Euro group chief Jeroen Dijsselbloem
The finance ministers of the euro countries have their talks with Greece frozen until the country voted in the referendum on Sunday on the required reforms. “The euro group is unanimous in its decision to await the outcome of the Greek referendum before any further talks,” tweeted the finance minister of Slovakia, Peter Kažimír, after a telephone conference in the early evening. And: “Do not let us stretch the carriage before the horse.”
His Finnish colleague Alexander Stubb said that the Euro group would still be willing to negotiate with Greece, but had to foresee the results of the referendum. A video message from Alexis Tsipras at noon did not increase confidence in Greece’s willingness to cooperate.
Prime Minister Alexis Tsipras had made an improved offer concessions, but also insisted on a haircut and earlier controversial points, such as a tax rebate for the islands. In his speech to the nation Tsipras stressed that is not about to remain in the country in the euro in the referendum. He reiterated his recommendation to vote, to vote during the vote ‘no’. That would bring a quick success in the negotiations with Brussels. He also apologized to his compatriots for the inconvenience that they would have to suffer now because of the closed banks. “The pensions and salaries are sure the problems are only temporary,” he tried to calm down.
Merkel and Hollande disagree on procedure
German Chancellor Angela Merkel and French President Francois Hollande expressed different views on how to proceed with Greece. “Before the referendum can be negotiated no new aid program,” Chancellor Angela Merkel said on Wednesday noon in the Bundestag. Hollande stressed, however, in parallel, that he hoped for a solution before Sunday. “To put it bluntly, an agreement must immediately ago,” he said in Lyon. We speak now as long as this understanding, now she had to come.
In the afternoon, Merkel tried these differences to downplay again. “There is no difference in the fact that we again have to hold talks at some point,” she said after a meeting with Italian Prime Minister Matteo Renzi in Berlin. However, they reiterated that they too basically was ready to negotiate. “As new situations arise, it is necessary to speak again and again,” she said. “To my knowledge, there is no new situation”.
What happens now with Greece?
Chapter 1: Together everything is better
Chapter 2: End of euphoria
With the outbreak of the financial crisis in 2008 and a general recession, the situation in Greece worsened. The end of April 2010, the government formally applies grants. EU, European Central Bank (ECB) and the International Monetary Fund (IMF) to approve loans under strict austerity measures. The years that followed are a constant back and forth. Greece needs money again, the reforms are implemented in part, for the lender but not sufficient. Debt shall be adopted. The economic situation of the country is still getting worse, unemployment shoots up.
Late last year, the then Greek government calls new elections, because they can not agree on a new budget for the country with the donors. The EU warns of such elections, because the radical left Syriza party, which defends itself against the austerity requirements of EU, ECB and IMF could win.
Chapter 3: wishes are fulfilled
The mood in Greece is at the beginning of this year so bad that’s exactly what happens. Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis be selected and realize many of their election promises immediately. Make official dismissed again, increase the pensions and open up the closed system of public broadcasting again. That costs a lot of money that Greece has not, but this is lead until the middle of the year to serious problems. On this June 30 namely runs from the second rescue package for Greece. The country then must operate, what it is not able without new loans a loan from the IMF. The Greeks begin to withdraw money from their accounts.
In recent weeks there for this period repeatedly crisis summit, even at the technical level with the finance ministers of the euro zone, even the leaders. Lange sees it, despite many delays of as if you look at some kind. While the financiers and Greece argue over whether the country should above all by an increase in income, for example through an increase in VAT, or by cuts, as a reduction in pensions achieve reform conditions of donors. The financiers call for these cuts forcing Greece Bucks. Most observers assume, however, that will be agreed in late night sessions just before the deadline once again to a compromise. The European Central Bank bridged the financing difficulties of Greece at this time with emergency loans (Ela). The Greeks raise more money from their accounts.
Chapter 4: Escalation
But then the situation escalates end of the week. Alexis Tsipras calls for many observers and participants totally unexpected from a referendum on the austerity proposals of donors. The people should decide whether it wished to accept the terms of donors or not. The Greek Government has positioned itself clearly and is calling on voters to vote against the proposed reforms. Again and again was thought in the past about such a referendum, but so precipitously no one expected it.
With this referendum is on the one hand clear that until June 30, no agreement can be reached, because the vote is expected until next weekend take place. On the other hand, the Greek Government EU, ECB and IMF alienated so that Greece is excluded from the negotiations. Tsipras requested an extension of the utility until the referendum, but the donors refuse. The fronts are so hardened than ever. The Greeks are trying as much money as possible to withdraw, it formed queues at ATMs.
The announcement of the referendum takes many steps to be. The European Central Bank does not increase its emergency loans. Since Greece has almost exhausted this credit line, the country is no longer manage to connect with new money. The government announced last weekend to capital controls, forcing the banks to remain closed this week. The Greeks are likely to stand out since only 60 euros a day at the ATMs and transfer only within the country money. Parallel running this week, preparations for the referendum, even if there is some doubt as to whether the Greek Government is both financially and logistically able to organize such a vote in a few days.
Chapter 5: And now?
What will happen in the coming weeks, is the big question. The Greek government announced meanwhile, not to use the due this June 30 credit from the IMF. According to the IMF, the country is thus more or less insolvent. Now it is considered back and forth, like Greece could go bankrupt within the euro or if it is not yet on a Grexit, an exit from the euro, amounts. In addition, the question is how to proceed with the Greek government. If the people accept the proposals of the donors, Tsipras would end. In the ever-changing situation, hardly anyone wants to define a safe solution more. Only one thing seems certain: Nothing is excluded.
EU Council President Donald Tusk shared her view. “Europe wants to help Greece – but can anyone against his will (help),” he tweeted late afternoon. “Let’s wait for the results of the Greek referendum.”
No legal basis for further money
Since Wednesday night the stands since 2010 cut the capital market country without money sources. After the expiry of the aid program there is no legal basis for more new billions in aid. Because Athens also the first industrial country in general credit rate to the International Monetary Fund (IMF) of EUR 1.6 billion not repaid, and the funds can be transferred any more. But the European Central Bank (ECB) holds now the Greek banks alive. Tilt, the Greek economy would collapse.
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