BRUSSELS (Reuters) – The euro area closed on Saturday the door to an extension of the credit line to Greece and left the country facing imminent default that could cause their exit from the Eurozone, after the Greek government rejected the tough demands of the lenders and called a referendum to decide on a rescue deal.
The finance ministers of the other 18 countries that share the euro met for the first time without Greece and flatly rejected his request to extend a bailout after the referendum of July 5.
This sets the stage for Athens falls on a default by the possibility of reneging on Tuesday a crucial payment to the IMF.
The 18 countries pledged to do whatever is necessary to stabilize the currency bloc and said they were in a better position than at the height of the crisis lived eurozone few years ago.
In a formal statement, also urged implicitly Greece to impose capital controls to stabilize its banking system.
The refusal of an extension of the rescue great pressure increased It exists on Greek banks, which rely on the help of the central bank to stay afloat. During the day, long lines formed in front of ATMs as people rushed to withdraw their money.
After his surprise decision to call a referendum on the bailout, Athens requested an extension of Greece’s bailout program beyond Tuesday, the day he must pay 1,600 million euros to the International Monetary Fund or fall into a default.
However, the other 18 eurozone members unanimously rejected the request, freezing fresh talks between Greece and the European Central Bank and IMF on how to deal with the consequences of a historic event in the 16 years of the euro.
The rapid rejection was a demonstration surprising the amount of discomfort there with Tsipras in the currency bloc by an announcement that ended five months of intense negotiations.
“The current financial assistance agreement with Greece will expire on June 30, 2015 and all agreements related to the Greek program,” said Eurogroup finance ministers.
The Greek Finance Minister Yanis Varoufakis, said the refusal to provide an extension” certainly damages the credibility of the Euro as a democratic union. “
“I am very afraid that the damage will be permanent,” he said.
The Greek parliament met to approve the referendum, although pro-European opposition parties joined in condemning the decision and fueled speculation that the leftist government of Tsipras may have to quit if voters support the rescue plan 5 July.
It is expected that the Greek president, Prokopis Pavlopoulos, meets with former Conservative Prime Minister Antonis Samaras on Sunday.
The supply of creditors requires Greece to cut pensions and raise taxes, something that Tsipras has long argued deepen one of the worst economic crisis in modern times in a country where a quarter of the workforce is unemployed.
Caught between fears of economic collapse and the demands of international creditors, some opinion polls released on Saturday pointed to a majority of Greeks are in favor of accepting the bailout terms.
Questions in the air
Many questions were in the air on the referendum, which was convened to approve the terms of a rescue deal may already be off the table.
But amid growing fears that foundations of the euro area could be severely weakened if Greece was forced to leave the bloc, Finance Minister of France, Michel Sapin, he insisted that Paris, at least, was still willing to talk.
“The 18 countries in addition to Greece, said that Greece was clearly in the euro and one that should remain in the euro whatever the current difficulties,” Sapin said.
While European officials have repeatedly insisted that the financial firewall built during the debt crisis in the euro zone would limit the impact of any output Greece, the long-term effects are completely unknown.
Jeroen Dijsselbloem, Dutch Finance Minister and President of the Eurogroup, said that Greek lawmakers should consider if the referendum is cautious before agreeing to do so.
Stressing the mutual incomprehension that marked months angry exchanges between the government led by Syriza party and its European partners, Varoufakis still hopes to reach agreement.
“In now crucial, the Greek government is struggling to there is a last-minute deal on Tuesday, “Varoufakis said after eurozone rejected further talks and said it would cut financial support on June 30.
The Greek Finance Minister said the Government would recommend that voters would support the agreement if lenders decided to improve the terms.
The heads of Finance of the euro zone met in Brussels for what it was intended to be the final negotiation to reach agreement.
But after being surprised by the announcement that Tsipras rejected his offer and called for voters after the deadline of Tuesday, the ministers said they were evaluating a “Plan B” for example how to limit the damage of a default.
“We have no basis for future negotiations, “said German Finance Minister Wolfgang Schaeuble, before the meeting.
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