European
leaders gave Greek Prime Minister Alexis Tsipras a straightforward choice:
ditch his principles or quit the euro.
With Greece running out of money and its
banks shut the past two weeks, the gathering was billed as the country’s last
chance to stay in the euro. Tsipras, who says he wants to keep Greece in the
currency union, has been in financial limbo since his government missed a
payment to the International Monetary Fund and allowed its second rescue
package to lapse on June 30.
“The situation is extremely difficult if you
consider the economic situation in Greece and the worsening in the last few
months, but what has been lost also in terms of trust and reliability,” German
Chancellor Angela Merkel told reporters.
With the final sticking points the role of
the IMF and Europe’s demand for a fund to hold Greek state assets for sale, the
euro slid 0.3 percent to $1.1130 by 12:49 p.m. in Tokyo. Standard & Poor’s
500 Index futures fell 0.2 percent.
The summit and the finance ministers’
meeting that preceded it featured skirmishes pitting hardliners led by Germany
against others. French President Francois Hollande rejected the notion of
suspending Greece from the currency. Earlier, German Finance Minister Wolfgang
Schaeuble snapped at European Central Bank President Mario Draghi.
Greek Pushback
An official
in Brussels said the document was very bad for Tsipras and the Greek people.
“They want to wreck us,” Defense Minister Panos Kammenos posted on Twitter.
“Enough is enough.”
“This Eurogroup list of demands is madness,”
Nobel laureate Paul Krugman wrote on his blog. “It’s a grotesque betrayal of
everything the European project was supposed to stand for.”
In addition to requirements to cut pensions
and raise sales taxes, measures that Tsipras accepted last week, the memo
demanded that creditor representatives return to Athens with full access to
ministers and a veto over relevant legislation.
Euro-area leaders also want Tsipras to
transfer as much as 50 billion euros of state assets to a Luxembourg-based
company for sale and make him fire workers he hired in defiance of previous
bailout commitments.
Balancing Costs
“The costs
for Greece of staying in the euro are reaching a point where the balance could
favor grexit,” said Daniel Munevar, who advised former Finance Minister Yanis
Varoufakis before he quit last week. “The costs being demanded of Greece are so
punitive that they are almost impossible to meet.”
Greece, whose economy has shrunk by about a
quarter since the first of two bailouts was enacted in 2010, needs as much as
86 billion euros over three years, with 22 billion euros required by the middle
of August.
Any deal is unlikely to be rubber-stamped
before Greece has to repay the European Central Bank 3.5 billion euros on July
20, and so creditors discussed bridge financing to avert a default, officials
said. An EU official rejected speculation that the ECB was willing to postpone
the payment.
Greece’s banks remain shut and capital
controls will remain in place when they reopen, as soon as this week if there’s
a deal, Economy Minister George Stathakis told Mega TV.
The banks are expected to stay closed on
Monday, so the ECB won’t need to adjust its now-frozen emergency credit line to
the banks right away, an EU official said as leaders were meeting. The ECB’s
Governing Council is slated to review the banks’ situation again on Monday.
Greece needs to pass laws by July 15 to
raise sales tax, cut pensions, change the bankruptcy code, safeguard the
independence of the statistics office and make spending cuts automatic if the
budget misses its target, according to the text presented to leaders.
The deal on offer is “clearly harsher than
what Greece rejected in the referendum last weekend,” Finnish Finance Minister
Alex Stubb told reporters as the leaders talks began. “It’s a rather black and
white choice.”
Πηγή:
bloomberg.com
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