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Greece Seeks Emergency Bailout From Eurozone Greece and Its Creditors Start Talks Again on Debt Crisis
(about 4 hours later)
ATHENS — With just hours to go before Greece hits a deadline for a debt payment it cannot afford, Prime Minister Alexis Tsipras on Tuesday asked the other nations that use the euro to extend another bailout and buy Athens time to renegotiate its crippling debt load. ATHENS — Greece and its European creditors began talking again on Tuesday about how to keep Greece afloat financially, but appeared not to be moving fast enough to prevent the country from missing a debt payment due at the end of the day.
Finance ministers of the eurozone countries said they would hold an emergency session Tuesday night to consider the proposal. There were no signs that the last-minute Greek proposal would be accepted, but the plan, coming after top European Union officials made another offer to Mr. Tsipras on Monday night, suggested that the two sides were both at least interested in getting back to the negotiating table ahead of a national referendum scheduled for Sunday in Greece. With just hours to go before the deadline for the payment, Prime Minister Alexis Tsipras of Greece asked the other nations that use the euro to provide another bailout, which would buy time for Athens to renegotiate its crippling debt load.
Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, wrote on his Twitter account that the ministers would hold a teleconference at 7 p.m. Brussels time “to discuss official request of Greek government received this afternoon.” Finance ministers of the eurozone countries discussed the proposal on Tuesday night and left open the possibility that Greece could eventually get a new package of aid, but dashed any hopes that Athens had for immediate action.
The flurry of events came after Mr. Tsipras’s office released a statement on Tuesday afternoon confirming that his government had forwarded a proposal to the Eurogroup and to a bailout fund called the European Stability Mechanism. The statement was vague, noting that Greece had applied for a two-year agreement for new loans from a pool of money under the control of the eurozone countries. The statement said the aim was to help the country meet its debt obligations, while Greece would remain in the eurozone and continue to seek a solution. Chancellor Angela Merkel of Germany said earlier in the day that no deal with Mr. Tsipras’s government could be negotiated until after a Greek referendum scheduled for Sunday. Greek voters will be asked to accept or reject an offer made last week by the country’s creditors.
The lack of specificity in the statement made it unclear whether it was just a repackaging of previous requests — already rejected in Brussels — or if the prime minister had offered new substantive proposals that could help the negotiations. Mr. Tsipras’s plan would amount to a third bailout of Greece since it was struck by the financial crisis more than five years ago. Alexander Stubb, the Finnish finance minister, wrote on his Twitter account that extending Greece’s current bailout program, which was to expire in a few hours, had not been possible. But Mr. Stubb said the request for what amounts to a third bailout for Greece would be “dealt with through normal procedures,” as was “always” the case after such requests.
Hours earlier, Mr. Tsipras had spoken by telephone with Jean-Claude Juncker, president of the European Commission, Mario Draghi, chief of the European Central Bank, and Martin Schulz, president of the European Parliament. Meanwhile, inside the Greek government, competing voices were jousting over how to proceed, analysts said. In another message posted on Twitter, Michel Reijns, a spokesman for Jeroen Dijsselbloem, the leader of the group of eurozone finance ministers, wrote that the ministers would hold another conference call on Wednesday morning to continue discussing the latest Greek proposals.
The developments, coming after top European Union officials had outlined another offer to Mr. Tsipras on Monday night, suggested that both sides were interested in defusing a crisis that has left Greece financially crippled and at risk of becoming the first nation to leave the euro currency union. France and the United States, among other nations, have been pressing for a compromise that could avert any risk of Greece’s problems spreading to other countries and reduce the strain on European unity.
But by evening in Europe, it appeared all but certain that Greece would miss the midnight deadline for a debt payment to the International Monetary Fund. Such a development would underscore the failure of efforts to reconcile Greece’s demands for relief from deep budget cuts imposed by its creditors with the demands from most other eurozone nations that the Greeks prioritize their debt repayments.
With the nation’s banks shut down and his government confronting intensifying financial strains, Mr. Tsipras’s office released a statement on Tuesday afternoon confirming that the government had proposed a new bailout from a different pot of money than the one drawn on so far.
The statement was vague, noting that Greece had applied for a two-year agreement for new loans from the so-called European Stability Mechanism. The statement said that the aim was to help the country meet its debt obligations and that Greece’s intention was to remain in the eurozone.
The lack of specificity in the statement made it unclear whether it was just a repackaging of previous requests — already rejected in Brussels, the base of the European Union — or if the prime minister had offered substantive new proposals that could help the negotiations.
