Greece in Shock as Banks Shut After Creditor Talks Break Down

Stunned Greeks faced shuttered banks, long supermarkets lines and overwhelming uncertainty on Monday as a breakdown in talks between Athens and its international creditors plunged the country deep into crisis.

With Greece’s bailout expiring on June 30 and an IMF payment falling due at the same time, Prime Minister Alexis Tsipras pleaded by phone with European officials to extend the programme until a referendum on Sunday on its future terms.

The frantic efforts to secure Greece’s place within the euro zone followed a dramatic weekend. Tsipras’s decision, early on Saturday, to put the aid package to a popular vote took the lenders and some of Tsipras’s own negotiating team by surprise.

It also pushed Greece towards defaulting on 1.6 billion euros ($1.77 billion) due to the International Monetary Fund on Tuesday.

Greeks – used to lengthy talks with creditors before an eleventh-hour deal – were left shocked by the turn of events. Lines snaked outside ATMs and inside supermarkets while fears of disruptions to petrol and medicine supplies grew.

The breakdown has pushed the European Union and euro zone into uncharted terrain. Financial markets reacted badly on Monday, with European bank shares down sharply on worries of contagion within the financial system.

“I can’t believe it,” said Athens resident Evgenia Gekou, 50, on her way to work. “I keep thinking we will wake up tomorrow and everything will be OK. I’m trying hard not to worry.”

After months of talks, Greece’s exasperated European partners have put the blame for the crisis squarely on Tsipras for rejecting a package they consider generous. The Greek side says further austerity would simply deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.

Personal Betrayal

Emotions were unusually raw among Europe’s leaders. EU Commission President Jean-Claude Juncker said he felt personally betrayed and told Greeks a “no” vote would point to a euro exit.

“I will say to the Greeks who I love deeply: you mustn’t commit suicide because you are afraid of death,” he told a news conference.

French President Francois Hollande appealed to Tsipras to return to the negotiating table and German Chancellor Angela Merkel said she was willing to talk to the Greek leader if he wanted.



 

© Thomson Reuters 2015