Greece
crisis deepens as banks close for a week after weekend that shook
euro
Greece’s
government says banks will stay closed until after snap referendum,
while stock exchange shut on Monday and cash machine withdrawals
limited to €60
Ian Traynor in
Brussels and John Hooper and Helena Smith in Athens
On Monday morning
Greeks will find their savings blocked and their banks closed for a
week following a fateful weekend that has shaken Europe’s single
currency.
The Greek government
decided on Sunday night it had no option but to close the nation’s
banks the following day after the European Central Bank (ECB) raised
the stakes by freezing the liquidity lifeline that has kept them
afloat during a six-month run on deposits.
The Athens Stock
Exchange will not reopen on Monday either. The dramatic move, after
48 hours of sensational developments in Greece’s long-running
battles with creditors, was sparked by the country’s prime
minister, Alexis Tsipras’s Friday night call for a referendum on
its creditors’ demands. That prompted finance ministers of the
eurozone to effectively put an end to his country’s five-year
bailout by the International Monetary Fund, the ECB and the European
commission.
In a brief,
televised address to the nation, Tsipras threw the blame onto the
leaders of the eurozone. But he did not say how long the banks would
remain shut, nor did he give details of how much individuals and
companies would be allowed to withdraw once they reopened.
In the early hours
of Monday morning, Tsipras published a decree in the official
government gazette setting out the capital controls to be imposed on
the country.
The decree –
entitled ‘Bank Holiday break’ – was signed by Tsipras and
president Prokopis Pavlopoulos.
It said all banks
would be kept shut until after the referendum on 5 July and
withdrawals from cash machines would be limited to €60 – about
£40. Cash machines are not expected to reopen until later on Monday.
Foreign transfers
out of Greece are prohibited, although online transactions between
Greek bank accounts are to continue as normal. Tsipras insisted
pensions and wages would be unaffected by the controls.
Greece’s finance
ministry later announced that the strict ATM withdrawal limits would
not apply to holders of credit or debit cards issued in foreign
countries. This was seen as a necessary move after worries that
tourists were seen joining locals in front of ATMs on Sunday. Any
similar restriction would hurt tourism, Greece’s one thriving
industry, which accounts for at least a fifth of economic activity.
The prime minister
said that Saturday’s move by the eurozone’s finance ministers to
halt Greece’s bailout programme was unprecedented. He called it “a
denial of the Greek public’s right to reach a democratic decision”.
Tsipras added that
the finance ministers’ initiative had prompted the ECB to curb its
assistance, forcing the government to take the steps that it had. He
said he had once again appealed for an extension of the bailout until
after the referendum, on 5 July, sending his proposal to the
president of the European council, Donald Tusk, the leaders of the 18
member states of the single currency, the commission and the ECB.
As fears spread
through Sunday that capital controls would need to be put in place,
growing numbers of depositors lined up at ATMs, even in affluent city
areas, to withdraw what cash they could.
Drivers also flocked
to gas stations across Greece, prompting the country’s largest
refiner to issue a statement reassuring there are enough reserves.
Refiner Hellenic Petroleum said: “We maintain fuel reserves for
several months. The supply of our refineries with crude oil is also
assured.”
The country’s
plight deteriorated sharply on Friday night when Tsipras put his
country’s future in the balance by suddenly calling a referendum
and arguing robustly for a rejection of the price set by his
creditors for saving Greece, at least for a few more months. This
Sunday’s vote will ask Greeks whether they approve or disapprove of
the last offer tabled by the creditors before the negotiations broke
down.
But during a
marathon parliamentary debate that ended in the early hours of Sunday
morning, opposition leaders argued that it was, in fact, a vote on
whether Greeks wished any longer to be part of the eurozone. It will
be Greece’s first referendum since the country voted to abolish its
monarchy in 1974.
The European
commission said on Sunday for the first time in the crisis that it
wanted to offer Greece debt relief, Tsipras’s central demand during
the five months of stalemated talks. Reports from Berlin said that
Angela Merkel and François Hollande shared that view.
But the potential
concession appeared to come too late to prevent growing chaos in
Greece – and sparked concerns across the Atlantic. Barack Obama was
said to have called Merkel to urge her to take action. Jack Lew, the
US Treasury secretary, urged creditors to offer debt relief to
Greece.
Financial analysts
will be watching the impact on the markets, which have not yet had
the chance to react to the events of the last 48 hours. Mario Draghi,
the president of the ECB, tightened the screws somewhat on the
country.
The governing
council of the ECB decided to freeze emergency liquidity assistance
to the Greek banks, the lifeline that is keeping the national
financial system functioning. The ELA was capped at last Friday’s
level of €89bn. It meant that the banks could continue to function,
but the draining of money as people flocked to the ATMs to retrieve
their savings also meant they would run out of money that could not
be replenished by the central bank.
“We continue to
work closely with the Bank of Greece,” Draghi said.
Greece’s financial
stability committee, which includes the finance minister, Yanis
Varoufakis, and the central bank governor, Yannis Stournaras, met on
Sunday evening to discuss Greece’s rapidly shrinking options. The
high-level political confrontations on Friday and Saturday produced
the greatest uncertainty over Greece and in the eurozone in the
five-year debt saga.
The fall-out from
the collapse of negotiations and the calling of the referendum
brought recrimination on all sides and predictions of gloom.
The German finance
minister, Wolfgang Schäuble, said he was “perplexed and depressed”
by developments. Jeroen Dijsselbloem, the Dutch finance minister who
heads the committee of eurozone finance ministers, said that with his
referendum call, Tsipras was thrusting the country into a mess from
which it would struggle to recover.
“We are
millimetres away from the total collapse of the Greek financial
system,” warned Herman Van Rompuy, until last year the president of
the European Council and heavily involved in years of Greek rescue
negotiations. “It’s actually suicide that’s taking place in
Greece right now.”
The restrictions
being imposed are anathema to Tsipras’s radical left-led government
– all the more so since it desperately needs to keep public opinion
on its side ahead of the referendum.
Varoufakis told the
BBC in a Sunday interview: “Capital controls within a monetary
union are a contradiction in terms.” But he was party to Sunday
night’s decision.
In the early hours
of Sunday, parliament voted 178 to 120 in favour of holding the
referendum. Embarrassingly for the government, the neo-Nazi Golden
Dawn movement joined Tsipras’s Syriza party and its populist
right-wing coalition partner, ANEL, in backing the proposal.
By Sunday evening,
however, it had not received the necessary endorsement of Greece’s
president, Prokopis Pavlopoulos.
According to two
polls published on Sunday, Tsipras faces an uphill battle to secure
the rejection he has indicated that he favours. One in the
right-leaning tabloid Proto Thema found 57% of those interviewed
favoured acceptance of the creditors’ latest offer. Another in the
centre-left To Vima put support at 47%.