Monday 26 September 2016

Greece Crisis: Country running out of food and medicine, banks down to last €500m

* PM Alexis Tsipras: negotiations will continue after Sunday vote
* Scepticism in euro zone about lending more to Greece
* Bank of England deputy governor sees no signs of contagion

Published 02/07/2015 | 07:00

Women sit in front of the National Bank building next to a poster that shows the word 'No' in Greek in Athens, Greece, July 3, 2015. An opinion poll on Greece's bailout referendum published on Friday pointed to a slight lead for the Yes vote, on 44.8 percent, against 43.4 percent for the No vote that the leftwing government backs. REUTERS/Jean-Paul Pelissier
Women sit in front of the National Bank building next to a poster that shows the word 'No' in Greek in Athens, Greece, July 3, 2015. An opinion poll on Greece's bailout referendum published on Friday pointed to a slight lead for the Yes vote, on 44.8 percent, against 43.4 percent for the No vote that the leftwing government backs. REUTERS/Jean-Paul Pelissier
A municipal worker assembles a voting booth at a voting center in Athens, on Friday, July 3, 2015. The brief but intense campaign in Greece's critical bailout referendum ends Friday, with simultaneous rallies in Athens for "Yes" and "No" supporters in what an opinion poll shows will be a very close race.(AP Photo/Petros Giannakouris)
Pensioners line up outside a National Bank branch to receive part of their pensions in Iraklio on the island of Crete, Greece, July 3, 2015. Long lines of pensioners jostling to get into a limited number of banks opened specially to pay out retirement benefits have become a powerful symbol of the misery facing Greece and the problems mounting for Prime Minister Alexis Tsipras. REUTERS/Stefanos Rapanis
A pensioner is helped by a bank manager after collapsing while waiting along with dozens of other pensioners outside a National Bank in Athens, Greece, July 2, 2015. REUTERS/Yannis Behrakis
A supporter of the Greek Communist Party shelters from sun during a demonstration in Athens, Greece, July 3, 2015. An opinion poll on Greece's bailout referendum published on Friday pointed to a slight lead for the Yes vote, on 44.8 percent, against 43.4 percent for the No vote that the leftwing government backs. REUTERS/Jean-Paul Pelissier
A pensioner reacts as she obtains a priority ticket to get part of her pension outside a National Bank branch in Athens, Greece, July 1, 2015
Pro-EU protesters take part in a rally in front of the Greek parliament in Athens last week. Photo: Yannis Behrakis/Reuters
Demonstrators burn a European Union flag during a rally supporting the no vote for the upcoming referendum outside European Union office in Athens, Thursday, July 2, 2015. (AP Photo/Petros Karadjias)
Pensioners line up as they wait to be allowed into a bank to withdraw a maximum of 120 euros ($134) for the week, Thursday, July 2, 2015. Greece braced for more chaos on the streets outside its mostly shuttered banks Thursday, as Athens and its creditors halted talks on resolving the country's deepening financial crisis until a referendum this weekend. (AP Photo/Daniel Ochoa de Olza)
A demonstrator gestures in front of a banner reading ''NO, not to fear'' during a rally by supporters of the no vote to the upcoming referendum in the northern Greek port city of Thessaloniki, Wednesday, July 1, 2015. Eurozone finance ministers decided Wednesday to break off talks on more aid for Greece until after it holds a weekend referendum, even as the Greek government pressed ahead with plans to let the people decide whether to accept more austerity measures in exchange for a rescue deal. (AP Photo/Giannis Papanikos)
Demonstrators shout slogans during a rally by supporters of the 'No' vote to the upcoming referendum in the northern Greek port city of Thessaloniki, Wednesday, July 1, 2015. Eurozone finance ministers decided Wednesday to break off talks on more aid for Greece until after it holds a weekend referendum, even as the Greek government pressed ahead with plans to let the people decide whether to accept more austerity measures in exchange for a rescue deal. (AP Photo/Giannis Papanikos)
Tourists visit the ancient Acropolis hill in Athens as Greek voters prepare to decide in a referendum on Sunday on whether their government should accept an economic reform package. Photo: Milos Bicanski/Getty Images
