Greek Finance Minister Says Europe Can’t Afford To Let Greece’s Economy Crash – Huffington Post

By Lefteris Karagiannopoulos and Matt Robinson
ATHENS, July 4 (Reuters) – Greece’s finance minister accused creditors of trying to “terrorize” Greeks into accepting austerity, warning Europe stood to lose as much as Athens if the country is forced from the euro after a referendum on Sunday on bailout terms.
After a week in which Greece defaulted, shuttered its banks and began rationing cash, Greeks vote on Sunday on whether to accept or reject tough conditions sought by international creditors to extend a lending lifeline that has kept the debt-stricken country afloat.
The left-wing government is urging a “No” vote, saying Greece’s European partners are bluffing when they warn that would mean a Greek departure from Europe’s single currency, with unforeseeable consequences for Greece, Europe and the global economy.
Opinion polls on Friday gave the “Yes” camp, which favors accepting the bailout terms, a slender lead but all were within the margin of error and pollsters said the vote was too close to call.
Only one had the “No” vote winning, despite turnout of at least 50,000 opponents of the deal at a rally in central Athens on Friday that appeared significantly bigger than a simultaneous rally by the “Yes” camp.
“What they’re asking us to accept is eternal slavery,” said Ermioni Tenekidou, 54, a teacher.
Finance Minister Wolfgang Schaeuble of Germany, Greece’s biggest creditor and toughest critic, said any so-called Grexit, Greek exit from the euro zone, might only be temporary.
“Greece is a member of the euro zone. There’s no doubt about that. Whether with the euro or temporarily without it: only the Greeks can answer this question. And it is clear that we will not leave the people in the lurch,” he said.
But it is far from clear how a temporary exit from the 19-nation euro currency bloc might work. Some economists have raised the idea of a temporary suspension, whereby Greece would revert to a national currency for a number of years until its economy stabilized.

Greece’s European partners say the euro zone is better placed to minimize the impact on its vulnerable southern flank from a Greek exit than several years ago when the debt crisis exploded. But Greek Finance Minister Yanis Varoufakis said Europe stood to lose more than Greece.
“If Greece crashes, a trillion euros (the equivalent of Spain’s GDP) will be lost. It’s too much money and I don’t believe Europe could allow it,” he told Spanish newspaper El Mundo.
Varoufakis reiterated he would resign if Greeks vote “Yes,” and accused creditors of trying to terrorize voters by capping a liquidity line to Greek banks.
“What they’re doing with Greece has a name: terrorism,” he told El Mundo. “Why have they forced us to close the banks? To frighten people.”
Greece accounts for barely 2 percent of the euro zone’s economic output, but its exit would represent a massive blow to the prestige of Europe’s grand project to bind its nations into a union they said was unbreakable.
It would also spell even greater hardship for Greece, stricken by one of the worst economic crises in modern times that has left one in four workers without a job, hammered pensions and pay and fueled political instability.
Germany’s Welt am Sonntag newspaper, citing a “senior negotiator” among Greece’s creditors, said the Athens government had money “for perhaps a week, but certainly not much longer.”
Critics accuse Prime Minister Alexis Tsipras, a 40-year-old former student protest leader, of gambling Greece’s future with a plebiscite called with eight days’ notice after negotiations with the European Union, European Central Bank and International Monetary Fund hit a wall.
They point out that the offer Greeks will vote on is no longer on the table and the question is worded in cryptic legalese, leading the Council of Europe, a major European rights watchdog, to say the plebiscite falls short of international standards of fairness.
Echoing a defiant Tsipras at Friday’s “No” rally, 60-year-old teacher Giorgos Sarafianos said the referendum was a question of “dignity.”
“The only message that can be sent tomorrow is that if we want to be part of the European community, it should not be with our heads bowed,” he said.
(Additional reporting by Paul Day in MADRID and Madeline Chambers in BERLIN; Writing by Matt Robinson; Editing by Janet Lawrence)

Greek Prime Minister Alexis Tsipras addresses an anti-austerity rally at the Syntagma square in Athens on July 3, 2015. (YANNIS BEHRAKIS/AFP/Getty Images)

Thousands on ‘NO’ protesters gather in front of the parliament building in Athens on July 3, 2015. (LOUISA GOULIAMAKI/AFP/Getty Images)

Thousands attend a pro-NO rally in front of the Greek parliament in Athens on July 3, 2015. (LOUISA GOULIAMAKI/AFP/Getty Images)

Supporters of the ‘Yes’ campaign attend a rally and listen to speeches at the Olympic Stadium in preparation for Sunday’s referendum on July 3, 2015 in Athens, Greece. (Christopher Furlong/Getty Images)

