As the European Central Bank's bailout phases out for Greece, Prime Minister Alexis Tsipras wants the country to decide on any help through a referendum. But what does it mean for citizens as time runs out on Tuesday?
Update, 6/29/2015, 3:20 a.m., Article incorrectly labeled Alexis Tspiras as President of Greece instead of Prime Minister.
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Greek banks will be closed all week instead of just Monday as Asian markets showed a lower Euro trading rate, via the New York Times. Tspiras addressed Greece with a televised message early Monday. "It is clearer than ever that this decision has no other goal than blackmailing the Greek people and obstructing the smooth democratic procedure of the referendum." Negotiations between eurozone bodies remains locked in a tight battle as the deadline looms closer.
Greece will be facing hard decisions in the upcoming days as the European Central Bank and International Money Fund refuse to extend a bailout deadline to the floundering nation. European leaders have attempted to resolve any issues prior to the deadline but nothing concrete came out of the talks.
BBC reports that emergency funding from the ECB and IMF will not be increased. In response, the Mediterranean country will close all banks and the stock exchange on Monday in an effort to keep citizens from withdrawing large amounts of money from ATMs.
Set to make a €1.6 billon payout to the IMF on Tuesday, the last day for the current bailout, means many people are worried if the country will be able to stay in the eurozone as a failed state. The answer seems to be coming up no since the general consensus is a default on large payment.
However, the ECB points out that the Greek authorities will hold a referendum as well as a non-prolongation of the EU adjustment program in an effort to find a balance for citizens facing yet another austerity measure as the country's economy begins to backtrack.
"We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies," said ECB President Mario Draghi. The bank's governing council will be carefully monitoring and potential instability in the region and will use all available options if needed.
Governor of the Bank of Greece, Yannis Stournaras, echoed the sentiment. "The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances."
BBC News Economics editor, Robert Peston, believes that closing all banks will signal a withdrawal from the European Union. And unfortunately for the Greece economy system, there are no capitol controls in place to limit how much customers are able to withdraw at once. A run on banks also means a repeat situation from 2009. Should the Greek banks not close on Monday, the ECB may recommend all international branches of the bank close in case of collapse.
According to Reuters, EU leaders are still open to discussions in an attempt to stop the Greek exit. EU chief executive Jean-Claude Juncker released information on Friday, adding a public plea against Prime Minister Alexis Tsipras's decision for the referendum. Earlier this year, the Sryzia goverment detailed a 10-point anti-austerity plan to convince creditors to reevaluate austerity measures. The Greek leader does not want to force future generations to pay for the country's current instability, according to Deutsche Welle.
Releasing a 10-page document and linked through Twitter, Juncker implied "in the interest of transparency and for the information of the Greek people" should be aware of all conditions before the referendum. Included in the documentation was an offer on pensions that was greatly revised from an earlier copy seen by Reuters. Due to impact of tourism on the country, the EU leaders were willing to scrap the usual 23-percent VAT tax down to 13-percent in an effort keep the hotel industry profitable.
European Council President Donald Tusk has also been in talks with eurozone leaders, trying to keep the country within the protected fold. Meanwhile EU Economics Commissioner Pierre Moscovici voiced similar opinions, saying, "1. Greece should stay in euro; 2. The door is still open for negotiations on latest EU Commission proposals."
Greece's biggest creditor is Germany, who has stayed silent in the frustrating conversation on economic bailouts and extensions. Instead, Chancellor Angela Merkel "will meet with party chiefs and parliamentary caucus leaders in Berlin on Monday afternoon and then brief reporters," according to Bloomberg. Vice Chancellor Sigmar Gabriel spoke to telecom broadcaster ZDF, stating this is the worst situation since the 1950s Treaty of Rome.
France, unlike the conservative German government, has been vocal about the lack of compromise for Greek leaders. What this means for the future of the failing nation has yet to be established. But what will happen to Greek residents when or if the Euro is no longer national money and the banks are collapsing?
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Whatever decision Greece ultimately makes will have far reaching impacts on citizens who voted in Tsipras based on his commitment to end the austerity measures. Early on Sunday, a group of anti-austerity protestors organized, calling to move away from the European help. The question always comes back to how the government will support itself and residents without any international backing?