Demonstrators destroy a European flag during a rally by supporters of the no vote to the upcoming referendum in the northern Greek port city of Thessaloniki, Wednesday, July 1, 2015. Eurozone finance ministers decided Wednesday to break off talks on more aid for Greece until after it holds a weekend referendum, even as the Greek government pressed ahead with plans to let the people decide whether to accept more austerity measures in exchange for a rescue deal. (AP Photo/Giannis Papanikos)
Greek Prime Minister Alexis Tsipras
Greek Finance Minister Yanis Varoufakis
On the islands of Greece, aside from limited exports, tourism is their only source of income
An employee sews while working in a factory in the city of Blagoevgrad, Bulgaria July 2, 2015. Greece is the third-largest investor in Bulgaria and is also Bulgaria's fourth-largest export destination. Picture taken on July 2, 2015. To match EUROZONE-GREECE/BULGARIA REUTERS/Stoyan Nenov
On the islands of Greece, aside from limited exports, tourism is their only source of income
The word 'Yes' in Greek is seen on a sticker as pro-Euro demonstrators attend a rally in front of the parliament building, in Athens, Greece, June 30, 2015. Greece's conservative opposition warned on Tuesday that Sunday's vote over international bailout terms would be a referendum over the country's future in Europe, and that wages and pensions would be threatened if people were to reject the package
Demonstrators wave Greek flags during a rally at parliament organised by supporters of the Yes vote to the upcoming referendum (AP)
Greece's Prime Minister Alexis Tsipras (L) is welcomed by European Commission President Jean-Claude Juncker (R) ahead of a meeting on Greece, at the European Commission in Brussels, on June 24, 2015, as eurozone finance ministers try to finalise a debt deal and avoid a default by Athens. Greek Prime Minister Alexis Tsipras is set to conduct yet another round of crisis talks with representatives of the country's creditors, ahead of a crucial meeting of eurozone finance ministers where all sides hope a solution can be found to save the country from bankruptcy. AFP PHOTO / POOL / JULIEN WARNANDJULIEN WARNAND/AFP/Getty Images
Pro-Euro protesters attend a rally in front of the parliament building, in Athens, yesterday
A man walks past a capsized ship at a marina in the town of Elefsina, near Athens, Greece June 30, 2015. In a poll released on July 1, 54 percent of Greeks showed that they would heed the advice of leftist Greek Prime Minister Alexis Tsipras and vote in the Greek referendum against new tough conditions for financial aid in the hope that creditors would compromise. Picture taken June 30, 2015. REUTERS/Marko Djurica TPX IMAGES OF THE DAY
Cypriot supporters of Greece's radical left Syriza party take part in a demonstration in support of the Greek people on July 1, 2015 in the capital Nicosia. Greek Prime Minister Alexis Tsipras vowed to go ahead with a controversial bailout referendum despite pressure from European leaders as they declined to consider any fresh debt offer before Sunday's vote. AFP PHOTO / IAKOVOS HATZISTAVROUIAKOVOS HATZISTAVROU/AFP/Getty Images
Demonstrators shout slogans during a rally by supporters of the 'No' vote to the upcoming referendum in the northern Greek port city of Thessaloniki, Wednesday, July 1, 2015. Eurozone finance ministers decided Wednesday to break off talks on more aid for Greece until after it holds a weekend referendum, even as the Greek government pressed ahead with plans to let the people decide whether to accept more austerity measures in exchange for a rescue deal. (AP Photo/Giannis Papanikos)
A banner flies from a balcony of the Finance Ministry in Athens, Greece
Demonstrators gather to protest against the European Central Bank's handling of Greece's debt repayments, in Trafalgar Square in London, Britain, June 29, 2015. 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. REUTERS/Neil Hall
A closed Eurobank branch after the Greek government imposed capital controls at the country's banks in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis
An employee of a foreign exchange trading company stands in front of monitors displaying the current exchange rate of the Japanese yen against the Euro in Tokyo. Photo: Reuters
IMF managing director Christine Lagarde and Finance Minister Michael Noonan and French Finance Minister Michel Sapin at the meeting in Brussels
Greek Prime Minister Alexis Tsipras (front) is welcomed by European Commission President Jean Claude Juncker for a meeting ahead of a Eurozone emergency summit on Greece in Brussels, Belgium in this June 22, 2015 file photo

Tourists in Greece will be unable to buy food or medicine within days if a deal is not reached to reopen the banks, the head of a leading business body has warned.

