With lines forming outside ATMs in Greece and the specter of capital controls drawing closer, the financial system buckled further after the announcement of the referendum on the terms of bailout aid. Prime Minister Alexis Tsipras, describing the proposal made by creditors as a violation of European Union rules and “common decency,” advocated a “no” vote.
Jeroen Dijsselbloem, the Dutch finance minister who presided over the fifth emergency session on Greece in little more than a week of the so-called Eurogroup, told reporters in Brussels Saturday that his Greek colleague, Yanis Varoufakis, had requested a one-month extension. With “no comprehensive package agreed” to by ministers, Dijsselbloem said the Greek government faces the expiry of its aid program on Tuesday night without any future financing in place.
“Not only has the Greek government rejected the last proposals by the institutions, you have to realize that those proposals already took advantage of the maxiumum flexibility,” Dijsselbloem said. Euro-area authorities “stand ready to do whatever is necessary to ensure financial stability” of the 19-nation currency region.
Greek Credibility
What may be a last throw of the dice for Greece’s Syriza-led government came after midnight in Athens, as Tsipras returned from weeklong negotiations in Brussels to announce the referendum for July 5. Dijsselbloem said the vote, and Tsipras’s decision to campaign for a “no,” raised questions about the Greek government’s credibility.
Varoufakis said that his government rejected an offer to unlock aid in return for more fiscal austerity made by creditors -- the European Commission, the Eurpoean Central Bank and the International Monetary Fund -- because the package gave no hope that Greece would emerge from the economic crisis.
The measures, ranging from cuts in pensions to wage curbs, have been “quite clear failures” since Greece first requested emergency aid in 2010, leading to twin bailouts worth 240 billion euros ($268 billion).
“Sad day for europe,” Varoufakis said as he left the building in Brussels where his 18 fellow euro-region colleagues met without him. “But we will overcome it.”
Source: http://www.bloomberg.com/europe
