Eurogroup shoots down Greek bailout extension
Eurozone finance ministers refused Saturday to extend Greece’s bailout program past June 30 after Athens called a referendum on reform proposals by creditor, hours after Greek Prime Minister Alexis Tsipras called the plebiscite on the bailout proposal for July 5.
Eurozone ministers met in Brussels on Saturday for a crunch meeting after a shock call for a referendum by Greek Prime Minister Alexis Tsipras threw a push to avert a default by Athens into confusion.
Greece was to vote on July 5 on the outcome of negotiations with its international creditors that have dragged on since January, when Tsipras’s Syriza party first took power on a promise of ending austerity.
The gambit by Tsipras heightened anxiety over a possible Greek default next Tuesday that could potentially push Greece towards an exit of the eurozone and risk throwing the European Union project as a whole into crisis.
“The people must decide free of any blackmail... the referendum will take place on July 5,” the 40-year-old prime minister said in a televised address to the nation late on Friday.
But the vote is five days after a June 30 deadline for Greece to pay the IMF 1.5 billion euros, a debt officials in Athens say they cannot afford without a deal for bailout cash with its EU creditors.
The referendum call stunned Greece, with reports of Greeks reportedly rushing to withdraw money in fear of capital controls and more financial chaos after six years of debt crisis — five of those in recession.
‘Makes some sense’
In an early reaction, Germany’ vice-chancellor Sigmar Gabriel urged Greece’s European partners to remain open to the referendum.
“I think we would be well advised not to reject Mr. Tsipras’s proposal out of hand,” the center-left Gabriel told Deutschlandfunk radio.
“If it is clear that the vote
is about a negotiated settlement, it makes some sense,” said Gabriel, who is number two to the hardline German Chancellor Angela Merkel.
An EU official added:: The referendum has a certain “logic.”
Greece’s international creditors on Friday offered Athens a fivemonth, 12-billion-euro ( US$13.4billion) extension of its bailout program but said it must seal a reform deal this weekend to avoid the IMF default.
Merkel had urged Athens not to waste an “extraordinarily generous” offer that would see Greece handed vital cash until November 30 in exchange for major reforms Greece has so far resisted.
But Greece did reject the offer, arguing it was unacceptable.
“We were asked to implement austerity measures ... allowing the deregulation of the labor market, pension cuts, and an increase in VAT on food products, targeting the humiliation of an entire people,” Tsipras said in his address.
Bank Run in Greek Cities
In Greece’s second city, Thessaloniki, some banks have run out of money, according to an AFP reporter, while a National bank branch had a queue of 50 people.
“I have a shop. I came to the bank to withdraw as much money as I can in order to cover the needs of my shop for next week,” 42- year- old Maria Kalpakidou told AFP.
“If we don’t have an agreement by July 4, the Greek banking system will crash.”
Private employee Nikos, 52, added: “There is a lot of fear of what may happen.
“In the last election I voted for Syriza. But we voted for them to decide, not to transfer responsibility to us, to the Greek people.”
Another worried bank customer, Sofia Makridou, told AFP that there is “great uncertainty and insecurity for what may happen,” adding it is “rational that there is a bit of a panic.”
Demand at petrol stations was also said to be “heightened” but there were no fuel shortage problems, according to state news agency ANA.
At the Greek parliament, meanwhile, several sources told AFP that the two cash machines there had run dry.
In central Athens, small groups of people queued at cash machines as a precautionary measure, with between three and 10 people seen queuing at 10 different ATMs.
A Greek central bank source said it would do “whatever possible” to make sure that cash machines were stocked.
Eurogroup head Jeroen Dijsselbloem on Saturday said Greece’s decision to hold a referendum over the future of its bailout programme was a “sad” decision that shut the door to further talks.
“I am very negatively surprised by today’s decision by the Greek government,” the Dutch finance minister said as he arrived for talks with his eurozone counterparts.
“They have apparently rejected the last proposals on the table from the three institutions and on that negative basis... have proposed a referendum with negative advice for the Greek people,” he said.
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(Top) People stand in a queue to use the ATMs at a bank in the northern Greek city of Thessaloniki on Saturday, June 27. (Above) Greek Prime Minister Alexis Tsipras gives a thumbs-up as he leaves after an EU summit in Brussels on Friday, June 26.