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Editorial Note: The following news reports are summaries from original sources. They may also include corrections of Arabic names and political terminology. Comments are in parentheses.

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Greece Announces Temporary Bank Closure as Crisis Deepens

June 29, 2015 

 

 
Greeks queue to withdraw cash from an ATM machine on June 28, 2015.

 

How much Greece owes to international creditors

Sun Jun 28, 2015 3:02pm EDT

BRUSSELS, Reuters --

Greece, which may default on an International Monetary Fund debt repayment due on Tuesday after talks with creditors broke down, owes its official lenders 242.8 billion euros ($271 billion), according to a Reuters calculation based on official data, with Germany by far the largest creditor.

That figure includes loans made under two bailouts from European governments and the IMF since 2010 -- worth a nominal 220 billion euros so far, of which some has been repaid -- as well as Greek government bonds held by the European Central Bank and national central banks in the euro zone.

Private investors hold 38.7 billion euros of Greek government bonds following a major write-down and debt swap in 2012 that reduced the Greek debt stock by 107 billion euros and the value of private holdings by an estimated 75 percent.

The Greek government has also issued 15 billion euros in short-term Treasury bills, mostly to Greek banks.

Here is a breakdown of the country's foreign debt stock:

IMF - Greece was promised a total of 48.1 billion euros by the IMF, of which 16.3 billion was still to come by March 2016 if Athens successfully completed the second economic adjustment program. It had serviced and repaid loans on time up to this month, when it used an obscure IMF provision to bundle together four payments totaling 1.6 billion euros for payment by the end of June. The older IMF loans carry an interest rate of 3.5 percent, higher than the euro zone rescue fund charges.

ECB - The ECB owns roughly 18 billion euros of Greek bonds, which would probably be worth a fraction of their face value should the country leave the euro zone, with 6.7 billion euros maturing in July and August.

Beyond a default on Greece's national debt, any exit of Greece from the euro zone would lumber the European Central Bank with a huge bill for lost credit. ECB President Mario Draghi recently said that Greek banks had tapped 118 billion euros of central bank liquidity. That includes 89 billion in what is known as Emergency Liquidity Assistance (ELA). That remains the responsibility of the country's central bank but only if Greece stays in the euro. Were it to leave, the bill would rebound on other euro countries, including Germany.

In addition about 45 billion euros of banknotes in Greece represents another liability, being a claim that the wider Eurosystem of central banks would be obliged to honor.

THE EURO ZONE - Euro zone governments gave Greece 52.9 billion euros in bilateral loans under the first bailout agreed in 2010, known as the Greek Loan Facility. Under the second bailout agreed in 2012 Athens has so far received 141.8 billion euros from the euro zone's financial rescue fund. It had been due a further 1.8 billion euros by June 30 if it met conditions but barring major surprises that is off the table.

Of the biggest euro zone members, Germany's exposure for the two bailouts totals 57.23 billion euros, France's is 42.98 billion, Italy's is 37.76 billion and Spain's 25.1 billion. That is in addition to their contributions to the IMF loans, commensurate with their respective quotas in the global lender.

Euro zone countries have already extended the maturities of their loans to Greece from 15 to 30 years and reduced the interest rates on some to just 0.5 basis points above their borrowing cost. They also granted Greece a 10-year moratorium on interest payments on the second bailout loan from the euro zone rescue fund.

Greece has asked for further debt relief from the Europeans, a move supported by the IMF. But euro zone governments have said they would only discuss that if Athens further tightens its budget.

(Reporting by Alexander Saeedy and John O'Donnell; Writing by Paul Taylor; Editing by Alastair Macdonald and Greg Mahlich)

Greece announces temporary bank closure as crisis deepens

Reuters, France 24,  2015-06-29

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

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

Greece has less than 48 hours to pay back 1.6 billion euros ($1.77 billion) of International Monetary Fund loans, and a default would set in train events that could lead to the country's exit from the euro currency bloc.

