Greece thrown funding lifeline
Emergency summit called as talks fail
ATHENS: The European Central Bank yesterday raised the level of emergency funding for Greek banks by an unspecified amount following a request from the Bank of Greece, a source said.
“There was no problem with the financing of Greek banks,” the source said, adding that bank governors were expecting a “positive result” at an emergency euro zone leaders summit on Greece on Monday.
According to state agency ANA, the funding cap was increased by €3.3 billion ($3.7 billion).
The Bank of Greece had earlier insisted that the country’s banking system was stable amid a rush of deposit withdrawals this week fuelled by fresh deadlock in Greece’s loan talks with its international creditors.
“The governor of the Bank of Greece has confirmed the stability of the banking system, which is fully safeguarded by the joint actions of the Bank of Greece and the ECB,” the central bank said.
Bank of Greece governor Yannis Stournaras had earlier met with the top Greek negotiator in European Union-International Monetary Fund talks, junior foreign minister Euclid Tsakalotos.
A billion euros were withdrawn from Greek banks on Thursday, following another €1.6 billion over the two previous days, financial website euro2day reported.
Greece yesterday insisted a last-ditch deal on its debt was possible and dismissed “terror scenarios” of a default that is looking increasingly likely unless an accord is concluded.
EU President Donald Tusk has called an emergency summit of leaders of the 19 euro zone countries in Brussels on Monday, after finance ministers failed on Thursday to break the five-month deadlock between the anti-austerity government in Athens and its creditors.
French President Francois Hollande insisted yesterday that “everything” must be done to seal a compromise on the Greek debt crisis.
“We must do everything to relaunch negotiations, so the talks can achieve a compromise, but one in line with European rules,” he said, following talks in Bratislava with his Slovak counterpart before speaking with German Chancellor Angela Merkel later in the day.
Hollande said Monday’s emergency euro zone summit would be “crucial”.
“I don’t want us to meet only to come to the conclusion that we have failed,” he said.
In a move that seemed calculated to irk other European leaders amid tensions with Russia over Ukraine, Tsipras was visiting Saint Petersburg as the star guest at President Vladimir Putin’s investment drive forum.
The Greek and Russian leaders were due to hold talks yesterday, as Moscow and Athens signed a preliminary agreement to set up a joint venture to extend the TurkStream pipeline through Greece, a long-term project which the Greek government hopes will translate into an upfront payment of some sort.
Greece has until June 30 to agree a reform deal in order to secure the remaining portion of its multi-billion-euro bailout, which it needs to avoid defaulting on a debt payment of around €1.5 billion to the International Monetary Fund.
Analysts have long warned that a default may set off a chain of events leading to a ‘Grexit’ — Greece leaving the euro zone.
Tsipras warned in an interview with an Austrian newspaper yesterday that a Greek exit would be “the beginning of the end” of the euro.
“The famous Grexit cannot be an option either for the Greeks or the European Union. This would be an irreversible step, it would be the beginning of the end of the euro zone,” he told the Kurier daily.
Tsipras’s own office was more conciliatory, adding in a statement: “We hope that the final negotiations take place at Europe’s highest political level and we are working toward the success of this summit.”
One source described the 90-minute Eurogroup talks on Thursday as “tragic”, saying that Greece had not even raised the issue of a possible bailout extension.
Creditors have refused to pay the remaining €7.2 billion of the bailout if there is no reform deal, and the cash will be lost forever if there is no deal for an extension.