– Merkel’s hardball –
Greece was officially declared in default on Friday by the European Financial Stability Facility, which holds 144.6 billion euros ($160 billion) of Greek loans, days after becoming the first developed country to miss a debt payment to the International Monetary Fund.
With its credit lifeline reduced to a trickle, the government this week closed banks and capped daily ATM withdrawals to 60 euros ($67).
The banks’ liquidity was expected to dry up entirely within a day or two unless the European Central Bank (ECB) – a major creditor – injected funds quickly.
Martin Schulz, the head of the European Parliament, was scathing of Tsipras’s government in an interview with Germany’s Welt am Sonntag newspaper, saying it had led Greece into a “dead end”.
Nevertheless, he said, Europe in the short-term could give “emergency bridging loans to Greece so that public service can be maintained and needy people get the money they need to survive”.
Tsipras has called for much more than that, demanding the ECB, IMF and European Commission forgive 30 percent of the 240 billion euros ($267 billion) they have loaned Greece over the past five years, and allow it a 20-year grace period before it starts repaying the rest.
So far, the German government led by Chancellor Angela Merkel has been playing hardball with Greece. Some reports suggested it wants to force a Grexit as a lesson to other lagging eurozone nations.
But that was causing a split among the big eurozone economies.
In an interview published Sunday, Italian Prime Minister Matteo Renzi said that, no matter the referendum’s result, “we must start talking to each other again – no one knows that more than Angela Merkel”.
France’s economy minister, Emmanuel Macron, said that even if Tsipras gets his ‘No’, bailout talks must resume. And in what could be seen as a thinly-veiled jibe at Germany, he warned that Europe cannot “crush an entire people”.
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