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Greek Debt Crisis Intensifies as Extension Request Is Denied Greek Debt Crisis Intensifies as Extension Request Is Denied
(about 1 hour later)
BRUSSELS — Europe’s long standoff over Greece’s debt moved into an unpredictable stage on Saturday, with tensions reaching their highest levels yet and the risk growing rapidly that Greece could crash out of the European currency. BRUSSELS — Europe’s long standoff over Greece’s debt moved into an unpredictable stage on Sunday, with tensions reaching their highest levels yet and the risk growing rapidly that Greece could crash out of the European currency.
On a hectic, fast-moving day, eurozone finance ministers meeting in Brussels rejected Greece’s request to extend its existing bailout program past a Tuesday deadline. Greece wanted the extension so it could hold a national referendum on July 5 to let voters decide whether the country should accept bailout aid under terms that the government of Prime Minister Alexis Tsipras bitterly opposes.On a hectic, fast-moving day, eurozone finance ministers meeting in Brussels rejected Greece’s request to extend its existing bailout program past a Tuesday deadline. Greece wanted the extension so it could hold a national referendum on July 5 to let voters decide whether the country should accept bailout aid under terms that the government of Prime Minister Alexis Tsipras bitterly opposes.
At the same time in Athens, Greek lawmakers held a long, impassioned debate in Parliament, many of them stunned by Mr. Tsipras’s decision to hold the high-stakes referendum. Lawmakers were expected to vote later Saturday evening on whether to go forward with the referendum, while across the city there were long lines at many cash machines as Greeks pulled money from banks out of concern that a fresh financial crisis could be at hand. Early on Sunday morning, lawmakers in Athens voted to go forward with the referendum, after a day in which many Greeks lined up at cash machines to withdraw money from banks out of concern that a fresh financial crisis could be at hand.
Addressing Parliament before the vote, Mr. Tsipras defended his decision to call a plebiscite, saying it would “honor the sovereignty of our people,” and called on Greeks to say a “big ‘no’ to the ultimatum,” referring to the creditors’ proposal for a deal. He added that his government would “respect the outcome, whatever it is.”
After five months of grinding negotiations, Mr. Tsipras’s surprise referendum gambit — announced early Saturday morning on national television while many ordinary citizens were asleep — left unclear whether he was seeking a final bit of leverage for a last-minute deal or was essentially calling an end to the negotiations.After five months of grinding negotiations, Mr. Tsipras’s surprise referendum gambit — announced early Saturday morning on national television while many ordinary citizens were asleep — left unclear whether he was seeking a final bit of leverage for a last-minute deal or was essentially calling an end to the negotiations.
Negotiators in Brussels had been racing the clock — with five emergency meetings in the last 10 days — to reach a deal by the end of the day Tuesday, when the European part of the current bailout program for Greece expires.Negotiators in Brussels had been racing the clock — with five emergency meetings in the last 10 days — to reach a deal by the end of the day Tuesday, when the European part of the current bailout program for Greece expires.
At the conclusion of the meeting on Saturday, the so-called Eurogroup, in a statement, said the end of the current program “will require measures by the Greek authorities” to “safeguard stability of the Greek financial system” in what amounted to a thinly veiled reference to the need for Athens to plan imposing capital controls to stem the flight of deposits.At the conclusion of the meeting on Saturday, the so-called Eurogroup, in a statement, said the end of the current program “will require measures by the Greek authorities” to “safeguard stability of the Greek financial system” in what amounted to a thinly veiled reference to the need for Athens to plan imposing capital controls to stem the flight of deposits.
Greece is rapidly running out of money and has been negotiating over a remaining installment of 7.2 billion euros, or about $8 billion, so that Athens can avoid defaulting on some of its debt, including a payment also due Tuesday to the International Monetary Fund. Greece is rapidly running out of money and has been negotiating over a remaining installment of 7.2 billion euros, or about $8 billion, so that Athens can avoid defaulting on some of its debt, including a payment of €1.6 billion due on Tuesday to the International Monetary Fund.
Greece’s creditors have been demanding cuts in pension payments and new taxes to give them assurance that Athens will be able to repay its debts in the long run. They have grown increasingly skeptical that Mr. Tsipras is willing to make the hard decisions they feel are necessary to put his government on more stable financial footing.Greece’s creditors have been demanding cuts in pension payments and new taxes to give them assurance that Athens will be able to repay its debts in the long run. They have grown increasingly skeptical that Mr. Tsipras is willing to make the hard decisions they feel are necessary to put his government on more stable financial footing.
