EU ready for worst as Tsipras pushes Greece to the limit
Athens stocks plunge 6%, banks fall 11.4% on Greek default fears
athens — European officials are preparing for the worst as Prime Minister Alexis Tsipras’s brinkmanship pushes Greece’s finances to the limit.
Chancellor Angela Merkel urged Tsipras to accept the framework for financial aid as the German public turns against supporting Greece and euro-area officials demanded a proposal for stabilising the country’s debt by the end of Friday. The International Monetary Fund team left Brussels earlier this week, despairing of Tsipras’s tactics.
In response, Greece ruled out cutting pensions and demanded a debt restructuring. Bank stocks plunged.
“People are really fed up with this,” UniCredit Chief Global Economist Erik Nielsen said in a television interview. “They’ve never seen anything so completely ridiculous, frankly speaking, from a debtor country.”
After four months going round in circles, diplomatic niceties evaporated in Brussels on Thursday as EU President Donald Tusk rebuked Tsipras for dragging his feet on a debt agreement. Greece has less than a week to accept the conditions for aid, with the euro area due to withdraw its financial safety net at the end of the month.
“Where there’s a will there’s a way, but the will has to come from all sides,” Merkel said in a speech to family- business leaders in Berlin. “That is why I think it’s right that we talk to each other again and again.”
Greek banks fell 11.4 per cent at 4.48pm in Athens. Greek bank stocks have lost about 55 per cent since the previous government of Antonis Samaras began to unravel in December. The Athens Stock Exchange Index posted its biggest decline in four months, dropping six per cent.
Week of deadlines
Battle lines were drawn on Thursday night at a working dinner of EU finance officials that set out the parameters of a likely showdown next week when their bosses meet in Luxembourg.
Greece was given less than 24 hours to come up with firm proposals to end the impasse, two officials present said. That would allow officials to review the plan over the weekend with a view to sealing a staff-level agreement by Tuesday, the officials said.
“If the Greek government isn’t willing to take difficult measures, even if they’re unpopular, then Greece will never be saved,” Dutch Finance Minister Jeroen Dijsselbloem, who leads the euro-area finance chiefs’ meetings, told reporters in The Hague on Friday. “We’ve repeatedly explained to the Greeks how little time there still is.”
Finance ministers from the bloc meet in Luxembourg on June 18. Because some national parliaments need to ratify the agreement before funds can be disbursed, that’s the last chance for Greece to secure aid before the bailout expires at the end of the month, Tusk said on Thursday.
With the Greek representative telling the group he had no authority to negotiate and he couldn’t promise to meet that deadline, euro nations are also preparing to contain the fallout from a Greek default, the officials said.
“There is no more time for gambling,” Tusk told reporters in Brussels on Thursday. “The day is coming, I am afraid, that someone says the game is over.” —