Greek debt: Merkel dismisses Tsipras's

last-ditch compromise plan

German chancellor reiterates stance of no new negotiations with Athens
until after Sundays referendum on bailout

Angela Merkels intervention closes the door on the latest attempt by the Greek PM to extend Greeces
bailout, which expired on Tuesday, leaving it unable to pay its debts. Photograph: Fabrizio Bensch/Reuters

Jennifer Rankin in Brussels-Wednesday 1 July 2015

Germany has dismissed a last-ditch compromise plan from Greece that

bowed to some key demands of its creditors.
In an address to the Bundestag, the German chancellor, Angela Merkel,
reiterated her stance that there was no point in having talks with the
government of Alexis Tsipras before a referendum in Greece on an EU
bailout plan.
The door to talks with the Greek government has always been, and
remains, open, she said, but added that talks could not take place before

Sundays poll.
Her finance minister, Wolfgang Schuble, was fiercely critical of Tsipras,
saying: Greece is in a difficult situation, but purely because of the
behaviour of the Greek government Seeking the blame outside Greece
might be helpful inGreece, but it has nothing to do with reality.
The Greek government is not doing its people any favours at all if it keeps
making completely false statements. Nobody else is to blame for their
situation.
He added: Its all very sad. Were in a much harder situation than before. It
was always difficult. But it has just kept getting more and more difficult
since January [when Tsipras took over].
The intervention closed the door on the latest 11th-hour attempt from
Tsipras to extend Greeces bailout, which expired on Tuesday, leaving the
country unable to pay its debts.
As the Pope urged the faithful to pray for the Greek people, doubts about
the legitimacy of Sundays referendum came to the fore. The Council
of Europe, the human rights body independent of the EU, warned the vote
could fall short of international standards if it went ahead on Sunday.
The decision to hold a vote at short notice with less than two weeks to
debate the issues was a major problem and the question was not very
clear the secretary-general of the Council of Europe Thorbjorn Jagland told
the Associated Press.
The jargon-heavy question inviting Greeks to decide whether to support
texts on reforms for the completion of the current programme and beyond
and the preliminary debt sustainability analysis for Greece has been
widely criticised. Speculation mounted that the Tsipras government would
be forced to call off the referendum. We dont know if the Greek
government is going to hold a referendum or not and whether it is for or
against it, said Schuble.

But speaking live on Greek television Tsipras said the referendum would go
ahead: They say I have a supposed plan that if you vote no I will take you
out of Europe, they are wrong.
Greece is insolvent and almost bankrupt after five years of 240bn
(170bn) in European bailouts dried up at the stroke of midnight and it
became the first EU member to default on its creditors. On Tuesday, Greece
missed a deadline to make a 1.5bn (1.1bn) payment to the International
Monetary Fund, dealing a blow to a Europe committed to the irreversibility
of its 16-year-old single currency.
Shortly before it slid into default, Greece wrote to its creditors to elaborate
on an earlier request for a two-year 29bn loan from the eurozones 500bn
crisis fund. The Tsipras government indicated it was ready to accept a large
part of its creditors demands, but asked for concessions on VAT reform and
pensions.
Pensioners queue outside Greeces national bank in Athens on Wednesday
to collect their retirement cheques
Specifically, Tsipras asked for a 30% discount on VAT for Greek islands, as
well as a slower phase out of the solidarity grant for poorer pensioners.
But he was ready to sign up to long-sought reforms of Greeces product
markets effectively tearing up hundreds of rules that hinder competition
in the tourism and retail industries.
Our amendments are concrete and they fully respect the the robustness
and the credibility of the design of the overall programme, said the letter,
addressed to the heads of the European commission, the International
Monetary Fund and the European Central Bank.
Eurozone finance ministers will discuss the proposals at 5.30pm (4.30pm
BST/6.30pm Athens), but had not been expected to re-open talks with
Greek government.
As pensioners across Greece queued outside banks, the Greek government
was forced to deny it had raised the white flag to its creditors. Reports that
say the Greek government has fully accepted the institutions proposal do
not stand, the government said.

