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| People stand in a queue to use an ATM outside a closed bank, next to a sign on the plant, bottom right, reading ''NO'' in Athens, Tuesday, June 30, 2015. It's crunch time for Greece, with the European part of its international bailout expiring Tuesday and with it any possible access to the remaining rescue loans it contains that it needs to pay its debts. As a result, the government is unlikely to repay a roughly 1.6 billion-euro ($1.87 billion) debt to the International Monetary Fund due Tuesday, too — a move that increases fears the country is heading to a messy default and potential exit from the euro currency. |
ATHENS, Greece
(AP) -- Greece slipped deeper into its financial abyss after the
bailout program it has relied on for five years expired at midnight
Tuesday and the country failed to repay a loan due to the International
Monetary Fund, deepening fears over whether it will be able to remain in
the eurozone.
With its failure to repay the
roughly 1.6 billion euros ($1.8 billion) to the IMF, Greece became the
first developed country to fall into arrears on payments to the fund.
The last country to do so was Zimbabwe in 2001.
After
Greece made a last-ditch effort to extend its bailout, eurozone finance
ministers decided in a teleconference late Tuesday night that there was
no way they could reach a deal before the deadline.
"It
would be crazy to extend the program," said Dutch Finance Minister
Jeroen Dijsselbloem, who heads the eurozone finance ministers' body
known as the eurogroup. "So that cannot happen and will not happen."
"The program expires tonight," Dijsselbloem said.
The
brinkmanship that has characterized Greece's bailout negotiations with
its European creditors and the IMF rose several notches over the
weekend, when Prime Minister Alexis Tsipras announced he would put a
deal proposal by creditors to a referendum on Sunday and urged a "No"
vote.
The move increased fears the country
could soon fall out of the euro currency bloc and Greeks rushed to pull
money out of ATMs, leading the government to shutter its banks Monday
and impose restrictions on banking transactions for at least a week.
Greeks are now limited to ATM withdrawals of 60 euros ($67) a day and
cannot send money abroad or make international payments without special
permission.
But in a surprise move late
Tuesday, Deputy Prime Minister Yannis Dragasakis hinted that the
government might be open to calling off the popular vote, saying it was a
political decision.
The government decided on
the referendum, he said on state television, "and it can make a
decision on something else." It was unclear, however, how that would be
possible as Parliament has already voted for it to go ahead.
With
its economy teetering on the brink, Greece suffered its second
sovereign downgrade in as many days when the Fitch ratings agency
lowered it further into junk status, to just one notch above the level
where it considers default inevitable.
The
agency said the breakdown of negotiations "has significantly increased
the risk that Greece will not be able to honor its debt obligations in
the coming months, including bonds held by the private sector."
Fitch said it now considered a default on privately-held debt "probable."
Hopes
for an 11th-hour deal were raised when the Greek side announced it had
submitted a new proposal Tuesday afternoon, and the eurozone's 19
finance ministers held a teleconference to discuss it.
But those hopes were quickly dashed.
German
Chancellor Angela Merkel said she ruled out further negotiations with
Greece before Sunday's popular vote on whether to accept creditors'
demands for budget reforms.
"Before the
planned referendum is carried out, we will not negotiate over anything
new," the dpa news agency quoted Merkel as saying.
Greece's
latest offer involved a proposal to tap Europe's bailout fund - the
so-called European Stability Mechanism, a pot of money set up after
Greece's rescue programs to help countries in need.
Tsipras'
office said the proposal was "for the full coverage of (Greece's)
financing needs with the simultaneous restructuring of the debt." It did
not provide details.
Dijsselbloem said the
finance ministers would "study that request as we should" and that they
would hold another conference call Wednesday.
Dragasakis, the Greek deputy prime minister, said the country's new proposal "narrows the differences further."
"We
are making an additional effort," he said. "There are six points where
this effort can be made. I don't want to get into specifics. But it
includes pensions and labor issues."
European
officials and Greek opposition parties have been adamant that a "No"
vote on Sunday will mean Greece will leave the euro and possibly even
the EU.
The government says this is
scaremongering, and that a rejection of creditor demands will mean the
country is in a better negotiating position.
In Athens, more than 10,000 "Yes" vote supporters gathered outside parliament despite a thunderstorm, chanting "Europe! Europe!"
Most huddled under umbrellas, including Athens resident Sofia Matthaiou.
"I
don't know if we'll get a deal. But we have to press them to see
reason," she said, referring to the government. "The creditors need to
water down their positions too."
The protest came a day after thousands of government supporters advocating a "No" vote held a similar demonstration.
On
Monday, European Commission President Jean-Claude Juncker made a new
offer to Greece. Under that proposal, Tsipras would need to accept the
creditors' proposal that was on the table last weekend. He would also
have to change his position on Sunday's referendum.
Commission
spokesman Margaritis Schinas said the offer would also involve
unspecified discussions on Athens's massive debt load of over 300
billion euros, or around 180 percent of GDP. The Greek side has long
called for debt relief, saying its mountainous debt is unsustainable.
A
Greek government official said Tsipras had spoken earlier in the day
with Juncker, European Central Bank chief Mario Draghi and European
Parliament president Martin Schulz.
Meanwhile,
missing the IMF payment means Greece is cut off from new loans from the
organization. And with its bailout program expiring, Greece will lose
access to more than 16 billion euros ($18 billion) in financial support
it has not yet tapped.
On the streets of
Athens, long lines formed again at ATM machines as Greeks struggled with
the new restrictions on banking transactions.
The
elderly have been hit particularly hard, with tens of thousands of
pensions unpaid as of Tuesday afternoon. Many also found themselves
completely cut off from any cash as they do not have bank cards.
The
finance ministry said it would open about 1,000 bank branches across
the country for three days beginning Wednesday to allow pensioners
without bank cards to make withdrawals. But the limit would be set at
120 euros for the whole week.