But after Tsipras angered Greece's international lenders by announcing a snap referendum next Sunday on the terms of a cash-for-reforms deal, hopes of a last-minute breakthrough are fading 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, appearing to contradict comments by EU Economics Commissioner Pierre Moscovici. He said a new offer was forthcoming and that the two sides were "only a few centimetres" away from a deal.

European bank shares fell sharply on Monday. Top banks in Spain, France and Germany were down more than 6 percent as the risk of a spillover to banks in other peripheral euro zone countries spooked investors.

The Greek government will keep banks shut at least until after July 5, the date of the referendum, and withdrawals from automated teller machines -- which are shut on Monday -- will be limited to 60 euros a day when they reopen on Tuesday. The stock exchange will also stay shut.

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

The creditors wanted Greece to 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 a quarter of the workforce is already unemployed.

As Tsipras announced the emergency measures late on Sunday, there were long queues outside ATMs and petrol stations as people raced to take out cash before it was too late.

"I've got five euros in my pocket, I thought I would try my luck here for some money. The queues in my neighbourhood were too long yesterday," said plumber Yannis Kalaizakis, 58, outside an empty cash machine in central Athens on Monday.

"I don't know what else to say. It's a mess."

‘Dramatic hours’

Newspapers splashed pictures of long lines outside cash machines on their front page. The Nafetemporiki daily headlined Monday's edition "Dramatic hours" while the Ta Nea daily simply said: "When will the banks open".

The conservative-leaning Eleftheros Typos newspaper accused Tsipras of announcing the referendum as a ruse to tip the country into early elections in the hopes of winning them.

"Mr Tsipras's decision to call a referendum and a possible euro exit constitutes a premeditated crime," it said in an editorial. "It is clear that Mr Tsipras has lost the trust of citizens. That's obvious from the queues at ATMs and petrol stations, and it will become obvious at next Sunday's ballot."

As rumours flew about, dozens of pensioners queued outside at least two offices of the National Bank of Greece on Monday after hearing they could withdraw pensions from some branches. They were turned away, Reuters photographers 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.

Despite the financial shock, parts of daily life went on as normal, with shops, pharmacies and supermarkets in the city 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.

A rally to protest against austerity measures and urge voters to say "No" in the referendum on bailout terms is expected later on Monday.

Despite the hardening of positions, officials around Europe and the United States made a frantic round of calls and organised 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 single currency together and keep Greece in the euro zone. The German and French governments announced emergency political meetings.

"While the programme is active until Tuesday, they aren't providing the necessary liquidity for Greek banks just to blackmail and to terrorize us," Administrative Reforms Minister George Katrougalos told Antenna television.

"If we vote a yes, they will demolish pensions, you will have to pay for medicare in public hospitals. When your kids can't go to school you will say 'thanks' and they will say 'you asked for it'.

"But if you say no you have the ability to fight for a better future."

 

Fatigue and frustration as Greece talks collapse

AFP, France 24,  2015-06-28

It is past midnight on Saturday when the phone rings on the 13th floor of the European Commission, bringing news the EU is facing an unprecedented crisis after last-ditch talks with Greece collapsed.

Only a few hours earlier Greece's leaders had agreed to continue talks to avoid a default on the country's debts that could force it to crash out of the single currency and even the European Union.

But now the government led by Prime Minister Alexis Tsipras has made the shock announcement that any deal with Greece's creditors -- the EU, European Central Bank and International Monetary Fund -- will be put to a public referendum.

In Brussels, a sense of stupor prevails. The decision comes at the worst moment, in the final stage of negotiations when "98-99 percent" of the deal had already been agreed, according to a participant in the talks.

The mood is still sombre hours later as EU ministers begin to arrive for their fifth round of discussions in 10 days to end months of cash-for-reforms wrangling and years of economic crisis in Greece.

"This is not the first time that the Greek government has created more and more drama," said the Slovakian Finance Minister Peter Kazimir.

Fatigue and frustration reign among EU negotiators sick of the negotiating style of Athens's left-wing leaders, with one official quipping that they "learn the state of the talks via leaks" to the press.

