New York Times | - |
BRUSSELS - A chorus of voices on Monday called on European Union authorities to plan for Greece to default on its huge pile of debt after bailout talks between Athens and its creditors deteriorated over the weekend.
BRUSSELS
— A chorus of voices on Monday called on European Union authorities to
plan for Greece to default on its huge pile of debt after bailout talks
between Athens and its creditors deteriorated over the weekend.
Some
senior politicians and policy makers from Germany were among the most
outspoken, with one warning of the need for a “state of emergency” to
handle the potential fallout from a failure to reach a deal with the
Greek government.
The impasse over the debt talks exposed the wide gap between Greece and its creditors — other eurozone countries, the European Central Bank and the International Monetary Fund.
The two sides are deadlocked over what steps Greece must take to
overhaul its economy, particularly regarding its pension system and
budget surplus.
Unless
they work out a deal, the creditors will not unlock aid payments from
Greece’s international bailout, raising the likelihood that Athens would
be forced to default. A repayment of 1.6 billion euros, or $1.8
billion, to the International Monetary Fund is due on June 30.
The
sides were hardening their positions in advance of Thursday’s meeting
of euro-area finance ministers, whose approval is required for any
resolution to take effect. But the increasingly acrimonious talks are
adding to fears that Greece will become the first country to leave the
19-nation currency bloc.
Greece’s
stock market fell sharply on Monday, opening 6.5 percent lower, as
interest rates on European government bonds rose. European markets also
slumped, with the Euro Stoxx 50 index 1.3 percent lower in afternoon
trading in London.
Weekend
discussions between senior Greek government officials and
representatives of creditor groups broke down on Sunday evening, as the
two sides refused to soften their long-held bargaining positions.
But
Gavriil Sakellaridis, a spokesman for the Greek government, said on
Monday that, for Athens, the “only plan, basic plan, is to reach a
deal.” He added that “efforts will continue for a mutually beneficial
agreement.”
Mr.
Sakellaridis repeated, however, that Greece would not cut pensions or
raise the valued-added tax on basic goods, steps that, according to the
government, the creditors have insisted Athens must take to release the
bailout funds. Asked whether Greece would submit new ideas to creditors,
he said the government had “to a great extent reached its limit on
proposals.”
President
François Hollande of France on Monday warned that failure to reach a
deal on Greece could lead to “a period of turbulence.”
Speaking
at a news conference at the International Paris Air Show, Mr. Hollande
said that he would tell the Greek prime minister, Alexis Tsipras, “let’s not waste time, let’s resume negotiations as soon as possible.”
“Time
is running extremely short,” he said. “This is a message to Greece.
Greece should not wait but return to discussions with the institutions.”
One
of the key issues hanging over the negotiations is the continuing
flight of capital from the Greek banking system. Mario Draghi, president
of the European Central Bank, said on Monday that his institution had
already provided emergency funding to Greek banks this year of about
€118 billion, roughly double the 2014 figure.
That
funding will continue to be forthcoming as long as the Greek banks
remain healthy, Mr. Draghi told the Economic and Monetary Affairs
Committee of the European Parliament in Brussels. But he said any that
loosening of the rules on Greek lenders’ holdings of short-term debt — a
primary source of the fragile Athens government’s funding — hinged on
the “credible” prospect of a deal with creditors.
“The ball lies firmly in the camp of the Greek authorities,” Mr. Draghi, added. “Urgent action is necessary.”
Jens
Weidmann, the president of the Bundesbank, Germany’s central bank,
echoed that sentiment and warned of the increasing danger that Greece
would have to declare bankruptcy.
Timeline: Greek Debt Crisis
- December 2009 Credit ratings agencies downgrade Greece on fears that it could default on its debt.
- May 2010 Europe and Greece reach a $146 billion rescue package, conditional on austerity measures. Some economists say the required cuts could kill the patient.
- October 2011 Banks agree to take a 50 percent loss on the face value of their Greek debt.
- July 2012 Stocks soar after the head of the E.C.B. says policy makers will do ''whatever it takes'' to save the euro zone.