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Constantine Michalos, president of Athens Chamber of Commerce, has warned that there could be “shortages on the shelves” by early next week and tourists could be left without “basics”.

Greek Finance Minister Yanis Varoufakis is surrounded by the media as he leaves the Finance Ministry building in Athens
Greek Finance Minister Yanis Varoufakis is surrounded by the media as he leaves the Finance Ministry building in Athens

Read More: ECB signals it could listens purse strings if referendum vote is 'yes'

He warned that shops will begin to close on Friday and not reopen because they are unable to import products due to the bank closures.

The Foreign Office increased warnings to British tourists heading to the country for their summer holidays this week as banks remains close and limits were placed on ATM withdrawal.

Speaking to BBC Radio Four’s Today programme, Mr Michalos warned holidaymakers would be left without access to essential food and medicines unless the situation is resolved soon.

Greek Prime Minister Alexis Tsipras
Greek Prime Minister Alexis Tsipras
Badly burnt: Greek Prime Minister Alexis Tsipras

“We will see as of next week shortages on the shelves”, Mr Michalos. “We are not in the position, although we may have funds in our accounts, to actually import goods and the major worry here is with basic sectors of the economy such as food and pharmaceuticals."

GREECE'S cash reserves are rapidly dwindling, with the country estimated to have just €500m left.

The daily cash allowance from ATMs has now been reduced to just €50, amid reports the country is running out of €20 notes.

Many ATMs in the country have run out of cash entirely.

A closed Eurobank branch after the Greek government imposed capital controls at the country's banks in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis
A closed Eurobank branch after the Greek government imposed capital controls at the country's banks in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis

Supporters of Greece's bailout terms have taken a wafer-thin lead over the "No" vote backed by the leftist government, 48 hours before a referendum that may determine the country's future in the euro zone, a poll showed.

An earlier poll by the respected ALCO institute, published in the Ethnos newspaper on Friday, put the "Yes" camp on 44.8 percent against 43.4 percent for the No" vote. But the lead was within the pollster's 3.1 percentage point margin of error, with 11.8 percent saying they are still undecided.

Greek Finance Minister Yanis Varoufakis (C) and head negotiator with Greece's lenders Euclid Tsakalotos (L) make their way past parliament as they head to Prime Minister Alexis Tsipras' office in Athens, Greece June 28, 2015
Greek Finance Minister Yanis Varoufakis (C) and head negotiator with Greece's lenders Euclid Tsakalotos (L) make their way past parliament as they head to Prime Minister Alexis Tsipras' office in Athens, Greece June 28, 2015
A man (R) reads newspaper headlines in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis

But the most recent poll puts those opposing Greece's bailout terms with a 0.5 percentage-point lead over the 'Yes' vote, a poll by Public Issue for the Syriza-published newspaper Avgi showed on Friday.

The poll, carried out between June 30 and July 2, found 43 percent of Greeks would vote 'No' in Sunday's referendum on bailout terms while 42.5 percent would vote 'Yes' and 9 percent were undecided.

With banks shuttered all week, cash withdrawals rationed and commerce seizing up, the vote could decide whether Greece gets another last-ditch financial rescue in exchange for more harsh austerity measures or plunges deeper into economic crisis.

It could also determine whether Greece becomes the first country to crash out of the 19-nation European single currency area, membership of which is meant to be irrevocable.

