Eurozone Meets Without Greece to Assess Stability

27 Jun 2015 | Author: | No comments yet »

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

ATHENS, Greece (AP) — Greece’s place in the euro currency bloc looked increasingly shaky on Saturday, when eurozone countries rejected a monthlong extension to its bailout program and the prime minister called for a risky popular vote on the country’s financial future. Eurozone finance ministers have refused to extend Greece’s bailout programme beyond Tuesday – meaning Athens is at risk of defaulting on a €1.5bn IMF payment.

It would be up to the European Central Bank (ECB) to decide whether to continue providing emergency liquidity funding to the Greek banking system, he added.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.

The Greek government have announced a snap referendum on 5 July – and the country’s Finance Minister, Yanis Varoufakis, had requested an extension of several weeks until it had taken place. Mr Varoufakis said that what had been proposed to Greece “did not contain any plan for giving, instilling hope in investors, both Greek and non-Greek, in consumers, in depositors”. 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. However, Eurogroup President Jeroen Dijisselbloem has said it will not be possible to provide a temporary extension until the result of the ballot is known.

I am disappointed with that,” Mr Noonan said. “We are going into totally uncharted waters.” His comments were echoed by other finance ministers. Throughout the ups and downs of the recent negotiations, Greeks have by and large resisted the urge to withdraw money from their accounts, pinning their hopes on a last minute deal with the country’s creditors. Without an extension or more loans from creditors, Greece is likely to be in arrears on a debt payment Tuesday and its banks face the risk of collapse.

But as the deadline for Greece’s €1.6bn payment to the IMF looms, and with Mr Tsipras calling for a referendum next week, lines have begun to form outside ATMs and bank branches in Athens. The Greek government’s call on the people to vote against a proposed bailout deal from international creditors on July 5 angered many of its eurozone partners. “We must conclude that, however regretful, that the program will expire on Tuesday night. One bank has imposed withdrawal limits of €3,000 per account, and some ATMs have handwritten “empty” signs on them – although I managed to withdraw cash at two separate locations. That is the latest date that we could have reached an agreement,” said Jeroen Dijsselbloem, the top eurozone official, effectively ending five months of fruitless negotiations. “The Greek authorities have asked for a month extension. But Mr Varoufakis has told reporters that Greece was “still fighting” for a bailout deal, adding that there is still “the possibility of negotiating in the coming days to improve the agreement”.

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. He said he was obliged to respond based on the sovereign will of the Greek people, who would be asked to accept or reject the offer in the referendum question in just over a week.

Speaking earlier in Brussels, Mr Tsipras slammed his country’s creditors, telling reporters: “The European Union founding principles were democracy, solidarity, equality and mutual respect. 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. 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. The EU’s actual shortcomings do not, in any way, negate this…” Karamanlis said. “Foolish choices that undermine this principle push the country to adventures, with unpredictable and possibly irreversible consequences.” “The people are not in a position to decide.

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