The Latest: Cyprus Could Agree to Write Off Greek Debt

29 Jun 2015 | Author: | No comments yet »

Greece crisis live: banks to close on Monday and capital controls imposed after ECB caps funding at current levels.

Cyprus’ finance minister says his own bailed-out country could consider writing off 330 million euros ($370 million) in rescue loans to Greece if there is a deal with other euro area member nations to lighten the country’s debt load.

We call on David Cameron to support the organisation of a European conference to agree debt cancellation for Greece and other countries that need it, informed by debt audits and funded by recovering money from the banks and financial speculators who were the real beneficiaries of bailouts (Greek leader calls last ditch referendum on bailout, 27 June).ATHENS: Greece weighed drastic banking restrictions to stave off a financial collapse on Sunday (Jun 28) as anxious Greeks emptied cash machines amid fears that banks will be closed this week.

Greek Prime Minister Alexis Tsipras says the Bank of Greece has recommended that banks remain closed and restrictions be imposed on transactions, after the European Central Bank didn’t increase the amount of emergency liquidity the lenders can access from the central bank. Harris Georgiades said Sunday the amount is significant relative to the small economy of Cyprus, whose banks took a 4.5 billion euro loss after the 2012 decision to write down Greece’s government bonds. Sunday’s move comes after two days of long lines forming at ATMs across the country, following Tsipras’ decision to call a referendum on creditor proposals for Greek reforms in return for vital bailout funds. Georgiades said Cyprus supported extending Greece’s rescue program because it would be “catastrophic” for a country to stay locked out of international markets without having such a program in place.

ATMs in Athens were running out of money, and tensions were running high Sunday as Greeks stood in line for hours to scrape together petty cash for basic supplies. An emergency meeting of the country’s financial stability council agreed to impose capital controls, which would restrict how much money savers can withdraw from their accounts, to ease pressure on the banking system.

In the meantime, Greek PM Alexis Tsipras remains confident the “dignity of the Greek people” will not allow the euro group “to stifle the will of the Greek people.” Greece’s banks are in pretty bad shape, and could close for the whole of next week. Greek Finance Minister Yanis Varoufakis and the Greek central bank chief met Sunday afternoon for an emergency session of the “systemic stability council” as the crisis-weary country prepared for the worst. Lines mounted at gas stations as worried residents topped off their tanks for what could be a period of time in a cashless nation. “The decision not to prolong financial aid to Greece is offensive, and it’s a disgrace for Europe in general,” Tsipras said in a brief Sunday evening address broadcast across Greek television networks. Banking officials said lenders would remain shut for at least a day, with some media reporting the institutions would remain closed for at least a week.

Asked about capital controls in a BBC interview, he replied: “This is a matter that we’ll have to work overnight on with the appropriate authorities both here in Greece and in Frankfurt.” Since Friday night alone, €1.3 billion (US$1.45 billion) have been withdrawn from the Greek banking system, according to the head of the bank workers’ union Stavros Koukos. There were signs that Greece’s creditors — the International Monetary Fund and euro-zone governments — were leaving the door open to negotiations.

If the Greeks were to support Tsipras, Greece would have to default with all the dire consequences not only for Greece but also for the eurozone, and that disaster would have been put off by these few days. A banking source in Greece said only 40 per cent of cash machines now had money in them and a host of European governments advised citizens travelling to Greece to carry money with them. “It is a dark hour for Europe as far as I’m concerned,” warned Varoufakis. The Syriza party has already indicated it will vote ‘No’ to the referendum, though it still remains unclear what the Greek public will be asked to vote on given that the bailout package will expire on Tuesday night. The leaders of France and Germany will hold crisis meetings with their respective ministers and party leaders on Monday over the crisis in Greece, reports AFP in Paris.

The Frankfurt-based ECB’s governing council earlier held an emergency telephone conference and pledged to maintain emergency liquidity assistance – keeping open its life-support for Greek banks and, by extension, the Greek state. Tsipras said that he had asked E.U. leaders to extend their assistance to Greece past the Tuesday deadline, calling the threat to cut it off “blackmail.” But he gave no concrete indications that he had made any concessions that would cause them to change their minds. A previous referendum called by former prime minister George Papandreou four years ago was cancelled after the then-government reached agreement with bailout creditors.

In a measure of deepening American concern about the consequences for global stability if Greece is kicked out of the euro, President Obama on Sunday urged German Chancellor Angela Merkel in a telephone call to find a way to keep the country within the currency zone. The White House said that “the two leaders agreed that it was critically important to make every effort to return to a path that will allow Greece to resume reforms and growth within the Eurozone.” The Treasury Department said Sunday that Treasury Secretary Jack Lew had spoken a day earlier to key European officials, urging them to maintain financial stability in the coming days. But the decision by Greek negotiators to “unilaterally” withdraw from the discussions had been “disappointing.” Mr Tsipras said the proposed bailout would violate European rules and the rights to equality, work and dignity. Wilful inefficiency in the north in stamping on money-laundering and tax-evasion services provided by Luxembourg, the UK and its far-flung dependencies, and also, increasingly, the Netherlands cannot be overlooked. Tsipras stunned Europe on Friday night with a surprise call for a Jul 5 referendum on the latest cash-for-reforms package and advised voters against backing a deal that he said spelled further “humiliation”.