- January 2015 Greek voters choose an anti-austerity party. Alexis Tsipras becomes prime minister.
- May 2015 Greece quells fears of an imminent default, authorizing a big loan payment to the I.M.F.
- June 2015 Greece defers a series of debt payments until the end of the month. It is not clear how much longer Greece can continue to scrape by.
“Time
is running out. The likelihood that no solution can be found is growing
day by day,” he told a conference in Frankfurt on Monday. “There seems
to be a lack of will to reach agreement,” he said.
Mr.
Weidmann argued for something more than a stopgap solution so that
“Greece can stand on its own two legs” without continually turning to
partners for help.
This
is just the latest battle of wills in the long-running crisis that has
prompted speculation that Greece is in imminent danger of abandoning the
euro.
Four
years ago, after months of arduous negotiations and large
anti-austerity protests in Athens, lenders agreed to reduce interest
rates paid by Greece for its loans while the following spring private
creditors had their loans restructured.
A
standoff late last year, when lenders said Greece had failed to fulfill
its loan conditions, prompted political upheaval and led to snap
general elections. The results brought the left-wing Syriza party to
power and finally led to an interim agreement with the creditors in
February that extended the European part of the bailout program by four
months.
All
parties have repeatedly found ways to delay a reckoning. But the
current round of posturing and brinkmanship is expected to escalate
toward the end of June, when the extension expires.
Günther Oettinger, the European commissioner for digital affairs who is close to Chancellor Angela Merkel
of Germany, called on the European Commission to make plans for a
“state of emergency” in Greece from July 1. The commission is one of
three institutions, along with the International Monetary Fund and
European Central Bank, that oversee Greece’s compliance with the terms
of its loans.
Mr.
Oettinger was among several leaders of Ms. Merkel’s Christian Democrats
who met for a regular party leadership session on Monday at which
Greece was the foremost topic.
There
were also cautionary words for Greece from Sigmar Gabriel, the leader
of the center-left Social Democrats, who are Ms. Merkel’s partners in
government.
In
what amounted to the strongest warning yet from his party to the
leftist government in Athens, Mr. Gabriel told Bild, Germany’s
top-selling newspaper, “We want to help Greece and keep them in the
euro” but “it is not only time that is running out, but everywhere in
Europe the patience.”
He added, “Everywhere in Europe the mood is growing: ‘Enough!’ ”
Mr.
Gabriel also expressed sympathy for ordinary Greeks, “who so urgently
need this help from Europe.” But, he emphasized: “Europe and Germany
will not be blackmailed. And we will not let German workers and their
families pay for the exaggerated election promises of a partly Communist
government.”
The Athens government sought to underline that the debt crisis
was as much a problem for Europe as for the Greek people — and
indicated that it was prepared to bet that its creditors would blink
first.
“We will patiently wait for the institutions to adhere to realism,” said Mr. Tsipras, who was referring to Greece’s creditors.
“Those
who perceive our sincere wish for a solution and our attempts to bridge
the differences as a sign of weakness, should consider the following:
We are not simply shouldering a history laden with struggles,” Mr.
Tsipras said. “We are shouldering the dignity of our people, as well as
the hopes of the people of Europe.”
Greek
newspapers criticized European creditors for making too many demands
that risked unleashing economic chaos, but some also suggested that the
Athens government was mismanaging the latest chapter of the Greek debt
drama.
“A scenario of rupture, the road opens to default,” the right-wing Eleftheros Typos said.
“Callous creditors, awkward government,” the center-left Ta Nea said.
The
European Commission said at a daily briefing in Brussels on Monday that
there were no scheduled meetings between Greece and its creditors
before a meeting of eurozone finance ministers on Thursday in
Luxembourg. But the president of the European Commission, Jean-Claude
Juncker, was expected to meet with Mr. Draghi, the head of the European
Central Bank, to discuss the talks.
Correction: June 15, 2015
An earlier version of this article misspelled the given name of the European commissioner for digital affairs. He is Günther Oettinger, not Günter.
An earlier version of this article misspelled the given name of the European commissioner for digital affairs. He is Günther Oettinger, not Günter.
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