German leaders right and left unleashed a barrage of criticism at Greece Prime Minister Alexis Tsipras on Sunday for rejecting an offer that could have unlocked rescue funds to resolve the debt crisis.

Chancellor Angela Merkel’s allies and the leaders of her centre-left coalition partners condemned Greece’s leftist government, reflecting pent-up public frustration.

Germany is the biggest European contributor to the bailout programmes that have kept Greece afloat for the past five years. Opinion polls now show a majority of Germans want Greece to leave the euro zone.

Aside from the reform Communist Left party, which expressed support for Tsipras, German politicians used unusually strong language on Greece.

“The whole thing is just absurd,” said Volker Kauder, a Merkel ally and leader of her conservative party in parliament. He called Tsipras’s referendum idea “a trick to hold power.”

Kauder said Tsipras and Finance Minister Yanis Varoufakis “had failed with their strategy of trying to divide Europe”.

“They are leading their country into chaos,” he said, adding the European Central Bank must now take a tough line on Greece.

Merkel has called for a meeting with the leaders of all of Germany’s major parties and parliamentary groups on Monday to discuss Greece.

Vice Chancellor and Economy Minister Sigmar Gabriel, leader of the Social Democrats (SPD), said he was stunned that Tsipras had slapped away the European Union’s outstretched hand.

“I’m appalled that the Greeks turned down this most accommodating offer,” he told Sueddeutsche Zeitung newspaper. “It went further than anything before. Tsipras wants an offer without any conditions. Europe isn’t going to accept that.”

Foreign Minister Frank-Walter Steinmeier was also baffled.

“I don’t understand how an elected Greek government can urge its own people to reject Europe’s proposal and how it can take its own people hostage to try to squeeze more concessions from Europe,” he told Welt am Sonntag.

“The Greek government’s zig-zag course makes me speechless,” he added. “They need to take responsibility for its people and stop fuelling illusions.”

Hans Michelbach, a leader in the arch conservative Christian Social Union (CSU), urged the ECB to stop extending Greece any further loans at all. “Greece is on the verge of bankruptcy,” he was quoted in German media telling his party.

Anton Hofreiter, a leader of the opposition Greens, said it would be irresponsible if Greece leaves the euro. Bernd Riexinger, co-leader of the radical Left party, said he feared Greece’s euro exit could lead to the end of the currency.

IMF Chief Lagarde says disappointed in Greece; vows to continue talks

International Monetary Fund Managing Director Christine Lagarde said Sunday she is disappointed with the inconclusive outcome of talks with Greece, which is teetering on the brink of a default on its debt to the IMF.

At the same time, Lagarde said she is still willing to continue talks with the Greek government in the hope the country can make “appropriate structural and fiscal reforms” that are supported by “financing and debt sustainability measures.”

“I continue to believe that a balanced approach is required to help restore economic stability and growth in Greece,” she said.

Rift with Greece sets Europe into uncharted territory

Europe’s grand project to bind its nations into an unbreakable union by means of a common currency lurched into uncharted waters after EU governments refused funding to save Greece from defaulting on its debts.

While finance ministers of the other 18 euro zone states chorused their insistence that Greece would remain inside the bloc, exasperation with the leftist government’s decision to reject creditors’ final offer and instead call a referendum was manifest and some officials spoke privately of expelling Athens.

“They were playing poker,” said Austrian Finance Minister Hans Joerg Schelling after the Eurogroup that runs the currency met on Saturday without their Greek counterpart to discuss how to limit the fallout. “But in poker, you can always lose.”

After five months of negotiations with a Greek government elected to end the pain of austerity measures, EU leaders left a summit in Brussels on Friday believing a deal was close to roll over bailout funding and let Athens meet a repayment to the IMF on Tuesday and further obligations over the coming months.

But Prime Minister Alexis Tsipras provoked consternation by returning home to call a referendum for next Sunday on the offer and urging voters, weary of years of debt crises, to reject it.

Not for the first time, EU officials said Greek negotiators across the table were themselves taken by surprise by news from Athens. “They heard about the referendum on Twitter,” one said.

“Tsipras messed up,” a euro zone official said. “We did everything possible. They chose to blow up when we were so close to settling this in a way that would allow them to sell it.”

Amid political drama in Greece, where a clear majority wants to remain inside the bloc, the next few days present a major challenge to the integrity of a 16-year-old currency bloc, which many blame for massive unemployment in countries outside Germany and its neighbours in the richer north and west of Europe.