Mr. Tsipras, who was elected this year on a platform of challenging the austerity policies that have defined the European response to seven years of economic trouble, has resisted some of the demands for additional cuts and accused the creditors — the eurozone countries, the European Central Bank and the International Monetary Fund — of humiliating the Greek people and imposing excessive hardship.Mr. Tsipras, who was elected this year on a platform of challenging the austerity policies that have defined the European response to seven years of economic trouble, has resisted some of the demands for additional cuts and accused the creditors — the eurozone countries, the European Central Bank and the International Monetary Fund — of humiliating the Greek people and imposing excessive hardship.
Uncertainties now abound in Brussels, Athens and the other European capitals, where leaders were weighing the costs of making last-minute concessions to Greece or possibly risk Greece becoming the first country to abandon the euro currency.Uncertainties now abound in Brussels, Athens and the other European capitals, where leaders were weighing the costs of making last-minute concessions to Greece or possibly risk Greece becoming the first country to abandon the euro currency.
Among the most pressing issues is the health of the Greek banking system — and in particular whether the European Central Bank will continue to prop it up in the face of huge withdrawals.Among the most pressing issues is the health of the Greek banking system — and in particular whether the European Central Bank will continue to prop it up in the face of huge withdrawals.
The E.C.B. said in a statement that its governing council would meet to discuss Greece “in due course.” The central bank has tried to avoid taking any steps that would push Greece out of the eurozone. But the bank’s rules would make it more difficult for it to continue to support Greek banks without the prospect of an agreement with creditors.The E.C.B. said in a statement that its governing council would meet to discuss Greece “in due course.” The central bank has tried to avoid taking any steps that would push Greece out of the eurozone. But the bank’s rules would make it more difficult for it to continue to support Greek banks without the prospect of an agreement with creditors.
Mario Draghi, head of the central bank, met to plot strategy on Saturday night with finance ministers and the head of the International Monetary Fund, Christine Lagarde. Some analysts predicted that Greek officials might be forced to introduce capital controls as soon as Monday.Mario Draghi, head of the central bank, met to plot strategy on Saturday night with finance ministers and the head of the International Monetary Fund, Christine Lagarde. Some analysts predicted that Greek officials might be forced to introduce capital controls as soon as Monday.
“We are in a pretty big mess right now,” said Guntram Wolff, director of Bruegel, a research institute in Brussels.“We are in a pretty big mess right now,” said Guntram Wolff, director of Bruegel, a research institute in Brussels.
Mr. Tsipras spoke on Saturday afternoon with Chancellor Angela Merkel of Germany and President François Hollande of France. According to a text message sent a Greek government official sent to journalists, Mr. Tsipras told the other leaders that the “Greek people will have oxygen next week, they will survive!” He also said that “democracy is the paramount value in Greece.” Mr. Tsipras spoke on Saturday afternoon with Chancellor Angela Merkel of Germany and President François Hollande of France. According to a text message a Greek government official sent to journalists, Mr. Tsipras told the other leaders that the “Greek people will have oxygen next week, they will survive!” He also said that “democracy is the paramount value in Greece.”
For weeks, European finance ministers — the Eurogroup — had been assembling to take stock of negotiations. But the dynamics shifted dramatically after Mr. Tsipras’s announced the referendum, with each side blaming the other for the risk of an irrevocable breakdown. For weeks, European finance ministers — the Eurogroup — had been assembling to take stock of negotiations. But the dynamics shifted dramatically after Mr. Tsipras announced the referendum, with each side blaming the other for the risk of an irrevocable breakdown.
“The Greek government has broken off the process,” the leader of the Eurogroup of finance ministers, Jeroen Dijsselbloem, said at a news conference. “Let me just say that I am very negatively surprised by today’s decisions by the Greek government. That is a sad decision for Greece because it has closed the door on further talks, where the door was still open in my mind.”“The Greek government has broken off the process,” the leader of the Eurogroup of finance ministers, Jeroen Dijsselbloem, said at a news conference. “Let me just say that I am very negatively surprised by today’s decisions by the Greek government. That is a sad decision for Greece because it has closed the door on further talks, where the door was still open in my mind.”
Since the Greek economy imploded five years ago, the creditors have committed loans to Greece worth more than €240 billion, or about $264 billion at today’s exchange rates. Since the Greek economy imploded five years ago, the creditors have committed loans to Greece worth more than €240 billion.
An expiration of the European part of the current bailout program would leave Greece unable to tap the €7.2 billion remaining in the rescue package. And it would almost certainly guarantee that Greece would default on a payment to the I.M.F. of about 1.6 billion euros, or $1.8 billion, that is due Tuesday. An expiration of the European part of the current bailout program would leave Greece unable to tap the €7.2 billion remaining in the rescue package. And it would almost certainly guarantee that Greece would default on the coming I.M.F. payment.
