Greece in misery as gov’t digs in against bailout
ATHENS/BRUSSELS—Long lines of pensioners jostling to get into a limited number of banks opened especially to pay out retirement benefits have become a powerful symbol of the misery facing Greece and the problems mounting for Prime Minister Alexis Tsipras.
Even so, Tsipras remains defi- ant. Late Wednesday, he urged Greeks to reject an international bailout deal, wrecking any prospect of repairing broken relations with European Union partners before Sunday’s referendum on bailout terms dictated by international creditors. The vote may decide Greece’s future in Europe.
With banks closed down and capital controls imposed to shield the financial system from collapse after Greece defaulted on its debt to the International Monetary Fund (IMF) on Tuesday, the depth of the problems facing the country has become clearer each day.
Tsipras’ left-wing govern- ment came to power in January vowing to protect pensioners and much of the breakdown in relations with international creditors centered on its refusal to accept the cuts in pensions that the lenders demanded.
Mindful of the fact that many older Greeks do not use credit
or debit cards and so do not have access to automated teller machines (ATMs), the government has ordered 1,000 banks to open across the country to pay out a maximum of 120 euros ($134) and issue cards.
In the process, however, the government has created a compelling reminder of the costs its confrontation with the lenders is inflicting on a society already deeply scarred by more than five years of harsh austerity imposed under successive bailout accords.
“In line for a handful of euros,” the conservative Eleftheros Typos newspaper headlined on Thursday. “The dignity promised by Tsipras turns into humiliation for thousands of pensioners.”
Back to combative mode
Less than 24 hours after he wrote a conciliatory letter to creditors asking for a new bailout that would accept many of their terms, Tsipras abruptly switched back into combative mode in a television address.
Greece was being “blackmailed,” he said, quashing talk that he might delay the vote, call it off or urge Greeks to vote “Yes.”
The remarks added to the frantic and at times surreal atmosphere of recent days in which acrimonious messages from the leftist government have alternated with late-night offers of concessions to restart negotiations.
“A ‘No’ vote is a decisive step toward a better agreement that we aim to sign right after Sunday’s result,” he said, rejecting repeated warnings from European partners that the referendum would effectively be a vote on whether Greece stays in the euro or returns to the drachma.
European Council President Donald Tusk retorted in a tweet: “Europe wants to help Greece. But cannot help anyone against their own will. Let’s wait for the results of the Greek referendum.”
Eurozone finance ministers held an hourlong conference call to discuss the previous night’s offer from Tsipras, but they were adamant that no further discussions would be held until after Sunday’s vote.
“Wewill come back to your request for financial stability support from the ESM (European Stability Mechanism) only after, and on the basis of the outcome of, the referendum,” the head of the currency zone ministers’ Eurogroup, Jeroen Dijsselbloem, wrote in a letter to Tsipras.
Plight of pensioners
In a country where one in four of the workforce is without a job, the plight of the pensioners, whose monthly benefits can often be the only source of income for families, is an acutely sensitive issue.
Konstantinos Nikolopoulos, a 70-year-old former employee of US entertainment group Warner Bros, emerged from his bank empty-handed after being told that benefits from his pension fund were not being paid out.
“They told me they don’t know when they will have the money and asked me to come again tomorrow just in case,” he said. “This situation is out of control.”
With scenes of long bank queues being played continuously on Greek television, the issue creates a big risk for Tsipras ahead of Sunday’s referendum on Greece’s bailout terms.
The only major opinion poll published on the referendum showed support for the “No” vote recommended by Tsipras has been slipping since the introduction of bank controls this week, although the depth of resentment against bailout-imposed austerity makes the outcome very hard to predict.
“On Sunday, I am slightly confused,” Nikolopoulos said. “I believe the message should be that the Greek people has to take a decision to settle its debt with a fair compromise, I am leaning more to voting ‘No.’”
The government side is keen- ly aware of the damage the headlines and continuous television broadcasts are creating for its image.
The left-leaning Efimerida ton Syntakton newspaper, which is sympathetic to the ruling Syriza party, reflected the concern on Thursday, blaming the TV stations for deliberately seeking to stoke the climate of fear in the country.
It showed the TV broadcasts alongside German Chancellor Angela Merkel and her Finance Minister Wolfgang Schaeuble, IMF head Christine Lagarde and others seen as villains by the left in a graphic headlined: “The mechanism of terror.”
Lagarde told Reuters in an interview that she would want to see reforms before opening discussions on any new debt package.
Global financial markets have reacted remarkably calmly to the widely anticipated Greek default, strengthening the hand of hard-line eurozone partners who say Athens cannot use the threat of contagion to weaker European sovereigns as a bargaining chip.
In his overnight letter to creditors, which was seen by Reuters, Tsipras agreed to accept most of their demands for taxes and pension cuts and asked for a new 29-billion-euro loan to cover all debt service payments in the next two years.
Breakthrough unlikely
However, even if negotiations do restart after the referendum, Germany and other countries had made clear that any talks on a new program would have to start from scratch with different conditions.
The exasperated tone to public comments of European leaders exhausted by the chaotic turnarounds of the past few days offered little hope of a breakthrough.
Tsipras has suggested he would step aside if Greeks vote “Yes” in Sunday’s referendum.
“This government has done nothing since it came into office,” Schaeuble said in a speech in the Lower House of parlia- ment in which he accused Athens of repeatedly reneging on its commitments.
“You can’t in all honesty expect us to talk with them in a situation like this,” he said.
Costs biting deeper
Greece has shut its banks after defaulting on its debt, imposed capital controls and limited ATM withdrawals to prevent the public from emptying the banks.
On the third day of the closure of banks, the costs were biting deeper for ordinary Greeks, with long lines forming at many ATMs and limited amounts of cash being doled out to pensioners. Even with a withdrawal limit of 60 euros ($67) a day, there were signs of bank note shortage, with bankers saying 50-euro and 20euro notes were running low.
The European Central Bank said it would maintain emergency lending that was enabling Greek banks to stay afloat at the same level as late last week, keeping pressure on Greece as its lenders run out of cash.
The lack of panic in financial markets stood in marked contrast to 2011, when the Greek crisis was perceived as a threat to the future of the single currency and investors bid up the borrowing costs for other countries seen as being in danger, like Spain and Italy.
Most eurozone leaders now believe any damage to the currency zone from Greek turmoil can be contained.
“Financial markets are not showing there is contagion or spreading of those risks to the periphery,” Bank of England Deputy Governor Jon Cunliffe told BBC Radio 5live. But, in an interview with Radio 4, Cunliffe warned that things could change.
“It’s a very volatile situation. It’s a very fluid situation. It is a very dangerous situation ... We have to prepare for the worst,” he said.