Eurogroup shoots down Greek bailout ex­ten­sion

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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.

Story con­tin­ues on page 2


(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.

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