On the streets of Athens on Saturday, lines appeared at many cash machines, though there was no sign of any panic. Several people said they feared that the government might institute capital controls on Monday, restricting how much money they could withdraw from their bank accounts and leaving them unable to meet expenses. On the streets of Athens on Saturday, despite the lines at cash machines, there was no sign of any panic. Several people said they feared that the government might impose capital controls on Monday, restricting how much money they could withdraw from their bank accounts and leaving them unable to meet expenses.
Costas Mentis, a 52-year-old plumber, was among about 40 people lined up at a bank A.T.M. in the Athens neighborhood of Pangrati early on Saturday afternoon. He said he was “worried, not panicked,” and wanted to be certain he had enough cash in case Greece imposed capital controls next week.Costas Mentis, a 52-year-old plumber, was among about 40 people lined up at a bank A.T.M. in the Athens neighborhood of Pangrati early on Saturday afternoon. He said he was “worried, not panicked,” and wanted to be certain he had enough cash in case Greece imposed capital controls next week.
“We don’t know what the next day will bring, so we’ve got to be prepared,” he said, adding that he had “filled the car up with gas too, just to be safe,” amid reports of lines forming at gas stations.“We don’t know what the next day will bring, so we’ve got to be prepared,” he said, adding that he had “filled the car up with gas too, just to be safe,” amid reports of lines forming at gas stations.
“After five years of crisis, you don’t really panic anymore, but that doesn’t mean that things aren’t bad,” he said. “They’re really bad, and it looks like they’re going to get a whole lot worse, but we need to be calm and deal with it.”“After five years of crisis, you don’t really panic anymore, but that doesn’t mean that things aren’t bad,” he said. “They’re really bad, and it looks like they’re going to get a whole lot worse, but we need to be calm and deal with it.”
In Parliament, lawmakers huddled with colleagues in hallways or sat in the main chamber as the afternoon was filled with speeches. Even government ministers were lined up at an A.T.M. near the chamber.In Parliament, lawmakers huddled with colleagues in hallways or sat in the main chamber as the afternoon was filled with speeches. Even government ministers were lined up at an A.T.M. near the chamber.
The leader of Greece’s junior coalition partner Independent Greeks, Panos Kammenos, described the creditors’ behavior toward Greece as “absolute fascism,” saying their aim was to subjugate the Greek people.The leader of Greece’s junior coalition partner Independent Greeks, Panos Kammenos, described the creditors’ behavior toward Greece as “absolute fascism,” saying their aim was to subjugate the Greek people.
“They are asking us to annihilate Greece,” he said in a speech interrupted by sobs.“They are asking us to annihilate Greece,” he said in a speech interrupted by sobs.
Olga Kefalogianni, a lawmaker with the opposition New Democracy Party, said staging a referendum on such short notice made little sense, especially since many voters had not yet been able to examine the specifics of the creditors’ last proposal.Olga Kefalogianni, a lawmaker with the opposition New Democracy Party, said staging a referendum on such short notice made little sense, especially since many voters had not yet been able to examine the specifics of the creditors’ last proposal.
Now the question is whether Mr. Tsipras and other European leaders can still negotiate as the clocks tick despite the deep distrust that has developed during the negotiations. Now the question is whether Mr. Tsipras and other European leaders can still negotiate as the clocks tick despite the deep distrust that has developed.
Yanis Varoufakis, the Greek finance minister, attended the initial Eurogroup meeting on Saturday, but the Eurogroup leader, Mr. Dijsselbloem, said a second session “will be without the Greek colleague,” declining to even use his name. Mr. Dijsselbloem said at a later news conference that Mr. Varoufakis left “on his own account” before the meeting had ended and before the remaining ministers decided on a follow-up meeting. Yanis Varoufakis, the Greek finance minister, attended the initial Eurogroup meeting on Saturday, but the Eurogroup leader, Mr. Dijsselbloem, said a second session “will be without the Greek colleague,” declining to even use his name. Mr. Dijsselbloem said at a later news conference that Mr. Varoufakis left “on his own account” before the meeting had ended.
In his own news conference, Mr. Varoufakis insisted that the Athens government was still seeking some form of accommodation with creditors.In his own news conference, Mr. Varoufakis insisted that the Athens government was still seeking some form of accommodation with creditors.
But Mr. Dijsselbloem suggested only minutes earlier that further talks would be fruitless because the credibility of the Greek government had collapsed.But Mr. Dijsselbloem suggested only minutes earlier that further talks would be fruitless because the credibility of the Greek government had collapsed.
In a later news conference, Mr. Dijsselbloem said the “door is open” to further talks.In a later news conference, Mr. Dijsselbloem said the “door is open” to further talks.