Greece’s Alexis Tsipras expects new aid deal 48 hours after referendum

Days after default, IMF says Athens needs debt relief and €50bn in new financing

 

Greek prime minister Alexis Tsipras has told the Greeks public the problems they face because of closed banks “will not last long”.

Mr Tsipras said he expected to seal a new aid deal with the country’s creditors 48 hours after Sunday’s referendum on its bailout terms.

Speaking to ANT1 television, he said that scenes in Greece involving queues at cash machines and a crush of elderly Greeks waiting hours for their pensions were “embarrassing”.

He blamed Greece’s euro zone partners for forcing the European Central Bank to freeze vital funding to the banks.

Mr Tsipras was speaking after the International Monetary Fund issued a stark warning that Greece needed debt relief and €50 billion in new financing from October through to 2018.

Days after Greece defaulted on part of its IMF debt, the fund, part of the lenders’ “troika” behind successive international bailouts, said Greece needed €36 billion from its European partners, to stay afloat.

It also needed significant debt relief, according to a preliminary draft of the fund’s latest debt sustainability report, which underlines the scale of the problems facing Athens, whatever the result of Sunday’s referendum is.

Painful sacrifices

Earlier the chair of the council of euro zone finance ministers Jeroen Dijsselbloem warned Greece was likely to “have no place in the euro zone” if it voted ‘No’ in Sunday’s referendum on whether to accept the terms of continued international aid.

Addressing a Dutch parliamentary committee, Mr Dijsselbloem said Greek voters should not expect to get better terms from their creditors by voting “no” in the referendum.

He said while the offer on which Greeks were being asked to vote had expired, the referendum would show whether Greeks were prepared to make the painful sacrifices needed to stay in the currency bloc.

“One illusion must be swept from the table: that if the outcome is negative then everything can be renegotiated and you will end up with an easier and more attractive package,” said Mr Dijsselbloem, who is also Dutch finance minister.

Alexis Tsipras letter, June 30th

Mr Tsipras’ rejection of what he terms the “blackmail” of EU and IMF creditors demanding spending cuts and tax hikes has so angered Greece’s partners that there is no hope of reconciliation before Sunday.

With banks closed for a fourth day and capital controls in place, the future of the left-wing government hangs on the result, given the angry mood of voters in Greece, torn between resentment of the lenders and scorn for their own politicians.

“People have lost it completely. And it’s all the fault, 100 per cent, of all the politicians. They are to blame for the situation we are in now,” said pensioner Thanos Stamou.

“We are asking them to vote with their eyes open and think hard about all the consequences of a ‘No’ vote, which could lead Greece to leave the euro zone,” French prime minister Manuel Valls said on the sidelines of an economic summit in Lyon.

The comment reflected the fear of many in the euro zone that a Greek exit would change the nature of the 15-year-old currency union which was intended to be unbreakable.

For Mr Tsipras, if voters back a bailout plan that he has scorned, his government is likely to fall, leading to new elections by September.

Allies quit

Four members of the right-wing Independent Greeks, uneasy bedfellows whose 13 votes Mr Tsipras’ left-wing Syriza party needs for a majority, defied him in the space of 24 hours by urging Greeks to accept more austerity in return for European money.

“Though these measures are painful - I don’t even know if Greeks can bear them - a ‘No’ will lead to the (reintroduction of the) drachma, which means the immediate destruction of the country, something that I don’t want to consent to,” one of the MPs, Costas Damavolitis, told Greek television.

Another dissenter, Vassilis Kokkalis, said he had not been elected on a mandate to close banks, and called for the referendum to be scrapped. His party colleague Dimitris Kammenos said Greece’s role in Europe was “non-negotiable”.

The defections were not enough to put the government at risk three days before a vote that is likely to decide its fate. But Mr Tsipras and Independent Greeks leader Panos Kammenos acted to shore up the coalition, held together from the start only by shared hatred of the austerity imposed by foreign lenders.

Remain convinced

Mr Tsipras and his finance minister, Yanis Varoufakis, remain convinced Athens can negotiate better terms, including debt relief, if voters reject the conditions on offer. But both have signalled they will quit if voters choose the bailout. “I want to believe that these problems won’t last long,”

In a bid to reassure voters, State Minister Nikos Pappas, one of Mr Tsipras’ closest aides, denied speculation that the government would impose a levy on bank deposits.

However, the ratings agency Fitch said the four biggest banks had already failed, and would have defaulted if capital controls had not been imposed. Unless the European Central Bank lifts the ceiling on emergency funding it provides at its next meeting on Monday, there is little prospect that they will reopen soon.

“We might run out of banknotes by Tuesday if people keep taking out 60 euros a day,” one senior banker said.

Pretend agreement

Asked by Bloomberg Television whether he would still be in office on Monday evening if Greeks voted ‘Yes’, Mr Varoufakis, an economics professor, said: “I will not ... I personally will not sign another extend and pretend (agreement).”

The only full poll to be released since the referendum was announced at the weekend showed the ‘No’ vote ahead but with support slipping sharply and the ‘Yes’ camp rising after the announcement that banks would be shut.

Berlin has delivered a blistering attack on Mr Tsipras, accusing him of lying to his own people and seeking scapegoats for the country’s misery everywhere but in his own ranks.

The German government dismissed desperate attempts by Athens to salvage some form of bailout.

In a separate development last night, the ECB agreed to maintain the amount of special aid for Greek banks at the current level of just below €89 billion.

Additional reporting: Agencies