Greece debt: Crisis meeting over bailout referendum – BBC News

Queue at a bank in Athens, 27 June 2015

People have been queuing to take out money in Athens

Greece’s creditors are holding a crisis meeting with the Greek finance minister after Athens called a referendum on the terms for a fresh bailout.

Greek PM Alexis Tsipras called the referendum for 5 July, but Greece’s current bailout expires on Tuesday.

On Saturday, creditors are expected to address a Greek request to extend that bailout until the vote is completed.

As the Greek parliament debates whether to ratify the referendum, queues have formed outside banks in Athens.

Many fear that Greece’s central bank might start restricting withdrawals.

It is unclear what would happen if Greece does not get a temporary extension.

Greece has to make a €1.6bn (£1.1bn) payment to the International Monetary Fund on Tuesday, and there are fears Greece’s economy could collapse if no new deal is struck.

EU Economic Affairs Commissioner Pierre Moscovici said on Saturday that “where there’s a will there’s a way”, but German Finance Minister Wolfgang Schaeuble said the “negotiations apparently have been declared at an end” by Mr Tsipras.

In a televised address late on Friday, Mr Tsipras described the bailout plan as “humiliation” and condemned “unbearable” austerity measures demanded by creditors.

Some opposition figures accused Mr Tsipras of using the vote to push Greece out of the EU.

At the scene: Joe Miller, Business reporter, Athens

Throughout the ups and downs of the recent negotiations, Greeks have by and large resisted the urge to withdraw money from their accounts, pinning their hopes on a last minute deal with the country’s creditors.

But as the deadline for Greece’s €1.6bn payment to the IMF looms, and with Mr Tsipras calling for a referendum next week, lines have begun to form outside ATMs and bank branches in Athens.

One bank has imposed withdrawal limits of €3,000 per account, and many ATMs have handwritten “empty” signs on them.

I visited half a dozen bank branches in the city centre, where the demand for withdrawals was so strong that customers were given a ticket number, and told to come back in a few hours.

One man told me he was 170th in line. “The game is over,” Peter, one of those queuing, told me. “Greece is going into uncharted waters, and the banks will be closed on Monday, I suspect.”

Anxiety is mounting in Athens. “Everybody’s really scared,” Elena, a woman in her 20s, tells me as she waits to withdraw cash from an ATM that is still dispensing. “We need to have enough money to last the week.”

The head of the IMF, Christine Lagarde, said that creditor institutions had “always showed flexibility to adjust to new situations in Greece”.

Speaking ahead of Saturday’s meeting between creditors and Greek Finance Minister Yanis Varoufakis, she said she would again be recommending a balance between structural reforms and fiscal consolidation.

European finance ministers had to consider “whether there’s a possibility or not of an agreement”, said Mr Moscovici.

“Greece’s place is in the eurozone,” he added. “When I look at where we are I see differences but they are quite limited and well identified.”

But Jeroen Dijsselbloem, who leads the group of European finance ministers, said he was “very negatively surprised” by the Greek government’s decision on the referendum.

Analysis: Chris Morris, BBC News, Brussels

The government portrays the referendum as yes or no to austerity. The opposition says it is, in effect, yes or no to Europe. Some of them say the referendum itself is unconstitutional, and are urging the Greek president to reject it.

But Mr Tsipras will argue that he had no other option. He was elected to get a better deal rather than no deal at all. But no better deal was on offer.

As for Greece’s creditors I think they will be one part flabbergasted, one part anxious, and one part wondering what on earth they do next.

But several eurozone finance ministers, arriving in Brussels for their fifth meeting on Greece in little more than a week, said there was no question of accepting Mr Tsipras’s request to extend his country’s current international bailout by a few days, to prevent the Greek economy collapsing before a referendum can be held.

Some of the ministers will now want to focus on Plan B instead – how to ring-fence Greece and protect the rest of the eurozone from any potential economic shocks ahead.

BBC economics editor Robert Peston said that if the European Central Bank continued its emergency support, some members of its governing council feared it would be breaking all central banking rules.

Of the meeting with Mr Varoufakis, Mr Schaeuble told reporters: “We’ll see what he says. With Greece, apparently you must never rule out surprises.

“But to be honest, none of the colleagues I spoke to beforehand sees any possibility for what we can do now.”

Greek debt talks – main sticking points

  • Greece has refused to accept cuts to pension payments or public sector wages
  • The IMF is pushing for deeper spending cuts, not just more tax rises
  • A key point of friction is a special benefit paid to some low-income pensioners, which creditors want scrapped
  • Creditors also want a wider VAT base; Greece says it will not allow extra VAT on medicines or electricity bills, and has also resisted calls for VAT hikes on hotels and restaurants
  • Athens wants a concrete commitment to debt relief, something its creditors are not offering

What if the Greek talks fail

Can Greece stay in the euro?

Chris Morris: Tsipras may face impossible choice

How did Greece get in this mess?

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