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Uncertainty looms over Greece after emphatic ‘No’ to creditors

7 July 2015 16:03



Greece’s European interlocutors are split over how to continue interactions with the government in Athens – in high spirits following a favored ‘No’ vote in a referendum dismissing foreign bailout terms – leaving the future of the country in little more certainty than before.

While Greece’s Sunday referendum results were expected to change the state of limbo that has increasingly characterized the relations between Athens and its international creditors in recent weeks, Germany, a major player in the efforts to bail out cash-strapped Greece, seemed unimpressed.

The German Finance Ministry said on Monday that it saw no new particular basis for further talks with Athens over its bailout program.

A spokesman for German Chancellor Angela Merkel also maintained a hard line, saying it was up to the government of Greek Premier Alexis Tsipras to decide whether to remain in the eurozone.

Wanting the loan, but not the terms

Greece faces an increasing likelihood of having to leave the eurozone over its failure to adhere to its commitments as a member. The country has received two bailout packages (in 2010 and 2012), worth a total of €240 billion ($272 billion), from its creditors following its 2009 economic crisis in exchange for implementing tough austerity measures.

And while Athens is seeking a third bailout in the hope of resolving its deepening financial crisis, it is refusing to implement the austerity measures demanded by the creditors in return for the loans, a position that led to the current deadlock in the first place.

Save Germany, a softer Europe?

In spite of Germany’s tough stance, other European leaders appeared willing to avoid the prospect of a Greek exit from the single-currency zone – a so-called Grexit.

Germany has remained tough on Greece despite a referendum in which Greeks said no to foreign bailout terms. Above German Chancellor Angela Merkel is seen walking down the steps following a meeting with French President Francois Hollande (unseen) at the Elysee Palace in Paris, June 6, 2015. (© AFP)


France’s Finance Minister Michel Sapin told French radio that although the results of Greece’s referendum – in which 61 percent of voters rejected the conditions of an international bailout –  “resolves nothing,” Paris could still support some debt relief for Greece if Tsipras suggests “serious” terms for a new bailout package.

European Commissioner for the Euro and Social Dialogue Valdis Dombrovskis said on Monday that while the referendum “dramatically” weakened Athens’ negotiating position in talks with its international lenders, the door was open to the possibility of a compromise.

“If all sides are working seriously, it’s possible to find a solution, even in this very complicated situation,” Dombrovskis said.

According to the Greek government, Tsipras will present new proposals on Tuesday, when eurozone leaders are scheduled to meet in Brussels to discuss Greece.

Athens wants easier terms, and a part of its debt canceled.

Pooling resources

Meanwhile, Tsipras has called on Greek opposition parties to back his demands from the lenders.

Following a six-hour meeting, the leaders of five major political parties in Greece issued a statement saying they wanted a discussion of relief from the country’s debt to be included in any negotiations.

They further demanded instant financial help to keep the banks afloat, tackle unemployment, and cover current debt obligations, practically supporting the position of the ruling leftist government.

An unwelcome finance minister

Athens named on Monday Euclid Tsakalotos, a leading member of Greece’s bailout negotiating team, as the new finance minister to replace Yanis Varoufakis, who resigned hours after vote results surfaced, citing concerns that he is unwelcome.

Former Greek Finance Minister Yanis Varoufakis (© AFP)


Meanwhile, Greek banks, faced with a shortage of cash, are to stay closed on Tuesday and Wednesday. The government said a withdrawal cap of €60 ($67) per day from ATM machines could be tightened

Greece has already defaulted on a €1.5-billion debt payment to the International Monetary Fund (IMF), which, together with the European Commission and the European Central Bank, forms the troika of Greece’s international lenders.

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