Monday, 29 June 2015

War of words fogs referendum

In an interview on national television on Monday night, Greek Prime Minister Alexis Tsipras confirmed that Greece would not honour an IMF bond on Tuesday, unless creditors accept its fiscal plan for the next 18 months.

He also left the door open for further talks, having walked out of them on Saturday, suggesting that Greece may be looking for a way to return. “We are still at the negotiating table. We never left the negotiating table. We are basically agreed on fiscal matters. On everything else we are prepared to talk.”

But a war of words has escalated between the Greek government and the rest of Europe over the last three days, leaving little hope that the Greek government can return to any sort of understanding with European colleagues and institutions.

Commission president Jean-Claude Juncker on Monday lashed out at the Greek government after repeated accusations that the Commission and Greece’s other institutional creditors, the European Central Bank and the International Monetary Fund, were to blame for the impasse in negotiations.

The Greek delegation walked out on talks “at the worst possible moment,” on Friday night Juncker said. “We were working on further openings and the Commission together with others was proposing to limit the increase of the hotel VAT in Greece to 13 per cent instead of 23 per cent envisaged earlier.”

Vice-President Dombrovskis was spending hours, days together with all the other Commissioners involved to put together all the elements needed to provide Greece a growth package of 35 billion euro,” Juncker said.

He made it clear that he did not believe the Greek delegation departed in good faith, accusing it of “egotism, and sometimes tactical or even populist games”. Greece walked out of talks in Brussels on Saturday, saying it had been presented with an “ultimatum”.

Juncker directly accused the government of lying about creditors’ intentions. “There is talk of an ultimatum, of a "take-it or leave-it" deal, as they say in French. We have heard about blackmail. But who acts this way? Who acts this way? Where do these insults, threats, misunderstandings come from - these incomplete sentences that carry the imagination of those who listen very very far away - too far?”

Tsipras said failure for last week’s talks belongs with creditors. He reiterated his belief that creditors are trying to intervene in Greece’s referendum since it was in their power to extend liquidity to Greek banks and use ECB profits on Greek bonds to pay the IMF, preventing a default - something Greece requested on Saturday. He criticised Greece’s Eurozone partners for putting themselves above Greece.

“There are no hosts and guests in Europe. And we don’t feel like guests in Europe… the Greek people are a European people. But those who use blackmail to violate all that has been achieved are doing it at their own risk.” 

But European leaders seem to be in no mood to accommodate Tsipras. In a statement on Greece on Monday, German Chancellor Angela Merkel insisted that the Greeks had to make the first move to mend their finances. “It is important—and in this position there will be no change—that own efforts and solidarity continue to belong together,” she said.

The Financial Times on Monday claimed to have obtained a copy of a letter from Donald Tusk, head of the European Council, turning down a Greek request to extend the financial assistance period by a month. "After consultations with the leaders, in the absence of new elements, I see no willingness to go against the positions expressed by the Finance Ministers at their June 27 meeting," the letter is alleged to say. It apparently, though, leaves open "the door to negotiations." 

Capital controls

Greek authorities began to clarify capital controls for households on Monday:

-Banks will remain closed for six business days, until July 6.
-ATMs were restocked on Monday but withdrawals are limited to 60 euros per card per day
-Domestic electronic transfers via web banking, phone banking and credit cards continue normally
-Cards issued by financial institutions abroad are not subject to these withdrawal limits
- Salary and pension deposits are to be made normally into beneficiaries’ accounts, but they are subject to the withdrawal limits

Retail business seemed to resume normally on Monday morning. While households are likely to remain liquid thanks to the fact that they have withdrawn several billion euros in savings over the past two weeks, it was unclear what the rules would be for businesses.

The heads of the country’s chambers of trade and industry wrote to Tsipras to seek an audience on Monday, saying that business was “asphyxiating”. 

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