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News, July 2015
Greek Banks Opens Monday, Merkel Urges Swift Bailout Talks, Hollande Calls for Creation of Euro Zone Government
July 19, 2015
Banks reopen, first repayments start as Greece aims for return to normal
Mon Jul 20, 2015 9:24am EDT
ATHENS | By Lefteris Papadimas
Greece reopened its banks and started the process of paying off billions of euros owed to international creditors on Monday in the first signs of a return to normal after a deal to agree a new package of bailout reforms.
Customers were queued up outside bank branches open for the first time in three weeks on Monday after they were closed to save the system from collapsing under a flood of withdrawals.
Increases in value added tax agreed under the bailout terms also took effect, with VAT on food and public transport jumping to 23 percent from 13 percent. The stock market remained closed until further notice. The bank closures were the most visible sign of the crisis that took Greece to the brink of leaving the euro earlier this month, potentially undermining the foundations of the single European currency.
Their reopening followed Prime Minister Alexis Tsipras' reluctant acceptance of a tough package of bailout demands from European partners, but a revolt in the ruling Syriza party now threatens the stability of his government and officials say new elections may be held as early as September or October.
"Things are better than the last few weeks. Thank God we didn't end up with the drachma!" said 62-year-old pensioner Maria Papadopoulou. "I came to pay bills and my taxes today. Last week I couldn't and all of this is very tiring for the older people like me."
Limits on withdrawals will remain, however -- at 420 euros ($455) per week instead of 60 euros per day previously -- and payments and wire transfers abroad will still not be possible, a situation German Chancellor Angela Merkel said on Sunday was "not a normal life" and warranted swift negotiations on a new bailout, expected to be worth up to 86 billion euros.
"Capital controls and restrictions on withdrawals will remain in place but we are entering a new stage which we all hope will be one of normality," said Louka Katseli, head of the Greek bank association.
Greeks will be able to deposit cheques but not cash, pay bills as well as have access to safety deposit boxes and withdraw money without an ATM card.
Bankers said there may be minor disruptions after the extended interruption to services but said they expected services to resume largely as normal.
"I don't expect major problems, our network and the network of our competitors are ready to serve our clients," said a senior official at Piraeus Bank, one of the big four lenders. "There might be lines because many people will want to withdraw money from their deposit boxes," the official said.
Athens initiated procedures to pay 4.2 billion euros in principal and interest to the European Central Bank due on Monday after European authorities agreed last week to provide emergency funding assistance,
It is also paying 2.05 billion euros to the International Monetary Fund in arrears since June 30, when Greece became the first advanced economy to default on a loan to the IMF, along with 500 million euros owed to the Bank of Greece.
VOTE ON WEDNESDAY
Tsipras is eyeing a fresh start and swift talks on the bailout aimed at keeping Greece afloat but faces hurdles with factions in his party.
Although the Greek parliament approved the bailout package on Thursday, the 40-year-old prime minister was forced to rely on votes from the opposition after 39 rebels from Syriza refused to back the government by voting against or abstaining.
A second vote will be held on Wednesday on measures including justice and banking reforms and a similar outcome is expected. The voting arithmetic is finely poised, however.
Together with his coalition partners from the right-wing Independent Greeks party Tsipras has 162 seats in the 300-seat parliament. But Thursday's rebellion cut his support to just 123 votes, meaning he is likely to need opposition votes again.
Some officials in the government have suggested that if support from lawmakers from within the coalition dropped below 120 votes, early snap elections would have to be called while the bailout was still being negotiated.
Their argument is that under Greek law, the lowest number of votes a government can have to win a confidence motion is 120 out of 240, the minimum quorum in parliament for a vote to be valid.
Dropping below 120 would be a symbolic blow but whether it would actually push Tsipras to step down is unclear given that he would have the support of the pro-European opposition parties if a confidence vote were called.
"What worries me is that some people still think that there would be no austerity if we were out of the euro. This argument is absolutely false," State Minister Nikos Pappas, one of Tsipras' closest aides told the leftist Efimerida Ton Syntakton newspaper.
Acceptance of the bailout terms and reopening of the banks have marked a new stage for Tsipras after months of difficult talks.
The bailout terms, which are tougher than those rejected in a referendum earlier in July, include tax hikes, pension cuts, strict curbs on public spending, an overhaul of collective bargaining rules and a transfer of 50 billion euros of state assets into a special privatization fund.
Greek banks ready to open Monday as Merkel urges swift bailout talks
Sun Jul 19, 2015 7:13pm EDT
ATHENS | By Costas Pitas and Lefteris Papadimas
Greek banks are ready to open their branches across the country on Monday after a three-week shutdown, officials said, while German Chancellor Angela Merkel called for swift aid talks so Athens could also lift withdrawal limits.
The cautious reopening of the banks, and an increase in value added tax on restaurant food and public transport from Monday, are aimed at restoring trust inside and outside Greece after an aid-for-reforms deal last week averted bankruptcy.
Greek Prime Minister Alexis Tsipras is trying to turn a corner after he reluctantly agreed to negotiate a third bailout, allowing the European Central Bank to top up bank credit lines but prompting a rebellion in his leftist Syriza party.
"Capital controls and restrictions on withdrawals will remain in place but we are entering a new stage which we all hope will be one of normality," the head of Greece's banking association Louka Katseli told Skai television.
Greeks will be able to withdraw 420 euros a week at once instead of just 60 euros a day, but the limit will effectively remain the same and capital controls will also stay in place.
"That's not a normal life so we have to negotiate quickly," Merkel said in extracts from an interview with German public broadcaster ARD.