Greece's Finance Minister Yanis Varoufakis -- seen in Brussels as a key troublemaker in the talks because of his abrupt, and flamboyant, style -- arrives dressed all in black.

In the meeting room, those on the other side of the negotiation table keep their distance. Varoufakis "lives in a parallel reality," says one diplomat.

'Jump into the unknown'

As the talks resume they swiftly hit a key stumbling block: the 18 other members of the eurozone refuse Greece's request to extend its repayment deadline by a month to what would be after the July 5 referendum.

Just another ploy to win time, grumble the EU's negotiators. Varoufakis says he plans to seek legal advice on whether the other eurozone states can make a decision without his agreement.

In the packed press room, rumours fly the talks are near an end, that Varoufakis is planning to hold a news conference. In the end it is the Netherland's Jeroen Dijsselbloem, head of the Eurogroup of finance ministers, who takes the stand.

In a weak voice, he announces that Greece's huge bailout plan that has been in place since 2012 will finish in three days, on June 30.

Words begin to fly. Irish Finance Minister Michael Noonan warns the eurozone is facing a "jump into the unknown," while Varoufakis rushes from the talks with a parting warning that today is a "sad day for Europe".

This is a "historic moment in the worst sense of the term," says a source close to the talks.

Officials from the eurozone, facing the unprecedented loss of one of its members, start talks on a plan B to deal with the nightmare scenario of a "Grexit" -- euphemistically known as "the consequences".

At the table, discussions begin on capital controls in Greece and the situation of its banks. Many want reassurance that a Greek default and its exit from the eurozone will not hurt their country.

"Don't believe that a 'Grexit' is just (about) Greece," says an official.

 

Eurozone readies for Greek default after Tsipras referendum call

Reuters, France 24, 2015-06-28

Greece’s European partners shut the door on extending a credit lifeline to Athens, leaving the country facing a default that could push it out of the euro and cause ripple effects across the European economy and beyond.

Finance ministers of the other 18 countries sharing the euro met for the first time without Greece after flatly rejecting its pleas to extend an expiring bailout. The left-wing Syriza government had asked for an extension until after a July 5th referendum in which Greek voters would decide on whether to accept new, tough bailout terms that the government opposes.

Without the extra time, Athens is set to default on a crucial IMFpayment on Tuesday.

The 18 blamed Greece for breaking off negotiations and pledged to do whatever it takes to stabilize the common currency area, declaring they were in much better shape to do so than at the height of the euro zone crisis a few years ago.

“We are completely clear that we have to do everything to fight any thinkable contagion threat,” said German Finance Minister Wolfgang Schaeuble. “We are resolved to prevent any uncertainty in the financial markets.”

In a formal statement announcing that “the current financial assistance arrangement with Greece will expire on June 30, 2015,” the 18 also implicitly urged Greece to impose capital controls to stabilize its banking system.

The rejection of an extension piled huge pressure on Greek banks, which depend on central bank support to remain afloat. Long lines formed in front of cash machines as people rushed to pull their money out while the banks were still operating normally.

Greek Finance Minister Yanis Varoufakis insisted that a deal could still be reached in time for the IMF deadline on Tuesday, warning the credibility of the euro zone could be permanently damaged by its rejection of Greece’s plea for more time.

“It’s a sad day for Europe,” he said as he left the European Council headquarters in Brussels, where the other euro zone ministers were meeting without him.

After its surprise decision to call a referendum, Athens asked for an extension of Greece’s bailout programme beyond Tuesday, the day it must pay 1.6 billion euros to the International Monetary Fund or default.

But the other 18 members of the euro zone unanimously rejected the request, freezing Greece out of further discussions with the European Central Bank and the IMF on how to deal with the fallout from a historic breach in the EU’s 16-year-old currency.

The swift rejection was a startling demonstration of the degree to which Tsipras had alienated the rest of the currency bloc with a final-hour announcement that upended five months of intense talks.