Supporters of the ‘Yes’ campaign attend a rally and listen to speeches at the Olympic Stadium in preparation for Sunday’s referendum on July 3, 2015 in Athens, Greece. (Christopher Furlong/Getty Images)

Greek protesters hold a placard reading ‘No’ during a demonstration calling for a ‘No’ vote in the upcoming referendum in Athens on July 3, 2015. (ARIS MESSINIS/AFP/Getty Images)

Greek protesters shout slogans during a demonstration calling for a ‘No’ vote in the upcoming referendum in Athens on July 3, 2015. (ARIS MESSINIS/AFP/Getty Images)

Supporters of the ‘Yes’ campaign attend a rally and listen to speeches at the Olympic Stadium in preparation for Sunday’s referendum on July 3, 2015 in Athens, Greece. (Christopher Furlong/Getty Images)

Reuters reports:

Prime Minister Alexis Tsipras rejected European warnings that Greeks will be deciding on their future in the euro zone in a referendum on Sunday, saying negotiations would continue for a better deal with international creditors after the vote.

In a televised address on Friday, Tsipras said a report by the International Monetary Fund which arguing that Greece’s massive public debt could not be sustained without significant writedowns vindicated his advice to reject the lenders’ terms.

Repeating his assault on European partners he accused of blackmailing and issuing ultimatums to Greece, the leftist leader called for calm ahead of Sunday’s ballot, as two opinion polls showed the ‘Yes’ and ‘No’ camps neck-and-neck.

“On Sunday what is at stake is not Greece’s membership of Europe, what is at stake is whether blackmail will lead us to accept the continuation of a policy which the lenders themselves recognize is a dead end,” he said.

Read more here.

From the Associated Press:

The 1953 agreement, in which Greece and about 20 other countries effectively wrote off a large chunk of Germany’s loans and restructured the rest, is a landmark case that shows how effective debt relief can be. It helped spark what became known as the German economic miracle.

So it’s perhaps ironic that Germany is now among the countries resisting Greece’s requests for debt relief.

Read the full story here.

Despite a raft of austerity measures since 2010, Greece’s economy has not lifted out of the recession sparked by the 2008 economic crisis. Greece instead is feeling the dual pain of reduced social services amid a crashing economy. Charlotte Alfred breaks down the repercussions of austerity on Greece’s health care system. Read it here.

The battle for the future of Greece will not end on Sunday — no matter how the referendum goes, Mark Weisbrot argues in a blog for The WorldPost. “This is a fight over the future of Europe, and the people who are currently strangling the Greek economy in a transparent attempt to intimidate the Greek electorate understand this very well,” he says.

Read the full story here.

The grand battle for Greece’s economic future has been cast as one between Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel. But what are other European leaders saying about the Greek crisis and the referendum? Read Nathan Gardels’ summary of European leaders’ reactions here.

As the Eurozone gropes for a solution to the massive Greek debt crisis, many people are struggling to withdraw their own money from ATMs, let alone put food on the table.

Against the crisis, one man is trying to help the hungry. EasyJet founder, billionaire and Greek native Stelios Haji-loannou has been handing out free meals to Athenians through his charity, the Stelios Philanthropic Foundation. Currently nearly 2,500 people get food each day through the foundation’s Food From The Heart initiative, which Haji-loannou launched two years ago. The meals would cost about 4 euros, or about .44, in a supermarket.

“They are walking and queuing to receive something worth 4 euros. It shows how much poverty and desperation there is,” Haji-Ioannou told the Evening Standard.

Read more here.

Charlotte Alfred reports:

As Greece’s financial drama plays out, economists and political analysts are trading theories about what went wrong and who is to blame. For some, Greece’s government has presided for too long over irresponsible economic policies, and is now playing a game of political brinkmanship to avoid the day of reckoning for its huge debts. Others say the international creditors are placing unreasonable demands on Greece after it has endured years of painful austerity as a condition for international loans. There is consensus on one point: Greece’s economy is a shambles and many economists blame the austerity policies for the Greek economy’s failure to recover.

Read the full story here.

HuffPost’s Editor-in-Chief Arianna Huffington weighed in on the crisis in Greece in an interview on Bloomberg Markets on Wednesday. “It’s not as if Greece hasn’t done what the troika has asked, it’s just that there is no economic recovery and without economic recovery it’s really impossible to achieve what the troika wants,” Huffington said.

Watch the interview here.