Youths (C) working at Athens' main fish market rest at the entrance of the market June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis
Youths (C) working at Athens' main fish market rest at the entrance of the market June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis
People line up at an ATM outside a closed National Bank branch, after the Greek government imposed capital controls at the country's banks in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis
Alexis Tsipras

The survey found that 74 percent of Greeks want to stay in the euro, while just 15 percent want to return to a national currency, with 11 percent undecided.

The IMF has warned that Greece needs a new €50bn bailout to stay afloat as voters go to the polls on Sunday to decide whether to accept the Troika's terms for help.

The stark warning came days after Greece defaulted on part of its debt. The latest assessment by the IMF concluded that the EU countries would supply €36bn of the €50bn and that Greece would still require debt relief.

Prime Minister Alexis Tsipras' rejection of what he terms the "blackmail" of EU and IMF creditors demanding spending cuts and tax hikes has so angered Greece's partners that there is no hope of reconciliation before Sunday's vote.

Mr Tsipras and his finance minister, Yanis Varoufakis, remain convinced Athens can negotiate better terms, including debt relief, if voters reject the conditions on offer.

But both have signalled they will quit if voters choose the bailout.

The euro zone's rescue fund, Greece's largest creditor, said on Friday it reserved the right to call in €130,9bin debt ahead of schedule after Athens defaulted this week on an International Monetary Fund loan.

The board of the European Financial Stability Facility decided to reserve its rights to act at a later stage on the outstanding loans to Greece, an EFSF statement said.

The decision was announced two days before Greeks vote in a referendum on whether to accept bailout terms rejected by their leftist government. European officials have said a "No" vote could lead to the country's exit from the euro zone.

The EFSF's chief executive, Klaus Regling, made the recommendation rather than the two other options - waiving the debt or demanding immediate repayment, which would have forced euro zone governments to take large losses.

Read more here: Greek vote will go ahead as leader attacks 'blackmail'  

Greece was being "blackmailed", Tsipras said, quashing talk that he might delay the vote, call it off or urge Greeks to vote "Yes".

The remarks added to the frantic and at times surreal atmosphere of recent days in which acrimonious messages from the leftist government have alternated with late-night offers of concessions to restart negotiations.

A day after Greece became the first developed economy to default on debt to the International Monetary Fund, long lines at cash machines provided a stark symbol of the pressure on Tsipras, who came to power in January vowing to end austerity and protect the poor.

Read more here: Talks stall but banks keep lifeline  

"A 'No' vote is a decisive step towards a better agreement that we aim to sign right after Sunday's result," he said, rejecting repeated warnings from European partners that the referendum would effectively be a vote on whether Greece stays in the euro or returns to the drachma.

European Council President Donald Tusk retorted in a tweet: "Europe wants to help Greece. But cannot help anyone against their own will. Let's wait for the results of the Greek referendum."

Euro zone finance ministers held an hour-long conference call to discuss the previous night's offer from Tsipras, but were adamant that no further discussions would be held until after Sunday's vote.

"We will come back to your request for financial stability support from the ESM (European Stability Mechanism) only after, and on the basis of the outcome of, the referendum," the head of the currency zone ministers' Eurogroup, Jeroen Dijsselbloem, wrote in a letter to Tsipras.

Read more here: I'd be surprised if Greeks don't vote for austerity in referendum: Schwarzman  

IMF Managing Director Christine Lagarde told Reuters in an interview that she would want to see reforms before opening discussions on any new debt package.

Global financial markets have reacted remarkably calmly to the widely anticipated Greek default, strengthening the hand of hardline euro zone partners who say Athens cannot use the threat of contagion to weaker European sovereigns as a bargaining chip.

"Financial markets are not showing there is contagion or spreading of those risks to the periphery," Bank of England Deputy Governor Jon Cunliffe told BBC Radio 5live in an interview.

Read more here: European stocks gain amid Greek bailout deal hopes  

In his overnight letter to creditors, seen by Reuters, Tsipras agreed to accept most of their demands for taxes and pension cuts and asked for a new 29 billion euro loan to cover all debt service payments in the next two years.

However, even if negotiations do restart after the referendum, Germany and others made clear that any talks on a new programme would have to start from scratch with different conditions.