RISK MANAGEMENT

“We must do everything we can to fight any conceivable threat of contagion,” German Finance Minister Wolfgang Schaeuble said after a meeting at which the group effectively called for capital controls to ring-fence Greek banks haemorrhaging cash.

While acknowledging that only Greece – or possibly banks themselves – can instigate such a shutdown, the ministers said the European Central Bank, whose management meets on Sunday, should use its powers to stabilise markets.

“You have to count on Greece getting into acute problems in the coming days because of this decision,” said Schaeuble, some of whose conservative allies have made no secret of preferring to see Greece forced out of the euro zone. “That is difficult as we do not know how it will live up to its commitments.”

He and others, however, stressed their faith in stability mechanisms put in place after scepticism among investors pushed the euro zone to breaking point following a run of national bankruptcy scares in the wake of the global crash of 2008.

And, echoing his French Socialist counterpart, Michel Sapin, Schaeuble insisted after the fifth such deadlocked ministerial meeting in just over a week: “Greece remains a member of the euro zone and Greece remains part of Europe.”

But there is a divergence, certainly in tone, between Berlin and Paris. Sapin insisted the Eurogroup at least discuss the Greek request for an extension on Saturday but Schaeuble and most others had lost patience, sources close to the talks said.

Afterwards, Sapin said he was still ready to negotiate, a view repeated on Sunday in Paris by Prime Minister Manuel Valls.

But few EU leaders now trust this Greek government, whose calls for debt relief and criticisms of the bailout’s deadening effect on growth have been echoed by some leading economists.

When representatives of the three creditor institutions – euro zone governments, the ECB and IMF – met after Greek Finance Minister Yanis Varoufakis had left, participants quoted one senior official as joking that at least they could refer again to the lenders as the “Troika,” a term Varoufakis had insisted be dropped because Greeks associated it with external diktats.

Dutch Finance Minister Jeroen Dijsselbloem, the Eurogroup chairman, repeatedly referred to the possibility that the Greek parliament might reject Tsipras’s call for a referendum. But lawmakers dashed any prospect of a quick shift in Greek politics before markets open on Monday by voting for it to go ahead.

Still, Dijsselbloem insisted: “The process has not ended. It will never end probably. We will continue to work with Greece. Many things could happen, many scenarios are conceivable.”

As Greeks lined up to take cash from ATMs, it remained to be seen how financial mechanisms would work. If Greece fails, as it has said it will, to repay 1.6 billion euros to the IMF on Tuesday, that default can have knock-on effects.

Greece could stay in the euro zone but also issue a local currency to pay bills — a form of “Grexit” recommended on Sunday by influential German economist Hans-Werner Sinn of Ifo.

The ECB must also decide whether to keep supplying liquidity to Greek banks, once the government whose debt makes up a large chunk of their assets is no longer meeting its obligations and once the bailout programme formally expires on Tuesday.

POLITICAL FALLOUT

The central bank, under its president Mario Draghi, has been reluctant to take such a highly politicised decision. At the same time, political leaders have been reluctant to override the decisions of finance ministers lest that appear to be a signal that the rules of the common currency are open to manipulation.

Donald Tusk, a former Polish prime minister who chairs meetings of the 28 EU leaders, made clear at two summits in the past week that heads of government must nonetheless take their responsibilities in a crisis that affects the Union as a whole.

Early on Sunday, he was in contact with leaders again: “Greece is and should remain euro area member,” Tusk tweeted.

The Greek government’s demands have alienated its euro zone partners – from Germany and its northern allies, to southern states and Ireland whose governments face critics of their own bailout terms to easterners much less prosperous than Greece.

But with Britain already planning a referendum on leaving the EU, a breach in formal institutions worries those who fear economic drift. Complaints it lacks democratic accountability threaten the EU’s survival in its present form.

One official close to Saturday’s Eurogroup discussions said the issue of Greece leaving the euro, or the EU, was not raised – there is no obvious legal way to force it out of either. But, the official said, a “Grexit” could not be entirely ruled out.

Leaving Brussels on what he called a “sad day for Europe,” the outspoken Varoufakis warned that the rift with Athens would damage the euro zone’s credibility as a “democratic union” – “And I’m very much afraid that that damage will be permanent.”

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