Greece Braces for More Chaos 07/02 06:13
ATHENS, Greece (AP) -- Greece braced for more chaos on the streets outside
its mostly shuttered banks Thursday, as Athens and its creditors halted talks
on resolving the country's deepening financial crisis until a referendum this
Banks have been closed all week to prevent a crash from mass money
withdrawals, while a few have been reopened to help pensioners without ATM
But they are still in business. The European Central Bank left the terms of
its emergency $100 billion cash support to Greece unchanged, a day after Athens
slipped into arrears with the International Monetary Fund and its bailout
The move kept chances alive for a settlement between Greece and creditors.
And Finance Minister Yanis Varoufakis publicly thanked the ECB and its
president, Mario Draghi, for the decision.
"This allows us to breathe. It's a very positive move and a move of good
will on the part of the European Central Bank. I welcome it," Varoufakis told
Draghi, he said, had faced down "hawks" among eurozone members who had
demanded that Athens increase collateral needed to receive continued assistance.
Asian stock markets advanced Thursday after gains on Wall Street as strong
U.S. payroll data overshadowed worries about the Greek crisis.
Greece is seeking a third bailout from the eurozone rescue fund after the
previous deal expired this week without agreement on the terms of final pay
The impasse left billions bailout money frozen or canceled and saw Greece
forced to close banks and its stock market for at least a week, while the
country's left-wing government called a referendum urging voters to denounce
the previous deal offered by creditors.
Eurozone finance ministers decided to put the talks with Greece on hold till
the vote takes place.
"Given the political situation, the rejection of the previous proposals, the
referendum which will take place on Sunday, and the recommendation by the Greek
government to vote 'No,' we see no grounds for further talks at this point,"
Dutch Foreign Minister and eurogroup chairman Jeroen Dijsselbloem said after a
"There will be no talks in the coming days."
In Athens, crowds of anxious elderly Greeks thronged banks Wednesday
beginning before dawn, struggling to withdraw their maximum of 120 euros ($134)
for the week after the government reopened some banks to help pensioners who
don't have bank cards.
"It's very bad," said retired pharmacy worker Popi Stavrakaki, 68. "I'm
afraid it will be worse soon. I have no idea why this is happening."
Business associations and the country's largest labor union urged the
government to cancel the vote.
And the Council of Europe --- an independent body that monitors elections
and human rights --- told The Associated Press the referendum would fall short
of international standards.
In a sign of serious financial deterioration, Greece suffered another
sovereign downgrade, the fourth this week, as Moody's slashed the country's
rating from Caa2 to Caa3, or just above default.
Prime Minister Alexis Tsipras resisted the pressure, however, insisting a
"No" vote would give the government a stronger negotiating position.
"There are those who insist on linking the result of the referendum with the
country's future in the euro," Tsipras said. "They even say I apparently have a
secret plan to take the country out of the EU if the vote is 'No.' They are
lying with the full knowledge of that fact."
Greece is in a financial limbo now that its bailout program has expired,
cutting it off from vital financing and pushing it one step closer to leaving
the euro. It also has become the first developed country to fail to repay a
debt to the International Monetary Fund on time. The last country to miss an
IMF payment was Zimbabwe in 2001.
As long as it is in arrears on the IMF payment, Greece cannot get any more
money from the organization.
The referendum has thrown additional confusion into the already fraught
German Chancellor Angela Merkel said a deal remained impossible before the
referendum, while French President Francois Hollande said creditors should seek
an accord before then.
"We have to be clear. An accord is for right now, it will not be put off,"