Greek Prime Minister Alexis Tsipras said Sunday the country’s banks will be closed and cash withdrawals restricted as the debt stalemate deepened between Athens and its international lenders.
In a nationally televised address, Tsipras blamed the country’s creditors for the crisis that threatens Greece’s membership in the 19-nation euro currency bloc. He did not give details on how long Greek banks would be shut or the extent of the capital controls.
The radical leftist Greek leader said the European rejection of the country’s request for an extension of its bailout until after it holds a July 5 referendum on whether to accept new austerity measures demanded by the lenders is “an unprecedented act by European standards, questioning the right of a sovereign people to decide.”
The bailout expires Tuesday, with Greece seeking $8 billion more so that it can make a $1.8 billion loan payment due then to the International Monetary Fund. But Athens is balking at the lenders’ demand for more austerity measures, including further pension cuts.
The European Central Bank (ECB) said it is keeping its emergency credit lines open to Greek banks even as Greek depositors are standing in long lines at automated teller machines to withdraw their savings. The decision keeps open a financial lifeline to Athens, but does not provide more money.
The ECB said it could reconsider its funding, but there was no hint of a resolution in the standoff between Greece and the creditors.
Greek Finance Minister Yanis Varoufakis suggested that Athens might not pay $1.8 billion it owes the IMF. He said the ECB, another of Greece’s lenders, profited on Greek bonds in 2014 and ought to simply transfer the money to the IMF to cover the loan payment.
IMF advocates ‘balanced approach’
IMF Managing Director Christine Lagarde said she is disappointed about the stalemate in talks between Greece and its lenders, but made no mention of the ECB tapping funds to pay the IMF.
“I continue to believe that a balanced approach is required to help restore economic stability and growth in Greece, with appropriate structural and fiscal reforms supported by appropriate financing and debt sustainability measures,” Lagarde said in a statement.
In Washington, the White House said President Barack Obama and German Chancellor Angela Merkel spoke by phone and agreed that it is “critically important” that Greece resume its economic reforms and growth within the 19-nation euro currency bloc.
ECB President Mario Draghi said the bank is working closely with the Bank of Greece to maintain financial stability. But Greek depositors, worried that the government would impose the withdrawal limits that Tsipras announced, lined up at ATMs over the weekend to get cash. Some machines ran out of money, but others were being replenished.
Meanwhile, the Greek parliament voted Sunday in favor of a request by Tsipras for the July 5 referendum on the terms of the international bailout deal that the lenders want Greece to accept.
Tsipras said “the people must decide free of any blackmail,” but the government is urging a “no” vote unless the terms are changed.
French Prime Minister Manuel Valls warned there is a “real risk” of Greece leaving the eurozone if Greek voters say “no” to the bailout proposals in the referendum.
Valls, however, refused to denounce the Greek government’s decision to hold the referendum. “When you ask the people to decide, to exercise their democratic right, this should not be criticized,” he said.
Valls said he continues to believe “that a deal is possible” and he invited the Greek government “to return to the negotiating table.”
Greece hurtled closer to a eurozone exit Saturday when Europe refused to extend the bailout program.
Greek authorities Friday unilaterally ended negotiations to extend the financial assistance and instead called for the referendum.
Eurozone chief Jeroen Dijsselbloem said ending talks “is a sad decision for Greece.”
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