International
Thanassis Stavrakis / AP
Less than a day after Greece missed a $1.9 billion payment on an International Monetary Fund loan, negotiations between Athens and its European creditors have stalled until after a Greek referendum on Sunday, which will put creditor proposals to a vote.
After reports surfaced Tuesday that the vote might be put on hold, Greek Prime Minister Alexis Tsipras reaffirmed Wednesday that the referendum would continue, taking the moment to denounce European actions in strident terms — “the sirens of destruction are blackmailing you to say ‘Yes’ to everything without any prospect of exiting the crisis” — and to urge Greeks to vote against a cash-for-reform deal.
But there is a odd catch: The proposals that Greek citizens are being asked to vote on Sunday are no longer officially on the table, because those negotiations were concerned with an extension to the terms of a bailout that expired at midnight Tuesday, when Greece also missed a deadline to pay a major IMF loan.
“The previous program has expired. Now we need to start negotiations as regards a new program,” said European Commission Vice-President Valdis Dombrovskis on Wednesday. “This is certainly a more complicated situation to resolve than it would have been if we would have reached an agreement on the previous program.”
Trying to forge a new bailout framework, Tsipras on Tuesday sought from European creditors a different two-year, 29 billion euros ($32 billion) loan under the eurozone’s European Stability Mechanism, a bailout pot containing about half a trillion euros.
Adding further confusion to the crisis talks, Tsipras sent a letter to eurozone finance ministers Tuesday that appeared to acquiesce to many of the European demands from the weekend. Tsipras said he would accept many of the proposals that he had previously rejected if Greece were allowed some additional leeway on points of contention like the level of a value-added tax and an easing of pension cuts.
Whether or not Greece wanted to continue negotiations ahead of the referendum was effectively rendered moot by the reaction from eurozone ministers, who on both Tuesday and Wednesday rejected Greek requests for an extension of the now expired bailout and said any negotiations on a new bailout arrangement could be discussed, but not until after the Greek vote on Sunday.
“There will be no talks in the coming days,” said Dutch Finance Minister Jeroen Dijsselbloem. “We will simply await now the outcome of the referendum on Sunday and take into account the outcome of that referendum.”
With shifting positions and negotiating tactics becoming an almost daily occurrence, European creditors appear to want to wait until after the referendum for the Greek position to become clearer.
French Finance Minister Michel Sapin said on France's iTele television Thursday that Europe remains committed to avoiding “catastrophe” for Greece and keeping it in the eurozone. “The exit of Greece from the eurozone is not desirable, nor envisaged,” he said.
“Europe wants to help Greece. But cannot help anyone against their own will. Let's wait for the results of the Greek referendum,” European Council President Donald Tusk tweeted Wednesday.
Creditors have expressed frustration at what they see as the contradictory demands of Tsipras, who seems to have conditionally accepted European proposals while simultaneously asking Greeks to reject the reform measures.
As to why Greece insists upon a referendum on proposals that have officially expired and appear to be no longer under discussion, the answer seems to lay in that fact that Syriza, Tsipras’ ruling party, believes a “No” vote would strengthen its negotiating hand.
Writing on his personal website on Wednesday, Greek Finance Minister Yanis Varoufakis said that “with the power vested upon us by that NO [vote],” the government could “renegotiate Greece’s public debt as well as the distribution of burdens between the haves and the have nots.”
It's unclear how a "No" vote would help Greece's negotiating standpoint, but Varoufakis said since the referendum was announced his European counterparts had “sent signals that they are ready to discuss debt restructuring,” which they have been reluctant to do in the past but which Syriza believes is vital for the long-term health of Greece's economy.
Tsipras said in his speech on Wednesday, “A ‘No’ vote is a decisive step toward a better agreement that we aim to sign right after Sunday's result.”
Polls released Wednesday suggest that Sunday’s poll will be close. One poll put out by the ProRata Institute said that “No” voters retained an advantage, though one that was shrinking after several days of closed banks, while another poll put out by polling organization GPO put the “Yes” ahead by four points.
Tsipras has said a “Yes” vote could mean the end of his short premiership, indicating that he could resign if the majority of Greeks rejected the government's negotiating position on proposals from last weekend.
Either way, the clock is ticking. On July 20, a 3.5 billion euro bond comes due to the ECB, and if no deal between Greece and its creditors is reached before then, most analysts believe it would effectively force Athens to leave the eurozone currency union in order to print its own currency to make up its debts — a move that could see Greek residents’ purchasing power parity drop by 40 percent.
French President Francois Hollande on Wednesday urged the parties to keep working toward a deal, saying it was the responsibility of all to ensure that Greece is kept in the eurozone.
“It is our duty to keep Greece in the eurozone,” he said. “That depends on Greece ... but it also depends on us.”
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