”

“Greece has left the negotiating table and so we are in a situation where on Tuesday the programme ends, because there are no more negotiations,” he said.

Finland’s Alexander Stubb called it “potentially a very sad day, specifically for the Greek people. I think with the announcement of this referendum we’re basically closing the door for any further negotiations.”

“There is pretty much a consensus inside the Eurogroup that we cannot extend the programme as it stands and consequently I would argue that Plan B becomes Plan A.”

With most Greek banks closed for the weekend, there was no sign of panic on the streets of Athens. Government officials said there was no plan to impose capital controls that would limit withdrawals.

But police tightened security around bank teller machines as lines formed at some teller machines in the darkness almost as soon as Tsipras’s early hours televised speech was finished.

The Bank of Greece said it was making “huge efforts” to ensure the machines remained stocked.

One branch of Piraeus bank that is normally open on Saturdays was shut, with around 100 people queued outside. A senior executive said the plan was to open the branch but staff were weighing security concerns because of the queue.

After months of bitter wrangling with the lenders, Tsipras announced that he would put the terms of the creditors’ “humiliating” offer to a popular vote on July 5.

Interior Minister Nikos Voutsis called for calm, telling lawmakers: “The game is not over for the country, its people, this parliament.”

Without a clear agreement on bailout cash, Athens is set to default on 1.6 billion euros of debt to the International Monetary Fund on Tuesday.

Its stricken banks have depended on emergency liquidity from the European Central Bank to stay open, and the banking system faces at the very least a further flood of withdrawals after billions have left in recent weeks.

Long lines were reported in some supermarkets in Athens as people stocked up with supplies.

However, along with the worry, there were also signs of defiance and almost relief after years of relentless austerity and seemingly endless rounds of crisis meetings with lenders.

“The referendum, I think, is necessary in the sense that we must send a message to Europeans that the Greek people are not enslaved, we are no longer under occupation,” said Elias Papachadzis, a 49-year-old Athenian resident.

Tsipras has asked for a few days’ extension of the bailout to accommodate the referendum, though Schaeuble’s remarks suggest it would be difficult to win a grace period.

The 40-year-old prime minister said he would respect the outcome of the vote. But he argued the lenders demands “clearly violate European social rules and fundamental rights”, would asphyxiate Greece’s flailing economy and aimed at the  “humiliation of the entire Greek people”.

Government ministers emerging from the cabinet meeting in Athens said they were confident Greeks would vote no and reject the bailout demands, leaving open the question as to whether the country had other options beside leaving the euro.

QUEUES AT BANKS

As parliament met to approve the referendum, the ruling Syriza party appealed to voters to reject the bailout and said the referendum was a key part of a wider rejection of austerity policies across the continent.

“The battle we’re fighting is not just for us, it is for dignity and democracy throughout Europe,” its political committee said in a statement.

The euro zone had offered to release billions in frozen aid if Greece accepted and implemented pension and tax reforms that are anathema to its leftist government, elected in January on a promise to end austerity.

Opposition parties attacked the government, saying Tsipras’s hardline stance had brought Greece to its knees.

“Tsipras brought the country to a total deadlock. Between an unacceptable agreement and a euro exit,” his conservative predecessor Antonis Samaras said. The referendum question was effectively a “yes” or “no” to Europe, he said.

The drama came after weeks of phone calls, face-to-face-discussions and several rounds of meetings among European leaders and its to sort out Greece’s troubles.

The creditors had laid out their terms in a document handed to Greece on Thursday. It said Athens could have 15.5 billion euros in EU and IMF funding in four instalments to see it through to the end of November, including 1.8 billion euros by Tuesday, as soon as the Greek parliament approved the plan.

The total is barely more than what Greece needs to service its debts over the next six months and contains no new money. Further funding would require a third bailout programme, which is politically impossible for the moment in Athens and Berlin.

The lenders also made a gesture towards Tsipras’ demands for debt relief by offering to reaffirm a 2012 pledge to consider stretching out loan maturities, lowering interest rates and extending an interest payment moratorium on euro zone loans to Greece, a senior EU official said.

But the demands come at the price of pension cutbacks, new reductions in public sector salaries, an increase in taxes on food, restaurants and tourism, and elimination of tax breaks on tourist islands. That has sparked protests in Greece, where one in four people are out of work.

For Updates Check Economy News; follow us on Facebook and Twitter

  1. No Comments.

Go to Top