Greek crisis: Greece plunges into financial chaos and orders a “park” | International

Athenians line up in front of a cashier.ALEXANDROS VLACHOS (EFE)

Park in Greece and on the way to a major euro crisis. The European Central Bank (ECB) pressed the nuclear button on Sunday: it rationed the emergency liquidity of the financial system and with this subtle movement forced Athens to announce the closure of banks, the Stock Exchange and the imposition of capital controls to avoid collapse. Frankfurt kept the assisted breathing, but did not give a single euro more to the battered Hellenic entities, despite the continuous withdrawals of deposits since the call for a referendum on Sunday on the European level. Without banks, the crisis is reaching an alarming stage. And not just for Athens. Led by an increasingly nervous France, Europe and the International Monetary Fund (IMF) have reiterated that they are keeping negotiating lines open, but Greece and the euro are heading into uncharted territory unless there is a turnaround. last minute.

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Without banks, there is no paradise: a country cannot live without its financial sector, a sort of circulatory system without which the economy risks becoming petrified. The ECB refused on Sunday to extend emergency funding, and this delicate move was enough to leave Athens without operating banks. Greece’s Financial Stability Board, meeting in Athens under the leadership of Finance Minister Yanis Varoufakis – with the participation of the Bank of Greece and banking bosses – announced the temporary closure of branches and the imposition of controls on capital to avoid financial collapse. Big words: the bank will keep the blind down at least until July 6, the day after the referendum. ATMs are not working today. And cash withdrawal is limited to 60 euros per person per day from Tuesday.

The crisis thus acquires a new dimension. Greek Prime Minister Alexis Tsipras confirmed in a brief message the imposition of capital controls and assured that deposits are guaranteed, as well as the payment of pensions. He blamed the ECB and the Eurogroup for forcing him to activate these measures. And he opened a door to hope: he reiterated a new request to extend the rescue to partners. Paris led a movement this Sunday to resume negotiations. Several countries – Italy, Spain and, in general, those potentially affected by the return of the European crisis – support this initiative. Even Washington has stepped up pressure for the partners and Greece to find a last-minute solution and avoid another shock to the markets, as the global recovery is still in its infancy eight years after the start of the Great Recession.

This does not seem easy: the sources consulted assure that the partners are finalizing a new offer to Athens with several concessions – which the European Commission circulated this Sunday -, and even with an explicit promise of debt restructuring. In exchange, Tsipras should change the direction of his campaign during the referendum, in favor of the European offer. In this case, the creditors could study an extension of the current bailout, in a fix for several bands which at the end of this Sunday was still far from being confirmed.

Faced with this possibility of finding an arrangement that saves the furniture, the damage is already done. Greece entered this Sunday – and moreover plunged into the euro – into unknown waters: it was forced to activate a park in the middle of the Eurozone, with a financial system that maintains close ties with the Balkans and other countries such as Cyprus, Romania and Bulgaria. And with a potentially dangerous contagion effect on the rest of the continent.

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Eurobank boss Mario Draghi decided to hold on to emergency funds despite weekend queues threatening a run on banks – more queues and capital flight to full speed – starting today. This gesture activated a domino of exceptional measures: not only will the banks not open and the dreaded parkbut will not open the Athens Stock Exchange either.

Hours earlier, Varoufakis’ statements to the BBC brought citizens back to the streets at midday after a temporary calm returned after the Union of Greek Banks issued an order on Saturday to replenish funds at ATMs. The imminence of a Black Monday multiplied the queues in neighborhoods that had not succumbed to nervousness, such as Syntagma Square, the zero kilometer of Athens.

The confidence of the Greeks in their banks is crumbling. And what’s worse: the trust between Athens and the creditors has disappeared. Tomorrow, the bailout expires and the ECB may be forced to turn off Greece’s tap for good. All the more so if Athens does not pay the IMF the 1,500 million due tomorrow. Athens lacks air in the midst of a completely rarefied atmosphere. Just a week ago, Chancellor Angela Merkel hinted that a deal was close. On Wednesday, the IMF broke the spell by tightening the position of creditors. On Friday, Tsipras surprised the world with a referendum on Europe’s penultimate proposal that makes things easier for him at home but opens the door to darker scenarios. Then, the partners refused to extend the rescue plan, and the closing of the banks left Greece one step away from bankruptcy and the euro zone one breath away from a dreadful crisis.

concessions

“It’s a dark moment for Europe,” Varoufakis manages to say: the paradox is that it’s happening because of a handful of fringes of dubious importance given the mess that awaits us. Brussels revealed on Sunday that the partners were willing to grant Greece a reduced VAT for the tourism sector and to grant other concessions, including debt relief. Tsipras rejected this package: he does not trust Europe, just as Europe does not trust Greece. Absent an unexpected twist, the euro crisis is finally returning. If he ever left.

Lagarde raises the possibility of reopening negotiations

The Managing Director of the International Monetary Fund (IMF), Christine Lagarde, expressed her “disappointment” on Sunday at the lack of agreement on the Greek crisis and insisted on the will of this organization to find a solution, and suggested that the Fund might even be ready to resume negotiations. “The IMF is ready for a rapprochement between the Greek authorities and European partners,” he said.

The toughness of the IMF in the final stretch of the negotiations has precipitated the rupture between Greece and the creditors, according to the sources consulted, even if the Fund agrees with Athens that the restructuring of the debt is necessary. “The next few days are critical,” Lagarde said. “The IMF will closely monitor the situation in Greece and other neighboring countries, and stands ready to provide assistance if needed.”

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