European Ministers Deny Greek Request to Extend Debt Talks

27 Jun 2015 | Author: | No comments yet »

Europe is entering ‘unchartered waters’ with Greek referendum, Finance Minister Michael Noonan warns.

Europe is entering “unchartered waters” following the Greek government’s decision to call a referendum on further austerity next weekend, Finance Minister Michael Noonan warned in Brussels.

Some Greek banks were beginning to limit cash transactions as hundreds of people lined up outside branches and drained cash machines after Prime Minister Alexis Tsipras called a referendum that could decide his country’s fate in the euro. He added that there had been room for a deal until the television announcement by Prime Alexis Tsipras in the early hours of Saturday morning when he told Greeks about the surprise vote. “I found out at 12 O’Clock last night that the Greeks have unilaterally discontinued negotiations. The surprise call marked the most dramatic twist yet in five-month negotiations between Greece and its lenders, plunging the cash-strapped nation into uncharted waters and risking a default and capital controls as hopes for an aid agreement faded. 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.

Customers queue to use an automated teller machine (ATM) outside a National Bank of Greece SA bank branch in Thessaloniki, Greece, on Saturday, June 27, 2015. I am disappointed with that,” Mr Noonan said. “We are going into totally uncharted waters.” His comments were echoed by other finance ministers. The sides are haggling over the reforms the country needs to make in exchange for more financial aid but have managed to only increase uncertainty over the country’s future. Jeroen Dijsselbloem, the Dutch finance minister who chairs the committee of eurozone finance ministers, said the Greek government had ended any hopes of a negotiated deal. “It has closed the door on further talks while the door was still open, in my mind.” German finance minister Wolfgang Schaeuble said the negotiations had clearly ended and there were “no grounds for further discussions.” Greece has a debt due on Tuesday and its bailout program expires the same day, after which it is unclear whether its banks would be able to avoid collapse, an event that could be the precursor to Greece leaving the euro.

This responsibility obliges us to respond to the ultimatum through the sovereign will of the Greek people,” Tsipras said in a televised address to the nation. The Greek Parliament is debating and will vote at midnight Saturday on the government’s request for a referendum, as finance ministers from the 19 euro countries, Greece’s main creditors, gathered to discuss the situation in Brussels. Yiota Kardogianni, a manager at a branch of Piraeus Bank SA, said cash withdrawals were limited at 3,000 euros ($3,350) daily and ATM withdrawals at 600 euros. 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”.

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.” “We are going to suggest to them that under these circumstances we should have an extension for a few weeks to ensure that the people are heard,” he told Reuters. At the Piraeus Bank branch, a clerk came out and stuck a piece of paper on the ATM that read, “lefta telos,” or “out of money.” Some people standing in line cursed at the clerk, who said the machine might be replenished later in the day.

Stavroula Kyriakou, a 78-year-old pensioner who was next in line to withdraw money, broke into tears. “I stood in line for 30 minutes,” she said. “I need money to buy pills for my heart condition and get some meat and vegetables. Germany’s Schaeuble said: “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.” With most Greek banks closed for the weekend, there was no sign of panic on the streets of Athens. After withdrawing more than 30 billion euros as the anti-austerity Coalition of the Radical Left, or Syriza, took power, depositors are now reacting to the latest twist in the five-month standoff with European leaders and creditors.

But police tightened security around bank teller machines as lines formed at some in the darkness almost as soon as Tsipras’s early hours televised speech was finished. Without the bailout funds, Athens is due to default on 1.6 billion euros in repayments to the International Monetary Fund on Tuesday, pushing Greece closer to being forced out of the euro, causing chaos for its economy and financial markets. I am very afraid.” Greece’s banks are the Achilles’ heel of the country’s economy, and of its government’s negotiating position, because they are being squeezed between deposit flight and the mounting impatience of many officials at the European Central Bank, which must approve emergency lending by Greece’s central bank to cover the banks’ loss of deposits.

A default would not necessarily lead to Athens leaving the 19-nation single currency area, but is expected to pave the way for it, worrying European leaders who fear it would undermine the principle that membership is irrevocable. Greece’s parliament convenes on Saturday at noon local time (0900 GMT) to approve the referendum plan, just before euro zone finance ministers are due to meet in Brussels to discuss an aid offer from European and IMF to Greece.

After months of wrangling with the lenders, Tsipras announced that he would put the terms of the creditors’ “humiliating” offer to a popular vote on July 5. Sharp limits on ATM withdrawals, wiring money abroad, and other financial transactions could deal a further heavy blow to Greece’s already depressed economy. One European official said the ministers would discuss a “Plan B” on preparing to limit the damage from a Greek default to Greek banks and other euro zone countries and markets if Athens rejected their offer. At a Eurobank branch in Holargos, Nikos Stavrakakis, a 47-year-old lawyer, withdrew the few hundred euros he had left in his checking account. “I think the ECB will pull the plug next week and there will be capital controls,” he said. “Tsipras is playing a very dangerous game with the referendum.

Greek officials said they nevertheless intended to continue negotiating with creditors anyway. “I think it’s right to ask the people their opinion. With the new currency less valuable than the euro, the government would have to write off a chunk of its foreign loans — mainly owed to eurozone countries — and many companies and households would go bankrupt.

But that only works if the head of government lives up to his responsibilities to lead,” said Martin Shulz, the German Social Democrat speaker of the European parliament, who has long urged EU leaders to give Tsipras a fair hearing. Former Prime Minister George Papandreou sought one in 2011 as he struggled to impose painful cuts demands by lenders, but was ousted over the call and his administration replaced by a government of technocrats. Once word got out that the bank wouldn’t open, one elderly woman fainted. “Tsipras said he would turn things around, but things are only going to get worse,” said Stavros, a 61-year-old retired sailor, who was lining up to withdraw his pension. The latest drama came after weeks of phone calls, face-to-face-discussions and several rounds of meetings among European leaders to sort out Greece’s troubles. He said he was initially planning to go to the bank on Monday but decided to line up on Saturday when he heard about the government’s referendum plans.

In the latest round, German Chancellor Angela Merkel and French President Francois Hollande met Tsipras on the sidelines of an EU summit to coax him to accept an offer to fill Athens’ empty coffers until November in return for painful reforms. The euro dropped in value slightly on international markets after the referendum was called. “The nation’s most vital interests demand that the country remains at the heart of Europe.

Those who are in position to decide are the ones that know a bit more and they must explain and simplify the issues for the people,” said Grigoris Kanellopoulos, 41, a street seller of bagels. “No (to the creditors’ proposals), no to any more measures. The lenders also made a gesture towards Tsipras’s 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. That has sparked protests in Greece, where one in four people are out of work. (Additional reporting by Karolina Tagaris, Vassilis Triandafyllou, Matthias Williams, Lefteris Papadimas and Gina Kalovyrna in Athens, Erik Kirschbaum in Berlin, Robin Emmott, Alastair Macdonald and Jan Strupczewski in Brussels; Writing by James Mackenzie and Peter Graff) But the demands come at the price of pension cutbacks, new reductions in public sector salaries, an increase in taxes on food, eateries and tourism, and elimination of tax breaks on tourist islands.

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