While the proliferation of small enterprises in Greece proves an especial difficulty in the collection of taxes, the political classes in Europe are also to blame. For Tsipras, austerity has been a “humanitarian catastrophe” for his country of about 11 million people, which has endured five years of recession, turmoil and skyrocketing unemployment. Mr Tsipras made little headway on the Greek bailout discussions at this week’s EU summit, with leaders insisting negotiations continue to take place at a technical level.

Their response to the criminal enterprises offering money laundering and tax evasion services elsewhere in the EU is hesitant for fear of exposing politicians around the world, including perhaps some also in Europe. • Europe is at a crossroads. Exasperated eurozone members, suspecting a further play for time, responded by refusing to extend the EU’s funding programme beyond a Tuesday deadline. The closure also threatened to deal a grievous blow to Greek tourism, one of the few remaining supports to the country’s economy, as nations warned their citizens to bring extra cash to Greece in if they planned to travel there.

We need to dismantle the institutions that make up the European behemoth that is strangling both Greece and Europe in the interests of the financial and corporate elite, and transform it into a union based on solidarity and democratic responsibility that respects the sovereign wishes of the nations that make up Europe. French Prime Minister Manuel Valls warned of a “real risk” of Greece leaving the eurozone if it citizens vote against the EU’s bailout proposals in the referendum planned for next weekend. Greece has been locked in tense negotiations with its creditors for months about the extent of the painful reforms it must make to continue receiving the rescue funds that keep the nation’s finances afloat. He says “The Greek people’s proud ‘No’ will mark the continuation of negotiations to achieve a real and substantial solution and not an agreement that will recycle the problems.” The newspaper I Efimerida ton Syntakton published his comments Sunday.

But with less than 48 hours before a default, IMF managing director Christine Lagarde on Sunday indicated that the organization remained willing to keep talking, keeping open a window of hope that a deal could still be reached. The Greek vote next Sunday on approving creditors’ demands for Greece will be the country’s first referendum in 41 years — and the logistics of it are daunting. Do we want an undemocratic Europe run by bankers and other corporate and financial elites who use their financial and economic leverage to beggar all before them in their quest for power, privilege and profit?

The referendum that Parliament approved early Sunday sees citizens voting July 5 on two creditor proposals — one of which is a very technical debt sustainability analysis. But E.U. leaders say they are far better prepared to guard against Greece’s exit than they were in 2011 and 2012, when the possibility first arose.

The focus now will be on quarantining Greece and containing the fallout for the other 18 members from “contagion” on financial markets which are set for a turbulent day on Monday when they open. The ECB, which has maintained ultra-low interest rates and launched large-scale quantitative easing measures, said it “is determined to use all the instruments available within its mandate” to maintain price stability. Varoufakis calls that idea “a very sensible transfer.” Asked directly, for the second time, whether Greece will pay up Tuesday, Varoufakis replies: “We are owed money by one part of the troika and we owe money to another part of the troika? OECD chief economist Catherine Mann told Italy’s La Stampa newspaper that “if you ask me if (markets) are ready for what is happening in Greece, I reply that no, their forecasts don’t predict any risk.

It blames everyone else for the consequences of its own actions and threatens default on repayment to the taxpayers of all these countries, including the poorest. • Greece’s prime minister has branded the deal on offer as humiliating and unacceptable. But it would put Greece on the slippery slope towards Grexit,” wrote Holger Schmieding, chief economist of Berenberg Bank. “Simply printing more IOUs and later on drachma to top up wages, pensions and welfare benefits would just cause a further collapse of the new currency and thus a bigger surge in import prices and overall inflation.”

However, she suggests the IMF remains willing to help. “I have briefed the IMF Executive Board on the inconclusive outcome of recent discussions on Greece in Brussels. I shared my disappointment and underscored our commitment to continue to engage with the Greek authorities. “I continue to believe that a balanced approach is required to help restore economic stability and growth in Greece, with appropriate structural and fiscal reforms supported by appropriate financing and debt sustainability measures. An updated version of the ministry’s travel advice issued Sunday noted that people seeking to withdraw cash in Greece could face “significant waits” and possible shortages at cash machines.

The UK foreign office has updated its travel guide today, advising that visitors to Greece should be aware of the possibility that banking services – including credit card processing and servicing of ATMs – could potentially become limited at short notice. On Friday, Ms Merkel accused Greece of taking “regressive” steps, warning that Berlin would not be “blackmailed” by the debtor’s demands, she told her MEP’s. “We have not made the necessary progress. It has been allowing Greek banks to draw emergency credit from Greece’s central bank, a financial lifeline that has been keeping Greece’s four major banks going during the country’s tense bailout negotiations with creditors.

Costas Papadopolous, a 75-year-old pensioner attempting to withdraw money from an empty ATM, says he is for the euro “no matter what” and he believes the conditions set down by the eurozone creditors have been okay. A separate poll by Kapa Research for the To Vima newspaper found 47.2 percent of respondents would vote in favor of a new, painful agreement with Greece’s creditors, compared to 33 percent who would vote no and 18.4 percent undecided.

It’s clear that one country can under no circumstances blackmail the European Commission and the euro countries.” Bloomberg is reporting that the Greek negotiators in Brussels found out about the referendum via Twitter. They were reaching agreement on a joint proposal to be presented to a meeting of finance ministry officials set for the next morning.” So, it’s the morning after the day before. They have vowed not to extent the country’s bail-out deal after Tuesday, putting Greece on course of a debt default and disorderly exit from the euro.

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