Hours earlier, Mr. Tsipras had spoken by telephone with Jean-Claude Juncker, president of the European Commission, Mario Draghi, chief of the European Central Bank, and Martin Schulz, president of the European Parliament. Meanwhile, inside the Greek government, competing voices were debating how to proceed, analysts said.
“What is certain is that there is a lot of pressure inside the government,” said George Pagoulatos, a political analyst in Athens. “There are some people there who realize the huge risks in the path the country is on.”“What is certain is that there is a lot of pressure inside the government,” said George Pagoulatos, a political analyst in Athens. “There are some people there who realize the huge risks in the path the country is on.”
The clock is clearly ticking. Tuesday is the final day in which Greece can make a debt payment of 1.6 billion euros, or about $1.78 billion, due to the International Monetary Fund. Asked on Tuesday whether Greece would make the payment, Finance Minister Yanis Varoufakis replied, “No.” When asked by a reporter about the possibility of a last-minute aid deal with international creditors, he answered, “We hope so.” Tuesday is the final day in which Greece can make a debt payment of 1.6 billion euros, or about $1.78 billion, to the I.M.F. Asked on Tuesday whether Greece would make the payment, Finance Minister Yanis Varoufakis replied, “No.” When asked by a reporter about the possibility of a last-minute aid deal with international creditors, he answered, “We hope so.”
Included in the new Greek proposal was a request that the current bailout program be extended for a short period to avert a technical default Tuesday night on the payment to the I.M.F. Failure to make the payment would not only put Greece in arrears to the I.M.F., but also cast further doubt on its willingness and ability to meet other financial obligations in the coming weeks. Greece’s broader European bailout program, the lifeline that has helped keep the country afloat, also expires at midnight in Brussels. With its banking system shut down, Greece could be forced to abandon the euro as its currency if no deal can be reached for additional financing.
Failure to make the payment would not only put Greece in arrears to the I.M.F., but also cast further doubt on its willingness and ability to meet other financial obligations in the coming weeks. Greece’s broader European bailout program, the lifeline that has helped keep the country afloat, also expires at midnight in Brussels. With its banking system shut down, Greece faces intensifying financial troubles, and it could be forced to abandon the euro as its currency if no deal can be reached for additional financing. Negotiations have been going on for months, as Greece has sought to unlock a frozen €7.2 billion bailout payment and complete a new comprehensive agreement that would include more funding and major debt relief. But the talks broke down last weekend, after Mr. Tsipras unexpectedly announced that a “yes or no” national referendum would be held so that voters could decide whether to accept the terms proposed by creditors, which he found onerous.
Negotiations have been going on for months, as Greece has sought to unlock a frozen €7.2 billion bailout payment and complete a new comprehensive agreement that would include more funding and major debt relief. But the talks broke down last weekend, after Mr. Tsipras unexpectedly announced that a “yes or no” national referendum would be held so that voters could decide whether to accept the terms proposed by creditors.
Initially, European officials were furious, interpreting the move as brinkmanship in the negotiations. But on Monday, several European leaders, notably Mr. Juncker, began openly lobbying Greek voters to choose “yes.” Mr. Tsipras had asked European officials to extend the bailout program for several days, beyond the Sunday referendum, but they refused.
Mr. Tsipras has called on voters to choose “no” and has denied that the referendum is the equivalent of choosing whether to leave Europe’s currency union, something that most Greeks do not want to do.Mr. Tsipras has called on voters to choose “no” and has denied that the referendum is the equivalent of choosing whether to leave Europe’s currency union, something that most Greeks do not want to do.
“From the first moment, we had made it clear that the decision to carry out a referendum is not the end but the continuation of negotiations, with a better outcome for the Greek people,” the statement released by Mr. Tsipras’s office said. “Greece remains at the negotiating table.”“From the first moment, we had made it clear that the decision to carry out a referendum is not the end but the continuation of negotiations, with a better outcome for the Greek people,” the statement released by Mr. Tsipras’s office said. “Greece remains at the negotiating table.”
Global investors are closely watching whether Greece fails to make Tuesday’s payment to the I.M.F., amid concerns that a Greek fiscal crisis could ripple to other vulnerable countries. Greek officials have already suggested that they will not make the payment absent a broader new debt deal with Europe. Pro-Europe demonstrators massed in Syntagma Square in Athens outside Parliament on Tuesday night despite drizzle, thunder and lightning. As speakers began shouting, “Vote yes to Europe,” the demonstrators shouted and blew whistles. Some waved Greek flags, others red flags bearing the words “YES to Europe. YES to the Euro.”
