Greece pushes to re­open bailout talks

Cape Breton Post - - NEWS / WORLD -

De­spite tri­umph­ing in a pop­u­lar vote against aus­ter­ity, Greece on Mon­day faced the ur­gent need to heal its ties with Euro­pean cred­i­tors and reach a fi­nan­cial res­cue deal that might pre­vent it from fall­ing out of the euro — pos­si­bly within days.

Prime Min­is­ter Alexis Tsipras won big in Sun­day’s ref­er­en­dum, in which 60 per cent of Greeks re­jected the eco­nomic mea­sures cred­i­tors had pro­posed in ex­change for loans the coun­try needs to re­main afloat. He also re­ceived the rare back­ing of op­po­si­tion par­ties to restart bailout ne­go­ti­a­tions.

But his bol­stered man­date to push for bet­ter con­ces­sions from cred­i­tors hit the hard re­al­ity of the coun­try’s de­te­ri­o­rat­ing fi­nances, with the banks fac­ing the risk of col­lapse within days un­less a res­cue deal is reached.

In a sign that he hopes to reach a deal as soon as pos­si­ble, Tsipras ap­pointed a new mild-man­nered fi­nance min­is­ter to lead talks with bailout cred­i­tors and re­place Yanis Varoufakis, the hard-talk­ing pro­fes­sor who clashed regularly with his Euro­pean coun­ter­parts.

Eu­clid Tsakalo­tos, a 55-yearold economist, ap­pears more will­ing to reach a com­pro­mise with cred­i­tors and will be tested as soon as Tues­day, when he will meet the other 18 eu­ro­zone fi­nance min­is­ters in Brus­sels.

That meet­ing is meant to seek the ba­sis for a deal that Euro­pean lead­ers, in­clud­ing Tsipras, might dis­cuss at an emer­gency sum­mit later in the day.

Ahead of the sum­mit, Tsipras spoke by phone with Ger­man Chan­cel­lor An­gela Merkel.

Greece’s fi­nan­cial sit­u­a­tion is get­ting more dif­fi­cult by the day. It had to close the banks last week to pre­vent their col­lapse in the face of a run, and im­posed lim­its on cash with­drawals and trans­fers.

Greek banks re­mained closed Mon­day, with only a few branches open­ing for pen­sion­ers to re­ceive emer­gency as­sis­tance.

The gov­ern­ment is ex­pected to ex­tend the re­stric­tions on with­drawals af­ter the Euro­pean Cen­tral Bank makes a de­ci­sion later Mon­day on cash sup­port for Greek banks.

The ECB has frozen the amount of credit it al­lows Greek banks to draw on, even though their cash re­quire­ments are grow­ing as peo­ple rush to with­draw what money they can.

An­a­lysts say if the ECB keeps the amount of credit on hold, Greek banks will come un­der in­creas­ing pres­sure and the gov­ern­ment could have to make the lim­its on cash with­drawals even tougher.

The on­go­ing Greek drama hurt stocks around the world, par­tic­u­larly in Europe. The losses were not as great as some had feared, how­ever, sug­gest­ing in­vestors think that a Greek exit from the euro, while dev­as­tat­ing for the coun­try and desta­bi­liz­ing in Europe, would be man­age­able for the global econ­omy.

“The ‘no’ vote in Greece’s ref­er­en­dum on Sun­day dra­mat­i­cally in­creases the risk of a slide to­ward a dis­or­derly Greek exit from the eu­ro­zone,” rat­ings agency Fitch said.

“An agree­ment be­tween Greece and its of­fi­cial cred­i­tors re­mains pos­si­ble, but time is short and the risk of pol­icy mis­steps, or that the two sides sim­ply can­not agree a deal, is high.”

Tsipras has agreed to im­pos­ing more harsh aus­ter­ity mea­sures, fol­low­ing a six-year re­ces­sion, but wants eu­ro­zone lenders to grant the coun­try bet­ter terms for bailout debt re­pay­ments.

“The prime min­is­ter is ... com­mit­ted to start­ing a fun­da­men­tal de­bate on deal­ing with the prob­lem of sus­tain­abil­ity of the Greek na­tional debt,” a state­ment signed by the gov­ern­ment and three pro-Euro­pean op­po­si­tion par­ties said.

Euro­pean of­fi­cials ap­pear to be split on Greece’s de­mand for eas­ier debt re­pay­ment.

France’s fi­nance min­is­ter, Michel Sapin, in­di­cated dis­cussing Greece’s debt is not taboo, say­ing the coun­try could not re­cover with its cur­rent obli­ga­tions “in the months and years to come.”

Ger­many, how­ever, re­mains highly re­luc­tant to dis­cuss debt re­lief. Ger­man Vice Chan­cel­lor Sig­mar Gabriel said Europe should be pre­par­ing to help Greeks with hu­man­i­tar­ian as­sis­tance.

“The sit­u­a­tion that is now be­ing cre­ated by the ref­er­en­dum makes me sad, be­cause life for the Greek pop­u­la­tion is go­ing to get harder in the com­ing days and weeks,” he said.

“Af­ter yesterday’s cel­e­bra­tions in the streets there’s a dan­ger of a rude awak­en­ing soon.”


El­derly peo­ple ar­gue with a bank worker as they wait to be al­lowed into a bank to with­draw a max­i­mum of 120 eu­ros ($134) for the week in Athens, Mon­day.

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