Greek Prime Minister Alexis Tsipras has forced all banks in the country to shut down and limit the amount of money Greeks can withdraw from ATMs. This is in anticipation of a July 5 referendum on whether Greece should accept economic reforms in exchange for a shot at not defaulting on its $271 billion debt to the European Union and the IMF.
In a speech on June 27 announcing the referendum, which will decide whether Greece accepts a deal with the European Union that would require significant austerity measures, Tsipras urged calm from the Greek people. “Any difficulties that may arise must be dealt with calmness,” he said, “The more calm we are, the sooner we will get over this situation.” Following the announcement, Greek banks were forced closed until the day after the referendum, July 6, and ATMs were locked so that an individual can only withdraw $65 at a time. Foreigners, necessary revenue generators in the tourism industry, are exempt from the ban.
On Tuesday, the last day of negotiations before Greece must make a 1.6 billion euro payment to the EU and IMF, Tsipras requested from its creditors a new two-year bailout that would keep Greece from the brink of economic collapse until payments for that new loan begin to run. The money for this new, third bailout would come from the European Stability Mechanism and force a restructuring of Greece’s entire, 323 billion euro debt. The letter Tsipras has sent Greek creditors has surfaced on social media:
— Piers Scholfield (@inglesi) June 30, 2015
The Athens stock market will be shut down until July 7, the Monday after the referendum, and public transportation in Athens will be free to facilitate travel in the city without forcing residents to withdraw more cash.
The extreme measures followed talks that resulted in no deal between Greek representatives and European Union officials. The European Central Bank in turn froze assets to Athens, which needs to make a 1.6 billion euro payment to its creditors by July 30 and has no money with which to do so. Without a deal between Greece and its creditors, it will default on its debt and be forced out of the euro and back to the Greek drachma.
Tsipras, head of the Coalition of the Radical Left party, was elected after promising a government under his rule would not capitulate to any austerity measures demanded by the nation’s creditors. The European Union and IMF have insisted that Greece limit its spending on pensions and social programs to save money and pay back its multiple bailout loans. According to those at the meeting this weekend, Tsipras has kept his promise to negotiate minimally. “Greece did not have a compromise,” German Chancellor Angela Merkel said after the meeting, adding that “there is no real reason to convene a new summit” if Tsipras’ government is unwilling to meet the EU halfway. EU Commission Chief Jean-Claude Juncker, meanwhile, described himself as feeling “betrayed” by Greece’s “egotism,” refusing to see the negotiations as “a game of liar’s poker,” implying this was the attitude the Greek negotiators brought to the table.
The referendum is designed to absolve Tsipras of any political backlash should he accept austerity measures to keep Greece in the euro. If Greeks vote “yes” on making a deal, he must accept its decision and remain in the euro. If Greece does not, it will be on its way back to the drachma.
Some evidence exists that Greeks support remaining in the euro, even after Syriza’s electoral coup sent a message to the rest of Europe that the nation had no intention of limiting its spending and making responsible payments back to the EU and IMF. Last week, Greece’s Syntagma Square flooded with thousands of supporters of the euro, many who fear that not cutting a deal with Europe will force Tsipras to ask Russian President Vladimir Putin for a loan, involving a new creditor. Signs reading, “Yes to the Euro/No to the Rouble” appeared on the scene, with others telling journalists at the rally that, while they supported Tsipras initially, his negotiating with the EU had gone too far towards leaving the euro for their liking.
Despite extreme disappointment on the part of European negotiators, Juncker in particular, the EU head urged Greeks to vote “yes” on the referendum, forcing Tsipras to accept a reasonable deal. “The whole planet would consider a Greek ‘no’ to the question posed … as meaning that Greece wants to distance itself from the eurozone and from Europe,” he told reporters this week, adding a personal plea to the Greek people: “I will say to the Greeks who I love deeply: you mustn’t commit suicide because you are afraid of death. … You must vote yes, independently of the question asked.”