BRUSSELS-Greek Prime Minister Alexis Tsipras was heading Tuesday to Brussels for an emergency meeting of eurozone leaders, where he will try to use a resounding referendum victory to eke out concessions from European creditors over a bailout for the crisis-ridden country.
The most obvious possibility is for Greece to leave or be ejected from the European Union. Second, while negotiations continue, the European Central Bank should extend its funding to avert economic collapse while there is still hope of a negotiated settlement. “I’m against a Grexit but we must discuss what “respecting the Greek vote” means”, said Juncker in a speech Tuesday morning.
But time is running out.
Austerity has not worked in Greece – indeed, in many ways it has made the situation worse, with the economy shrinking by a quarter in the past five years, and the referendum is a vote of confidence in Mr Tsipras’s attempts to find an alternative.
“We welcomed our new Greek colleague and listened to his assessment of situation after the “no” vote in Greece“, he said in a short statement, adding that there are no new proposals from new Greek Finance Minister Euclid Tsakalotos, Xinhua reported.
Meanwhile, many Greek banks are closed and withdrawals at cash machines are limited to just $67 a day.
The lack of progress on Greece anxious stock markets in Europe, where the Stoxx 50 index of top companies was down 2.1 percent on Tuesday.
A person with direct knowledge of the talks, who requested anonymity because of the sensitivity of the closed-door meeting, said that Tsakalotos had at least struck a far less abrasive tone than his predecessor and seemed open to constructive discussion.
The latest developments in the Greek crisis come after 61 percent of Greeks voted last Sunday against the country’s bailout program from creditors, which entailed austerity measures and spending cuts. The worldwide Monetary Fund last week called for European states to accept longer repayment rates and lower interest rates on their loans to Greece.
Paris and Berlin remain divided despite the Merkel-Hollande display of unity, with Germany’s Economy Minister Sigmar Gabriel insisting that talks on reducing Greece’s debt were impossible before Athens implements reforms.
“No, we are not willing to ease Greece’s debt”, said Finnish Finance Minister Alexander Stubb. The ECB, which does not confirm the meeting, holds the key to a short-term easing of market tension via its ability to provide cash to depleted Greek banks. And suppliers are demanding that businesses pay cash up front. The result is that they have created a meat grinder that kills every politician trying to pass the reforms demanded by the troika, paving the way for more radical politicians to take center stage.
“We cannot play with fire”, said Gianni Pittella, president of the Socialists and Democrats Group in the European Parliament, warning that “maybe someone did not understand” the severe consequences for the eurozone, euro and the European Union (EU) in case of “no agreement”.