Kostas Mavraganis of HuffPost Greece reports:

Greece’s Interior Ministry estimates that Sunday’s referendum on a bailout deal with international creditors will cost about 20 million euros — a budget that will cover procedural expenses, the transportation of election agents and the printing of ballots.

Nikos Voutsis of Greece’s Interior Ministry stressed in a press conference on Tuesday, however, that no government funding will be given to political parties, as is provided for by current law. Therefore, Greece’s political parties have to cover expenses using their own resources.

It is worth noting that the cost of the Jan. 25 general elections was estimated at 42 million euros, the lion’s share of which was attributable to election agents.

Ballot boxes for the upcoming referendum are stored in a warehouse in Athens on July 2, 2015. (ANGELOS TZORTZINIS/AFP/Getty Images)

Electoral workers prepare ballot boxes in a warehouse in Thessaloniki on July 2, 2015, ahead of a controversial bailout referendum. (SAKIS MITROLIDIS/AFP/Getty Images)

Sen. Bernie Sanders (I-Vt.) attacked the International Monetary Fund and European authorities on Wednesday for imposing what he called excessive austerity measures on Greece in negotiations over the country’s debt payments.

“It is unacceptable that the International Monetary Fund and European policymakers have refused to work with the Greek government on a sensible plan to improve its economy and pay back its debt,” Sanders said in an exclusive statement to The Huffington Post. “At a time of grotesque wealth inequality, the pensions of the people in Greece should not be cut even further to pay back some of the largest banks and wealthiest financiers in the world.”

Read more here.

Greece’s is facing a massive economic crisis. And of course, most Germans have seen it coming. It’s so obvious, that when it comes to national finances, the “Bankrupt Greeks“ are simply not as disciplined as the Germans. Right?

There is a general assumption that Europe’s future is jeopardized by “the Greeks,“ and the German newspaper Bild did the math, converting the financial aid into truck loads: “In order to get 215.7 billion euros in bills of 100 euros on a truck to Athens, you would have to send off 88 40-ton trucks.”

All this propaganda against Athens fails to acknowledge one fact: Within the last two centuries, the Germans, or more precisely the Prussians, have pulled off more bankruptcies than the Greeks.

Find out more here.

HuffPost Italy’s editorial director, Lucia Annunziata, argues in a blogpost published on Wednesday that the clash over Greece has one irreversible effect: the Europe people are criticizing or defending during these days is no longer the institution we once knew. “During this conflict, something we can call the European Canon has been shattered,” she says.

Read the blog here.

Greek Prime Minister Alexis Tsipras affirmed in a televised speech on Wednesday that Sunday’s referendum on a proposed bailout for the cash-strapped country will move ahead. Tsipras also denied that a “No” vote on accepting the terms of the bailout package with Europe would mean the country has to exit the euro.

European leaders have warned Greeks in previous days that voting “No” on Sunday could mean the end of the country’s membership of the eurozone.

Read more here.

Economics professor Nicos Devetoglou argues in HuffPost Greece that it’s unwise for the European Union to continue to impose harsh austerity demands on the Greek people.

With its fresh and harsher measures, always reigning intransigently supreme in the foreground, the EU still insists upon more widespread cuts in public expenditure, pensions and wages. Bound, if adopted, to starve the Greek economy into deeper recession due to an already collapsing aggregate demand in the system — exacerbated by a set of yet steeper rates envisaged both in direct and indirect taxation.

Read the full story here.

Pensioners sit in front of the Bank of Greece’s headquarters during a protest to reclaim their pensions in central Athens on July 1, 2015.(LOUISA GOULIAMAKI/AFP/Getty Images)

Employees adjust a banner reading ‘No to blackmail and austerity’ at the Finance Ministry in central Athens on July 1, 2015. (LOUISA GOULIAMAKI/AFP/Getty Images)

Critics of Greek Prime Minister Alexis Tsipras have accused him of showing little willingness to compromise in the talks. “Whenever the ideological, radical people lead the debate it leads to nothing,” European Parliament President Martin Schulz told HuffPost Spain last week, in an apparent reference to Tsipras and his government.

The pointed rhetoric has gone both ways, with Tsipras on Saturday rallying against “authoritarianism and harsh austerity” while calling for a July 5 referendum to decide whether Greece should accept another bailout.

Read more about the controversial prime minister here.

Nick Robins-Early reports:

Greece failed to meet its deadline to pay 1.6 billion euros it owed to the International Monetary Fund on Tuesday, a development that heightened fears of a Greek exit from the eurozone.

The IMF confirmed Greece missed the deadline in a statement on Tuesday night. It is the first time a developed country misses a payment to the IMF.

