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Greece and Its Creditors Start Talks Again on Debt Crisis Greece Misses Debt Payment, Deepening a Crisis
(about 2 hours later)
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. ATHENS — Greece and its European creditors put aside the bitter recriminations of the past few days and began talking again Tuesday about how to keep the country afloat financially, but failed to move fast enough avert a missed debt payment that only deepened the air of crisis.
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. With just hours to go before the deadline for the payment, Prime Minister Alexis Tsipras had asked the other nations that use the euro to provide another bailout that would buy Athens time to renegotiate its crippling debt load.
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. Finance ministers of the eurozone countries discussed the proposal on Tuesday night and left open the possibility that Greece could eventually win a new aid package, but dashed any hopes Athens had for immediate action. Chancellor Angela Merkel of Germany had said earlier in the day that no deal with Mr. Tsipras’s government could be negotiated until after a referendum on Sunday in which Greeks will be asked to accept or reject an offer made last week by Greece’s creditors.
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 International Monetary Fund said shortly after the deadline expired that Greece had missed the payment.
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. “We have informed our executive board that Greece is now in arrears and can only receive I.M.F. financing once the arrears are cleared,” said Gerry Rice, a spokesman for the fund.
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. Mr. Rice confirmed that the I.M.F. had received a request on Tuesday from the Greek authorities for an extension on the repayment.
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. That request, he said, “will go to the I.M.F.’s Executive Board in due course.”
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. Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, also said on Tuesday night that Greece was effectively in default and could now face even tougher conditions for a new aid package. 
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.   Mr. Dijsselbloem was speaking to CNBC shortly before midnight Central European Time when Greece formally missed a payment due the International Monetary Fund, and the European part of the country’s current bailout program expired. During a conference call earlier in the evening, the Eurogroup ministers refused a last-minute bid by Mr. Tsipras to extend that program.
  “I think the fact of the matter is that Greece is in default or will be in default tomorrow morning on the I.M.F. and also, I believe, on a loan to their own central bank,” Mr. Dijsselbloem told CNBC. “But they will be in default, and I don’t think can alter that in the short term.”
  Any new program for Greece from the European bailout fund, the European Stability Mechanism — something that was requested by Mr. Tsipras on Tuesday — would require a number of procedural steps and raise significant new challenges for Greece. 
  “Any talks about a future program will have to be discussed in the Eurogroup" and "will have to be assessed by the institutions,” Mr. Dijsselbloem said.
  He was referring to the three institutions — the European Commission, the International Monetary Fund and the European Central Bank — that oversee Greece’s compliance with the terms of the two giant bailouts it has been granted since 2010. 
Earlier, Alexander Stubb, the Finnish finance minister, wrote on his Twitter account that extending Greece’s current bailout program 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.
The developments came after top European Union officials had outlined another offer to Mr. Tsipras on Monday night, and 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.
With the nation’s banks shut down and his government confronting intensifying financial strains, Mr. Tsipras’s office released a statement 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 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. 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 new proposals.
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. Hours earlier, Mr. Tsipras spoke 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. And within 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.”
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.” Tuesday was the final day in which Greece could have made a debt payment of 1.6 billion euros, or about $1.78 billion, to the I.M.F. Failure to make the payment puts Greece in arrears to the I.M.F., but also casts 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 expired 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 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, which he found onerous.
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.”
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.”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.”
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.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.
“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.”“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.”
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.”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.”
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.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.
“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.