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Greece in shock as banks shut after creditor talks break down

Greece has less than 48 hours to pay back $1.77 billion of IMF loans

Greek Prime Minister Alexis Tsipras spoke to European Commission President Jean-Claude Juncker on Monday and asked for help in securing a short extension of the country's bailout to allow time for a referendum on its terms, a government official said.

Previous requests for such an extension were refused.

Greeks struggled Monday to adjust to to shuttered banks, closed cash machines and a climate of rumors and conspiracy theories on Monday as a breakdown in talks between Athens and its creditors plunged the country deep into crisis.

Tsipras told Juncker that "obstructing the Greek people's democratic expression by closing banks goes against the democratic tradition of Europe," according to a Greek official. Tsipras asked Juncker to help get the program "extended by a few days and help restore the Greek banking system's liquidity."

He also spoke to the European Parliament President Martin Schulz and asked for parliamentary support.

After receiving no extra emergency funding for Greek lenders from the European Central Bank, Tsipras somberly announced capital controls in a televised address Sunday night to prevent banks from collapsing under the weight of mass withdrawals. 

Greece has less than 48 hours to pay back $1.77 billion of International Monetary Fund loans, and a default would set of a chain of events that could lead to the country's exit from the euro. 

After Tsipras angered Greece's international lenders by announcing a snap referendum July 5 on the terms of a cash-for-reforms deal, hopes of a last-minute breakthrough have faded fast. Greeks reacted with a mixture of disbelief and fear.

“I can't believe it,” said Athens resident Evgenia Gekou, 50, on her way to work. “I keep thinking we will wake up tomorrow and everything will be OK. I'm trying hard not to worry.”

European officials sent confusing signals about their next move. A spokesman for the European Commission told French radio that Brussels would not make any new proposals on Monday. That statement appears to contradict comments by EU Economics Commissioner Pierre Moscovici, who said that a new offer was forthcoming and that the two sides were “only a few centimeters” away from a deal.

The Greek government will keep banks shut at least through July 5, and withdrawals from ATMs, which were shut on Monday, will be limited to 60 euros a day when they reopen Tuesday. The stock exchange will also remain closed.

Meanwhile, anxious Greek pensioners swarmed closed bank branches Monday in the hope of getting their pensions.

Deputy Minister of State Terence Quick said special arrangements would be made for pensions, telling private Antenna television that pensions would be dispensed in full, since many pensioners don't have bank cards.

But dozens of pensioners who lined outside at least two offices of the National Bank of Greece on Monday after hearing they could withdraw pensions from some branches were turned away, a Reuters photographer said.

“I've worked all my life, only to wake up one morning to a disaster like this,” said one shop owner, who was there to collect his wife's pension.

After months of wrangling, Greece's exasperated European partners have put the blame for the crisis squarely on Tsipras' shoulders. 

The creditors wanted Greece to further cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times, in a country where over a quarter of the workforce is already unemployed.

The newspaper Nafetemporiki ran the front-page headline “Dramatic hours”; Ta Nea read, “When will the banks open?”

Despite the financial shock, parts of daily life went on as normal, with shops, pharmacies and supermarkets in Athens opening and Greeks meeting to discuss their country's fate at cafes and restaurants. Tourists gathered as usual to watch the changing of the presidential guard outside parliament. 

Despite the hardening of positions, officials around Europe and in the United States made a frantic round of calls and organized meetings to try to salvage the situation. 

U.S. President Barack Obama called German Chancellor Angela Merkel, and senior U.S. officials, including Treasury Secretary Jack Lew, who spoke to Tsipras, urged Europe and the IMF to come up with a plan to hold the currency together and keep Greece in the eurozone. The German and French governments announced emergency political meetings.

Al Jazeera and wire services

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