Tuesday also marked the end of Greece’s years-long bailout program.

Read the full story here.

Since the breakdown in negotiations between Greece and its international creditors over the country’s debts, it has become very difficult to follow the crisis. At almost every moment, a new European leader puts in his two cents.

The Royal Bank of Scotland (RBS) published a memo on June 29 that sums up the different scenarios Greece faces once its residents vote on the proposed bailout plan in a referendum on July 5. The outcome of the vote, the possible resumption of negotiations, the European Central Bank’s (ECB) reactions, a possible exit from the eurozone… It’s all in there.

“If we start with the possibility of a 60/40 vote in favor of ‘yes’ going by recent polls, and assuming that there will not be a return to the Greek exit scenario in the case of a ‘yes’ victory, then we estimate the probability of a Greek exit at 40 percent maximum, against 10 to 20 percent in our previous estimations,” RBS explains in their memo.

U.S. Treasury Secretary Jack Lew spoke with Greek Prime Minister Alexis Tsipras and other European officials on Monday, urging them to continue negotiating a bailout deal ahead of Greece’s July 5 referendum on agreeing to any such deal. But a former senior International Monetary Fund official told The Huffington Post on Tuesday that the United States should have intervened a week ago when the latest talks between Greece and its creditors began to fall apart.

Read the full story here.

In a blog for HuffPost Greece, Syriza’s Manolis Glezos defended the Greek government’s decision to call a referendum on the bailout proposal as a triumph of democracy.

In need of democratic expression, the government announced a referendum for July 5th. At a critical time, the government did the obvious: It requested that the Greek people judge the government, give direction to the government, and reward or criticize the government.

The Greek people spoke many times during the five years of the memorandum. They bled, they inhaled chemicals, they were faced with violence and mockery from the political personnel that for four decades now has used power in many ways, but never according to the principle “the measure of all money is people.”

Read the full blog here.

Joseph Stiglitz argues in the WorldPost that the situation in Greece has some important similarities with Argentina’s 2001 default — and some differences as well.

In both countries, recessions turned into depressions as a consequence of austerity policies — making the debt even more unsustainable. In both cases, the policies were demanded as a condition for assistance. Both countries had rigid currency arrangements that gave them no possibility for running expansionary monetary policies during the recession. In both countries, the IMF got it wrong, providing alarmingly flawed forecasts of the consequences of the imposed policies. Unemployment and poverty soared, and GDP plummeted. Indeed, there is even a striking similarity in the magnitude of the fall in GDP and the increase in the unemployment rate.

Read Stiglitz argument here.

From HuffPost France:

Greek Prime Minister Alexis Tsipras’ announcement on Saturday that he plans a referendum on the European Union’s proposed bailout plan has been strongly applauded by the leadership of France’s National Front party. While financial markets plunge into disarray as rumblings of a Greek exit from the eurozone grow louder, the party of Marine Le Pen rejoices over this “beautiful democracy lesson” addressed “to the Eurocentric class.”

It’s not much of a surprise to see France’s extreme-right party supporting the coalition of the Athenian radical left. Despite their ideological differences, the National Front welcomed the victory of Syriza in the Greek elections in January, lauding it as as a “slap in the face” to the euro and the austerity politics of the European Union.

Read the full story here.

Daniel Marans reports:

But nowhere do expressions of solidarity with Syriza resonate as much as in Spain, where Podemos is seen as a credible threat to the ruling conservative government. While Spain’s austerity policies have won it plaudits from eurozone leaders, they have proven less popular at home. Podemos has taken advantage of dissatisfaction with the country’s high unemployment rate to win mayoral races in Barcelona and Madrid, Spain’s two largest cities. The two wins could portend a victory in general elections later this year.

Read more here.

Nick Robins-Early writes:

In 2010 and 2012, Greece accepted bailout deals from European creditors totaling hundreds of billions of euros in order to prevent the collapse of the Greek banking system. The funds kept Greece from a potential default that would force it out of the eurozone, but most of the enormous sum of money involved in the bailouts ultimately didn’t end up funding public services or directly going to the Greek people.

Instead, as The New York Times reported in 2012, much of the bailout funds went back to the same creditors who gave Greece both the bailouts. This resulted in a situation where the so-called troika of the IMF, European Central Bank and European Commission were effectively lending Greece money so it could pay off the debt it already owed them. As a senior adviser to Germany’s Deutsche Bank told the Times then, the troika “is paying themselves.”

Read the full story here.

The Guardian asked 100 Greeks about their views of the troika, the chaos and whether they want their country to stay in the eurozone. Check it out here.


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