Greece teeters closer to the abyss as austerity vote nears, lenders wait
Athens in financial limbo after bailout program expires
ATHENS, GREECE— The Greek government vowed Wednesday to go ahead with plans to have the people decide whether they want more austerity measures in exchange for a rescue deal. Greece offered more concessions to its creditors, but was rebuffed. Eurozone finance ministers refused to negotiate any more aid until the referendum clears up what the country wants.
The moves came on a fast-paced day of zigs and zags that saw the Greek prime minister back off his earlier refusal to consider creditors’ belt-tightening demands, yet hold firm on putting the measures to a popular vote.
The strategy was met with a cool response. Following a late-night teleconference, the 19 eurozone finance ministers announced they were putting any further talks on hold.
“Given the political situation, the rejection of the previous proposals, the referendum which will take place on Sunday, and the recommendation by the Greek government to vote No, we see no grounds for further talks at this point,” said Dutch Foreign Minister Jeroen Dijsselbloem, who heads the eurozone finance ministers’ body known as the eurogroup.
“There will be no talks in the coming days, either at eurogroup level or between the Greek authorities and the institutions on proposals or financial arrangements,” he said.
Earlier Wednesday, Prime Minister Alexis Tsipras was defiant, saying the referendum would go ahead on Sunday, and he again urged citizens to vote No. In a televised address to the nation, he said a No result would not mean that Greece would have to leave the euro, as many European officials have argued.
Rather, Tsipras insisted, it would give the government a stronger negotiating position with creditors.
“There are those who insist on linking the result of the referendum with the country’s future in the euro,” Tsipras said. “They even say I have a so-called secret plan to take the country out of the EU if the vote is No. They are lying with the full knowledge of that fact.”
Greece is in financial limbo after its bailout program expired at midnight Tuesday, cutting it off from vital financing and pushing it one step closer to leaving the euro. It also became the first developed country to fail to repay a debt to the International Monetary Fund on time. The last country to miss an IMF payment was Zimbabwe in 2001.
Still, there was some good news: Amid more chaotic scenes outside closed banks in Athens and elsewhere, the terms of its emergency $100-billion (U.S.) cash support were left unchanged.
Finance Minister Yanis Varoufakis thanked the European Central Bank and its president, Mario Draghi, for the decision.
“This allows us to breathe. It’s a very positive move and a move of goodwill on the part of the European Central Bank,” Varoufakis told state television.
Draghi, he said, had faced down “hawks” among eurozone members who had demanded that Athens increase the collateral needed to receive continued assistance.
Sunday’s hastily called referendum is based on creditor reform proposals made last week and roundly rejected by the Greek government.
But in a letter sent late Tuesday, Tsipras reversed course. He said his government was prepared to accept the earlier proposals, subject to certain amendments on central points of contention, including pensions and tax increases. He linked acceptance of the terms to a new bailout package.
Hopes that Tsipras was softening his position, after refusing for five months to accept the proposed spending cuts, boosted markets across Europe, the United States and Asia. But some of Greece’s main creditors, including Germany, the largest single contributor to Greece’s bailout, contended it wasn’t good enough and that a deal was impossible before the referendum.
The head of a top European inter- governmental institution questioned whether Sunday’s referendum would meet international standards. Those call for at least two weeks’ notice to allow for discussion, crafting a clear question to be put to voters and for international observers to monitor the vote.
Council of Europe chief Thorbjorn Jagland told The Associated Press that the question being put to the people was “not very clear” and his agency, which monitors votes, had not been invited to do so.
With its economy teetering near the abyss, Greece suffered its fourth downgrade this week when Moody’s rating agency slashed its rating further into junk status, just above default. The agency said Greece was likely to default on its remaining privately held debt due to its impasse with lenders.
The country has put limits on cash withdrawals to keep banks from collapsing after Greeks rushed to pull money out of ATMs following the referendum call at the start of the weekend.
In Athens, crowds of anxious elderly Greeks thronged banks before dawn Wednesday, struggling to withdraw the maximum 120 euros ($167) for the week after the government reopened some banks to help pensioners who don’t have bank cards. Greeks are now limited to daily ATM withdrawals of 60 euros ($83) and cannot send money abroad without special permission.