The exasperated tone to public comments of European leaders exhausted by the chaotic turnarounds of the past few days offered little hope of a breakthrough.

Read more here: Despite the hubris of Greek leaders, it is appalling to see a proud nation on its knees

 

Tsipras has suggested he would step aside if Greeks vote "Yes" in Sunday's referendum.

PENSIONERS SUFFERING

"This government has done nothing since it came into office," German Finance Minister Wolfgang Schaeuble said in a speech in the lower house of parliament in which he accused Athens of repeatedly reneging on its commitments.

"You can't in all honesty expect us to talk with them in a situation like this," he said.

French Finance Minister Michel Sapin, among Greece's strongest sympathisers in the euro zone, told RTL radio, "The aim is to find an agreement before the referendum if possible ... But it's dreadfully complicated."

Lagarde declined to be drawn out on whether she viewed Tsipras was a reliable negotiating partner after his latest switch, although she did say the Fund wanted to see evidence of reforms before talks about any new potential debt package.

Read more here: Eurozone firewalls held up well - but they could face real test next week  

"We have received so many 'latest' offers, which themselves have been validated, invalidated, changed, amended, over the course of the last few days, that it's quite uncertain exactly where the latest proposal stands," she said.

Greece has shut its banks this week, imposed capital controls and limited teller machine withdrawals to prevent the public from emptying the banks.

On the third day of the closure, the costs were biting deeper for ordinary Greeks, with long lines forming at many ATMs and limited amounts of cash being doled out to pensioners. Even with a withdrawal limit of 60 euros a day, there were signs of banknote shortages, with bankers saying 50-euro and 20-euro notes were running low.

Read more here: Elderly Greeks scared, confused and angry as paltry €120 limit put on weekly pension  

The European Central Bank said it would maintain emergency lending that is keeping Greek banks afloat at the same level as late last week, keeping pressure on Greece as its lenders run out of cash.

Kiki Rizopoulou, a 79-year-old pensioner from Lamia in central Greece, had to travel to Athens to collect her pension, spending 20 euros of the 120 euros she was allowed to withdraw.

"I already have to pay back 50 euros that I owe. It's embarrassing," she said.

An opinion poll showed opposition to the bailout in the lead but also that the gap had narrowed significantly as the bank closure and capital controls began to bite.

Read more here: Greek vote will go ahead as leader attacks 'blackmail'  

Posters from the ruling Syriza party calling for a "No" vote started to appear in central Athens. A large white banner declaring 'No to blackmail and austerity!' was unfurled from windows of the finance ministry.

Finance Minister Yanis Varoufakis said on Twitter that it was the work of "unionists" and it was later removed.

SCEPTICISM

The Tsipras letter asking for a new bailout deal appeared to move closer to accepting creditor demands. But it contained only a single sketchy reference to labour market reform and no mention at all of frozen privatisations, both big priorities for the creditors.

He asked to keep a discount on value-added tax for Greek islands, stretch out defence spending cuts and delay the phasing out of an income supplement to poorer pensioners.

Read more here: Greece Crisis: Timeline to negotiation on new Greek bailout  

The lack of panic in financial markets stood in marked contrast to 2011, when the Greek crisis was perceived as a threat to the future of the single currency and investors bid up the borrowing costs for other countries seen as being in danger, like Spain and Italy. Most euro zone leaders now believe any damage to the currency zone from Greek turmoil can be contained.

In a poll by the ProRata Institute published in the Efimerida ton Syntakton newspaper, 54 percent of Greeks planning to vote would oppose the bailout against 33 percent in favour.

Of those polled before the announcement of the bank closures, 57 percent said they would vote "No" against 30 percent who would vote "Yes". However among those polled after, the "No" camp fell to 46 percent against 37 percent for "Yes".

Seeking a "No" vote, Varoufakis told state television a deal would then swiftly follow, even as early as Monday, and the capital controls would go.

"The ECB will press the button," he said.

Read more here: Greece crisis: Germany's Schaeuble says Tsipras government has wreaked havoc on struggling country  

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