The new proposal was an attempt to find a mutually beneficial agreement

that not only gave emphasis to growth but making the countrys
monumental debt load viable, it added.
Greece is still waiting to hear whether it will be granted emergency aid from
the European Central Bank, as the country scrambles to pay wages and
pensions without the financial lifeline of an EU bailout.
The ECB has poured 89bn into the Greek financial system in recent
months to keep banks afloat. The Greek government will be waiting to hear
whether the credit line will be extended when the ECBs decision-making
governing council meets later on Wednesday in Frankfurt, Germany.
A weekend request from Athens to extend emergency liquidity funding by
6bn was turned down by the ECB. Some analysts think the central bank
may prefer to do nothing rather than risk charges of political interference.

A pro-EU rally in front of the parliament building in Athens. Photograph: Nicolas

Koutsokostas/Demotix/Corbis

In the hastily organised referendum that triggered the breakdown of talks,

Greeks are being asked to vote on creditors bailout terms that are no
longer on the table. Athens is campaigning for a no vote, while eurozone

leaders have insisted the choice is between staying in the euro or reverting
to the drachma.
A poll published on Wednesday showed the lead for the no side narrowed
after capital controls were introduced at the weekend.
The ProRata Institute poll, published in the Efimerida ton Syntatkton
newspaper, and reported by Reuters, showed 54% of those planning to vote
would oppose the bailout against 33% in favour. But among those polled
after the introduction of capital controls, only 46% planned to vote no.
The strongest support for a no vote comes from voters for the ruling hardleft Syriza party (77%), the far-right Golden Dawn (80%) and the
communists (57%). In contrast, 65% of people who support the the
traditional parties of the centre-right and centre-left, New Democracy and
Pasok, plan to vote yes, as do 68% of voters supporting the centrist To
Potami faction.

Pope Francis has urged the Catholic faithful to pray for the Greek people. Photograph: G
Ciccia/Pacific/Barcroft

As Pope Francis on Wednesday urged the faithful to pray for the Greek
people, doubts about the legitimacy of referendum came to the fore. The
Council of Europe, the human rights body independent of the EU, warned
the vote could fall short of international standards if it went ahead on

Sunday.
The decision to hold a vote at short notice with less than two weeks to
debate the issues was a major problem and the questions were not very
clear, its secretary-general, Thorbjrn Jagland, told the Associated Press.
The wordy question inviting Greeks to decide whether to support reforms
for the completion of the current programme and beyond and the
preliminary debt sustainability analysis for Greece have been widely
criticised. Speculation mounted that the Tsipras government would be
forced to call off the referendum.
We dont know if the Greek government is going to hold a referendum or
not and whether it is for or against it, said Schuble.
On a day of feverish rumours and hectic telephone diplomacy, eurozone
finance ministers decided that a last-ditch offer from Athens was too little,
too late. With less than nine hours to go before Greeces financial lifeline
vanished, the Tispras government called for a two-year loan from the
eurozone totalling 29.1bn, debt relief, as well as a temporary extension of
its bailout to avoid missing the IMF payment.
At a last-minute meeting of eurozone finance ministers, the Greek finance
minister, Yanis Varoufakis, offered to cancel Sundays referendum if the
eurogroup agreed to the terms.
During Tuesday evenings conference call, eurozone ministers decided there
was not enough time to ratify the Greek plan in the Athens parliament or
the German Bundestag. They also felt that the numbers no longer made
sense because the Greek economy had deteriorated further since the
imposition of capital controls.
The collapse of talks means Greece has lost not only a 7.2bn tranche of
bailout funds, but 10.9bn that could have been used to recapitalise its
cash-starved banks.
Being on the IMFs list of countries in arrears along with Sudan, Somalia

and Zimbabwe means Greece also loses the 16.6bn it could have got
from the fund by March 2016 if it completed its bailout.
Greece needs to find about 9.3bn to pay debts falling due to the IMF, the
ECB and private creditors over the summer, but this sum does not include
the bill for public sector wages and pensions. The next big milestone is a
3.5bn debt repayment to the ECB on 20 July.
Posted by Thavam