“I think that the mistake was that, certainly from Greece, they were playing poker, but with poker you can always lose,” said Austrian Finance Minister Hans-Joerg Schelling.

Damaged credibility

Tsipras himself was defiant, saying his government could not accept the “insulting” terms offered by creditors and saying voters would do the same.

“I am certain that the Greek people will rise to the historical circumstances and issue a resounding ‘No’ to the ultimatum,” he said as he wound up debate before parliament voted in the early hours of Sunday to authorize the referendum.

Pro-European Greek opposition parties united in condemning the decision to call the referendum. There was rising speculation that Tsipras’ left-wing government may have to resign if voters back the bailout in the referendum.

Underlining the topsy-turvy nature of the Greek bailout saga over several years, Tsipras was himself a fierce critic of former Prime Minister George Papandreou’s abortive 2011 proposal to hold a referendum, warning at the time that it would cause economic collapse and a banking disaster.

He has since had the same criticisms flung back at him by the opposition, which accused him of irresponsibly risking Greece’s future in Europe.

“Why don’t you say ‘No’ to the foreigners directly? Why are you hiding behind the Greek people? You are afraid,” said former conservative Prime Minister Antonis Samaras, leader of the opposition New Democracy party.

The offer from creditors requires Greece to 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 a quarter of the workforce is already unemployed.

Caught between fears of economic collapse and defiance of the demands from international creditors, many Greeks expressed shock, although opinion polls published in Sunday newspapers pointed to a majority in favour of accepting the bailout terms.

“They are trying to kill us. I don’t think this is a dilemma about whether to stay or leave the euro zone. But those bailout terms cannot be accepted,” said 70-year-old George Kambitsis. “We don’t have any money, but they want to take more from us. How will we eat, how will we live?”

However, voters in other euro zone states - including economic powerhouse Germany, other southern states that have suffered austerity in return for EU cash and poor eastern countries with living standards much lower than Greece’s - have lost patience.

Referendum

Many questions remained about the referendum, which is being called over the terms of a bailout offer that may no longer be on the table.

“You are calling on the Greek people to vote on a proposal in a negotiation that has already closed,” Samaras said.

But with fears growing that the foundations of the euro zone could be fatally weakened if Greece were forced out, French Finance Minister Michel Sapin insisted that Paris, at least, was still prepared to talk.

“The 18 countries, apart from Greece, all said clearly that Greece was in the euro and should remain in the euro whatever the difficulties of the moment,” he said.

European Council President Donald Tusk said on Sunday he was in contact with all the governments of the euro zone to ensure Greece remained in the single currency.

Underlining the mutual incomprehension that has marked months of often angry exchanges between Athens and its European partners, Varoufakis said the government would be prepared to recommend that voters back the deal if lenders agreed to improve the terms.

The Eurogroup of euro zone finance ministers met in Brussels for what had been intended as a final negotiation of a deal and its chairman, Jeroen Dijsselbloem, said the door was still open.

“The process has not ended. It will never end probably. We will continue to work with Greece. Many things could happen, many scenarios are conceivable,” he said, without spelling out what steps Greece could take.

But after they were blindsided by Tsipras’s surprise middle-of-the-night announcement that he rejected their offer and would put it to voters only after Tuesday’s deadline, one after another said all that remained to discuss was “Plan B” - how to limit the damage of default.

“How can you continue to negotiate with a partner that says in advance that he’ll be opposed to the package you are negotiating?” said Luxembourg Finance Minister Pierre Gramegna.

With most Greek banks closed for the weekend, there was no sign of panic on the streets of Athens. Government officials said there was no plan to impose capital controls that would limit withdrawals.

But police tightened security around bank teller machines as lines formed at some in the darkness almost as soon as Tsipras’s early hours televised speech was finished.

More than a third of automated teller machines across Greece ran out of cash on Saturday before they could be replenished, banking sources said.

The Bank of Greece said it was making “huge efforts” to ensure the machines remained stocked.

(REUTERS)

 

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