Mr. Tsipras used a Monday night interview with a state-owned broadcaster to suggest that Greece would skip the payment, and he also blamed the European Central Bank for capping emergency loans that had kept the banking system afloat. The government responded by closing banks this week and instituting broader capital controls. Alexandros Limniatis, 67, a retired worker from the telephone company OTE, said he had been frustrated with the governing Syriza party since it took office this year. But the last straw, he said, came on Monday, the first day of capital controls, when he found himself waiting in a long A.T.M. line to receive his daily cash allotment of €60.
“How is it possible the creditors are waiting for the I.M.F. payment while our banks are being asphyxiated?” Mr. Tsipras said. “If they decide to stop the asphyxiation, the installments will be paid.” “I went home to my grandchildren and I thought, ‘What Greece am I leaving them?’ ” he said, twisting the strand of worry beads he had taken up since the doctor told him to quit smoking. “So I made up my mind to come here to demand hope. Greece in Europe. A European Greece.”
Closing the banks has upended the lives of many Greek pensioners, who usually withdraw their pensions in person at a bank branch. In response, the government is expected to open hundreds of branches for use by pensioners only. Meanwhile, the state treasury is running out of money. Initially, European officials were furious about Mr. Tsipras’s decision to call a referendum, interpreting the move as brinkmanship in the negotiations. But on Monday, several European leaders, notably Mr. Juncker, began openly lobbying Greek voters to choose “yes.”
On Tuesday, reporters in Berlin asked Chancellor Angela Merkel of Germany, a critical figure in the talks, whether a last-minute deal could be reached. Ms. Merkel insisted there had been no change in the situation since Monday. Some analysts said European officials were hoping that a “yes” vote on Sunday would force Mr. Tsipras to resign, a development that would be welcome to the creditors — the European nations that use the euro, the European Central Bank and the I.M.F. — after months of bitter clashes with Greek government officials. In the meantime, some European officials have been signaling that they would like to use the coming days to try to persuade Mr. Tsipras to stop pushing for a “no” vote — an unlikely prospect given the consistent position Mr. Tsipras has taken against the terms offered so far by the creditors.
Global investors have been closely watching whether Greece fails to make Tuesday’s payment to the I.M.F., amid concerns that a Greek fiscal crisis could ripple to other vulnerable countries. Financial markets around the world dipped again on Tuesday, in part over concerns about Greece.
“How is it possible the creditors are waiting for the I.M.F. payment while our banks are being asphyxiated?” Mr. Tsipras said in an interview Monday night with the state-owned broadcaster. “If they decide to stop the asphyxiation, the installments will be paid.”
Closing the banks has upended the lives of many Greek retirees, who usually withdraw their pensions in person at a bank branch. In response, the government is expected to open hundreds of branches for use by pensioners only on Wednesday. Meanwhile, the state treasury is running out of money.
On Tuesday, reporters in Berlin asked Ms. Merkel, a crucial figure in the talks, whether a last-minute deal could be reached. Ms. Merkel insisted that there had been no change in the situation since Monday.
“Tonight at exactly midnight, the program ends,” she said.“Tonight at exactly midnight, the program ends,” she said.
“I do not have any other reliable indications” to the contrary, she added. “That does not mean that we will cut the lines of communication. That means the door remains open.” “That does not mean that we will cut the lines of communication,” she added. “That means the door remains open.”
At the 11th hour, France moved to promote a compromise proposal, President François Hollande told a small group of members of the French Parliament on Tuesday.
The efforts are being backed by President Obama, who spoke on Monday with Mr. Hollande and urged him to reach out to Greece. Mr. Hollande’s economic team has been working with the White House on possible solutions.
The goal of the French proposal — according to legislators who attended the meeting and received a general description from Michel Sapin, France’s finance minister — would be to offer a mix of money to stimulate investment in Greece, funding for the Greek economy and a debt restructuring package. Reducing debt payments has been a critical demand of the Greek government.
“Michel Sapin made the distinction between three main issues: the funding of the Greek economy, an investment plan and the methods for the debt restructuring,” said Barbara Pompili, the co-president of the Ecologists group in the National Assembly, who attended the meeting.
“I think the president and the government know that austerity can’t bring Greece back into balance,” she said.