The clock is ticking for Greece as it rushes to finish a 3 year aid program and sweeping reforms in hopes to save the country from being the first domino to fall in what would inevitably become a global economic crisis. With just hours to come up with a plan, Greece is seeking help from it’s neighbors in Europe as the country is already in a free fall economically.
According to Business Insider :
As its banking system teetered near the edge, the government extended bank closures into next week, while international creditors were in open disagreement over whether to award the country debt relief – with Germany at odds with the International Monetary Fund.
Without a deal, Greece faces an almost inevitable collapse of the banking system, which would be the first step for the country to fall out of the euro.
As Thursday’s deadline loomed, the government sought to reassure its European creditors that it would enact tax and pension reforms quickly in exchange for loans from Europe’s bailout fund, the European Stability Mechanism.
In a formal request that was filled with vague promises but short on details, the Greek government pledged to “immediately implement a set of measures as early as the beginning of next week” – but did not specify what these were.
After months of fruitless negotiations with the Greek government, the skeptical eurozone creditor states have said they want to see a detailed, cost-accounted plan of the reforms by Thursday. That is meant to give enough time to review the plan before all 28 leaders of the full European Union meet on Sunday in what has been termed as Greece’s last chance to stay in the euro.
But Greece’s major creditors were hardly in lock-step over what path to take in dealing with the struggling but defiant EU member nation.
IMF chief Christine Lagarde reiterated Wednesday that Greece’s massive debt would need restructuring, something that Germany – Greece’s largest European lender – has resisted.
Speaking in Washington, Lagarde said Greece needed to continue cost-cutting reforms, but added: “The other leg is debt restructuring, which we believe is needed … for debt sustainability.”
“It well may be that the numbers may have to be revisited, but our analysis has not changed,” she said of the need for granting Greece better repayment terms.
U.S. Treasury Secretary Jack Lew added pressure on the European lenders, arguing debt relief was needed for a deal – and describing a Greek euro-exit as a “geopolitical mistake.”
“I don’t think any prime minister of Greece could sell all the additional fiscal measures, plus the structural reforms that are needed without some sense of what the debt sustainability looks like,” he said in Washington.
Earlier Wednesday, Greek Prime Minister Alexis Tsipras said his country was seeking a deal that would bring a definitive end to his country’s financial crisis. Greece has had two bailouts from its European partners and the International Monetary Fund since May 2010, totaling 240 billion euros ($260 billion).
“We need to ensure the medium-term funding of our country with a development and growth program,” Tsipras told lawmakers at the European Parliament in Strasbourg, France.
Applause rose from left-wing lawmakers in the turbulent chamber when Tsipras said aid to Greece has only helped banks, not ordinary Greeks, as some held up “No” signs to back Greek voters’ rejection of more austerity.
Tsipras insisted he has “no hidden agenda” to drive Greece out of the euro and that last Sunday’s referendum in which Greeks roundly rejected more belt-tightening reforms does not mean a break with Europe.
The head of a conservative group in the parliament, Belgium’s Guy Verhofstadt, said he was “furious” at Tsipras’ failure to spell out specifics of his reform plans.
Tsipras said Greece’s troubles predated his arrival in office in January and condemned the “austerity experiment” his country has endured over the past five years that he blames for spiraling unemployment and poverty.
“We demand an agreement with our neighbors, but one that gives us a sign that we are on a long-lasting basis exiting from the crisis – which will demonstrate to us that there is light at the end of the tunnel,” he said.
Tsipras vowed to continue reforms, but warned of the austerity-weariness of the Greek public. “This has exhausted the patience and resilience of the Greek people,” he said.
In Greece, meanwhile, people already struggling with eight days of shuttered banks and limits on money withdrawals learned the finance ministry was extending the closures until next Monday. Greeks cannot take out more than 60 euros ($67) a day from ATMs and are unable to send money abroad, including to pay bills or to stock their businesses, without special permission.
The head of France’s central bank said he feared the “collapse” of the Greek economy and “chaos” if Greece doesn’t strike a deal by Sunday.
In unusually strong language, Christian Noyer told Europe-1 radio he predicted “riots” in Greece if no deal is reached. He also indicated the European Central Bank would effectively pull the plug on its emergency liquidity measures for Greek banks if no deal is struck.
Highlighting the rising anger with Tsipras, European Commission President Jean-Claude Juncker had a stark warning for Greece after Tuesday’s eurozone summit.
“We have a Grexit scenario, prepared in detail,” he said, apparently referring to the situation in which Greece would be forced out of the currency union.
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