Merkel said it would be possible to talk about changing the maturities of Greece's debt or reducing the interest Athens has to pay after the first successful review of the new bailout package to be negotiated.
Berlin, the biggest contributor to eurozone bailouts, would do all it could to bring talks to a successful conclusion but would "negotiate hard" to ensure Athens stuck to agreements, she said.
"That certainly won't be easy because there are things that we have discussed with all of the Greek governments since 2010 that have never been done but that have been done in other countries like Portugal and Ireland," she said.
Acceptance of the bailout terms that meant the banks could reopen marked a turnaround for Tsipras after months of difficult talks and a referendum that rejected a less stringent deal proposed by the lenders.
He sacked party rebels in a government reshuffle on Friday and is seeking a swift start to talks on the bailout accord with European partners and the IMF before elections which Interior Minister Nikos Voutsis said were likely in September or October.
But while opinion polls suggest the prime minister's popularity remains high, on the streets of Athens some were sceptical that the bank reopening would change much in a recession-hit country with over 25 percent unemployment rate.
"The banks opening tomorrow won't change anything for me," said 31-year old hotel worker Joanna Arvanitaki. "I never used to withdraw 60 euros a day - 60 euros is what I had a week for my expenditure."
Greeks will be able to deposit, although not cash, cheques, pay bills as well as have access to safety deposit boxes and withdraw money without an ATM card.
Deposit boxes are not affected by the capital restrictions and clients can therefore take whatever they want from them, bank officials said.
"We are expecting queues in our branches in the first two or three days. Many people will ask to open their safe deposit boxes," an official at EFG Eurobank (EURBr.AT), the country's third-largest bank by assets, said.
EU officials hope the bailout deal will be in place by mid-August when Greece needs to make new payments to the European Central Bank to redeem its maturing debt. A 7.16 billion euro bridge financing is enough to see Athens through July - including a July 20 ECB repayment - but not through August.
German Economy Minister Sigmar Gabriel said this deal could succeed where previous ones failed because the European Union now emphasises growth and investment rather than just austerity.
It would depend on reforms being enacted and "convincing the population that this is a path that allows Greece to assert itself rather than becoming a permanent alms-receiver," he said in extracts from a television interview.
French President Francois Hollande, who pushed hard for a deal, said the Greek crisis had weakened Europeans' faith in the European project.
"What threatens us is not an excess of Europe but its insufficiency," he wrote in an op-ed in the Journal du Dimanche newspaper, reiterating calls for the creation of a euro zone government.
Gabriel rejected accusations Germany had been too hard on Athens and criticised Finance Minister Wolfgang Schaeuble for suggesting Greece could quit the euro zone temporarily.
But in a sign of the challenge for euro zone leaders to convince their electorates of the merits of the deal, more than half of Germans think the planned deal with Greece is bad and many would have preferred it left the euro zone, a YouGov survey seen by German newspaper Welt am Sonntag showed.
European Commission Vice President Valdis Dombrovskis called on the Greek parliament to pass laws on reforms "very quickly," in an interview due to be published in German newspaper Bild on Monday. He said negotiations on a third bailout for Greece would take several weeks, according to comments released ahead of publication.
Dombrovskis defended the decision to grant Greece bridge financing even though the Greek parliament had not yet passed its whole reform program, saying that the funds were important to prevent the country from sliding into insolvency and had only been granted once the Greek parliament had passed some reformsı.
But he warned that the EU would "in the worst case scenario" hold off paying funds to Greece from the EU budget if Greece broke agreements and did not pay back the emergency loan. He said a Greek exit from the euro zone "is not on our agenda," but Athens needed to stick to its agreements and carry out reforms in return for solidarity.
Hollande calls for the creation of a euro zone government
Sun Jul 19, 2015 2:28pm EDT
French President Francois Hollande speaks during the annual television interview at the Elysee Palace following the Bastille Day military parade in Paris, France, July 14, 2015. Reuters/Alain Jocard/Pool
PARIS French President Francois Hollande called on Sunday for the creation of a euro zone government and for citizens to renew their faith in the European project, which has been weakened by the Greek crisis.
Reviving an idea originally put forward by former European Commission chief Jacques Delors, Hollande proposed "a government of the euro zone (with) a specific budget as well as a parliament to ensure its democratic control".
The French president said the 19 member states of the euro zone had chosen to join the monetary union because it was in their interests and no one had "taken the responsibility of getting out of it".
"This choice calls for a strengthened organization, an advance guard of the countries who will decide on it," he said.
The euro zone's members are currently united in the informal body the Eurogroup, which comprises each country's finance minister, presided over by Dutch Finance Minister Jeroen Dijsselbloem.
"What threatens us is not an excess of Europe but its insufficiency," Hollande wrote in an op-ed in the Journal du Dimanche weekly newspaper.
Hollande said Europe had let its institutions become weaker and admitted the EU's 28 members were "struggling to find common ground to move forward. Parliaments remain too far away from decisions. And people are turning away after having been bypassed so much."
The president said populist movements had seized on Europeans' disenchantment with European institutions and were taking issue with Europe because "they are scared of the world, because they want divisions, walls and fences to return."
Hollande's view on a euro zone government, however, drew immediate criticism from his predecessor Nicolas Sarkozy, head of France's main center-right opposition party and a possible candidate in the 2017 presidential election.
"I do not think we need one more parliament," Sarkozy said at a political gathering in Nice. "We need to coordinate economic policies to be much stronger, we need a French economic policy that is not in contradiction with the economic policy of all the other euro zone countries."
(Reporting by Astrid Wendlandt; Editing by Ros Russell and Susan Fenton)
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