Greece default deepens euro crisis

Greece plunges further into deep crisis today as the country looks set to default on its €1.6bn repayment to the IMF, putting its membership of the euro in doubt.

Greece default deepens euro crisis

Throughout the country, people were in shock as the banks failed to open and the government went back on a promise to exempt pensioners from the €60 a day limit on withdrawals.

There were also fears that one of the country’s largest public sector pension funds, IKA, may not make their monthly pay-outs today.

Taoiseach Enda Kenny sent a letter to Greece prime minister Alexis Tsipras yesterday urging his government to return to negotiations as quickly as possible.

“For me, and I am sure for all our colleagues, the door remains open to dialogue in a spirit of solidarity and responsibility,” wrote Mr Kenny.

There were a series of protests around Greece, mostly outside shut banks, as police holidays were cancelled amid fears of riots.

Eurozone finance ministers, including Michael Noonan, met with their advisors to make contingency plans in case of contagion, as the capital controls in Greece took effect.

While the cost of borrowing rose for most eurozone countries including Ireland, against that of Germany, stock markets fell as did the value of the euro for a time, giving a taste of the turmoil that lies in wait.

By defaulting on the IMF, Greece joins Somalia, Sudan, and Zimbabwe and misses out on the additional €16bn it was due to receive from the IMF as part of its bailout programme.

At midnight tonight, the official EU/IMF/ECB bailout comes to an end as the eurozone refused to prolong it further, and with it goes the €7.2bn Greece was due to receive.

It will now be up to IMF chief Christine Lagarde whether to declare the default immediately or wait a few weeks. The next faultline is July 20, when Greece is due repay €3.4bn to the ECB, and failure would mean it is in breach of the EU treaty.

The battle for the hearts of Greek people kicked off in Brussels with an impassioned plea for a yes vote in Sunday’s referendum by commission president Jean Claude Juncker.

“Greece is Europe, Europe is Greece”, he said in Greek and the clip was broadcast across Twitter and other media.

With Italy and its high debt making it among the most vulnerable to exit, the Italian prime minister Matteo Renzi warned: “It’s not a derby between the EU and Tsipras, but between the euro and the drachma.”

A straw poll among a few Greeks in Athens yesterday evening showed that while they know the question is about taxes, cuts, and changes, that is not what will be in their heads when they they cast their vote.

Mr Tsipras’ accusation of blackmail following the Friday’s EU summit may have infuriated his eurozone colleagues, but it has struck a chord with his citizens.

“This is 100% blackmail — they are looking at the numbers, not at the people even after six years of suffering,” said taxi driver Christos.

Like most Greeks, he wants to remain in the EU and keep the euro. But, he reasons, “the bottom line is it doesn’t matter if we have the pound, the drachma or the euro, if we are killing a country of 12m people”.

Greek media reported that Mr Tsipras made a fresh round of requests to his fellow EU leaders to extend the bailout until after Monday’s referendum, but they refused.

German chancellor Angela Merkel repeated a phrase she has used before — “if the euro fails, Europe fails” —but, following a meeting with party leaders in the Bundestag, she said she would not return to the negotiation table until after Greece had held its referendum.

The EU is coming under massive pressure from Washington to resolve the standoff, while the Chinese premier, Li Keqiang, in Brussels for a China-EU summit, said his government had an interest in Greece remaining in the eurozone and called on “international creditors to reach an agreement with Athens”.

British chancellor George Osborne said the referendum is effectively a choice of whether the country leaves the euro. “Britain’s attitude is we hope for the best, but plan for the worst,” he said.

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