Sunday 19 November 2017

As €16bn hangs in the balance, a No vote spells disaster

Pro-Euro protesters attend a rally in front of the parliament building, in Athens, yesterday
Pro-Euro protesters attend a rally in front of the parliament building, in Athens, yesterday

Joe Daunt

It's crunch time for Greece, with the European part of its international bailout about to expire and with it any possible access to the remaining rescue loans it contains that the country needs to pay its debts.

Greek Prime Minister Alexis Tsipras argues that the demands from creditors for further, tougher austerity measures simply cannot be accepted after six years of recession.

He has called for a referendum on creditor demands in return for bailout loans.

The government is unlikely to repay a €1.6bn debt to the IMF - a move that increases fears the country is heading to a messy default and potential exit from the euro currency.

With banks shut and Greeks limited to cash withdrawals of €60 ($67) per day, long lines formed once more at ATM machines.

However, on the other side of the tracks, European officials and Greek opposition parties have warned that a rejection of the creditor proposals in Sunday's popular vote will lead Greece out of the eurozone and potentially out of the European Union itself.

The government has responded by saying this is scaremongering, and that a No vote will merely mean the country is in a better negotiating position.

Nonetheless European Council President Donald Tusk has warned that will not be the case.

If Greece does not pay, it will be officially in arrears and will no longer have access to funding from the body until it pays its debt. This, IMF chief Christine Lagarde said last week, has "never happened in the case of an advanced economy".

EU officials also said Greece would lose access to more than €16bn (£11.2bn) in financial support once its bailout expires.

Greece can apply for some other form of assistance but this could take days, even weeks, to organise. An assessment would first have to be made on whether Greece is eligible, what kind of terms the new package would function under, and the kinds of reforms that Athens would undertake in return.

On the streets of Athens, long queues formed again at ATM machines as Greeks struggled with the new capital controls imposed on Monday, after a bank run over the weekend following the referendum announcement. Banks are to remain shut until at least next Monday. The elderly have been hit particularly hard, with tens of thousands of pensions unpaid as of yesterday afternoon.

Many also found themselves completely cut off from any cash as they do not have bank cards.

The finance ministry said it would open about 1,000 bank branches across the country for three days from today to allow pensioners without bank cards to make withdrawals.

But the limit would be set at €120 for the whole week, rather than the €60 per day allowed for those with bank cards.

The crisis has roiled global markets as investors fret over the repercussions of a Greek debt default and its exit from the euro - developments that could derail a fragile global economic recovery, as well as raise questions over the long-term viability of the euro currency itself.

Irish Independent

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