GREECE made a desperate attempt to secure a new €29.1 billion bail out deal last night as the clock ticked down to the deadline to repay €1.6bn to the International Monetary Fund.
The Greek government made its request for a new deal from the eurozone as the financial crisis gripping the country increased the risk of it quitting the single currency.
As last night’s deadline crept closer, the Greek prime minister Alexis Tsipras asked for a deal under the European stability mechanism (ESM), a rescue fund for eurozone countries with the aim of maintaining the euro’s stability.
A document produced by the Greek government at the 11th hour suggested the ESM loan would cover Greece’s external and internal financing for the next two years.
Eurozone ministers held a teleconference to discuss the new deal and a Greek government official later confirmed that another meeting between the ministers would be held this morning to give them more time to examine the Greek proposals.
The official did not give details of last night’s discussions.
Mr Tsipras’ office said the deal would “fully cover its [Greece’s] fiscal needs with the simultaneous restructuring of debt” and the government “until the end will seek a viable solution within the euro”.
Last night the chances of the new deal succeeding looked slim when it was reported that the German chancellor Angela Merkel told members of her party that “we will not negotiate over anything new” before Sunday’s referendum in Greece over whether the country should accept the conditions placed on the country by its creditors.
Thousands of people gathered in Athens’ main Syntagma Square to demonstrate in favour of a Yes vote. Mr Tsipras called the vote on the grounds that the demands from the EU, European Central Bank and the IMF for painful economic reforms would damage Greece further. The prime minister argues voting No – ie, against austerity – will strengthen his arm to negotiate a more beneficial settlement.
However, others say a No vote would not provide him with any more bargaining power, while European Commission president Jean-Claude Juncker has raised the stakes by suggesting a No vote would be seen by the rest of the world as Greece distancing itself from the eurozone.
Although Mr Tsipras has emphasised his country remains committed to the euro, David Cameron made a similar point, saying the referendum amounts to an in/out vote on Greece leaving the euro.
While European finance ministers were locked in conference-call negotiations to plot the way forward for dealing with Athens’ €340bn debt mountain, people in Greece were feeling the impact of the crisis.
They have been rushing to withdraw cash from ATMs.
The government declared all banks will remain shut for at least a week. Greeks have been limited to cash withdrawals of €60 (about £42) per day.
Pensioners have been hit particularly hard, as many do not have bank cards and so found themselves completely cut off from their money.
A day after worried elderly Greeks mobbed banks in the hope they would open, the finance ministry said yesterday morning it would open about 1,000 bank branches across the country for three days this week to allow pensioners without bank cards to make withdrawals.
But the limit for them would be set at €120 for the whole week, rather than the €60 a day for those with bank cards.
Meanwhile, irate depositors called in to television stations to report that some ATMs had run out of €20 notes, leaving them dispensing €50 only.
Capital controls began on Monday and will last at least a week, an attempt to keep the banks from collapsing in the face of a nationwide bank run.
The expiry of the last night’s deadline would mean Greece becoming the first developed country to miss such an IMF commitment. While credit ratings agencies said that it would not immediately trigger a default rating, it will mean Athens cannot get any further funding from the world financial body until it has cleared the arrears.
Yesterday also saw reports that Mr Tsipras, whose radical left-wing party Syriza was swept to power on a vociferous anti-austerity agenda, might undertake an initiative based on a last-minute offer by Mr Juncker.
Markets in Europe rose on the hopes for a resolution of some kind.
In Brussels, European officials said the commission chief was willing to help give Mr Tsipras a belated way out of his crisis if he accepts creditors’ conditions on the bailout standoff and campaigns for staying in the euro.
An EU official called it “a sort of last-minute offer” before the deadline.
Under the offer, Mr Tsipras would need to write to Mr Juncker and other leaders saying he accepts the deal. He would also have to change his position on Sunday’s referendum.
The financial turmoil did not appear to be having much affect on British holidaymakers heading to the popular destination.
The Association of British Travel Agents said it had not had inquiries from people wanting to cancel their holidays to Greece.
“We have not had calls from people wanting to cancel,” said an Abta spokeswoman.
“There is no Foreign Office advice saying not to travel, so travellers are still subject to the terms and conditions of their holiday [booking] when it comes to cancellations, so they would not get their money back.”
Official advice is to take enough cash in euros to cover expenses. Credit and debit cards will still be accepted, but ATMs are not necessarily being replenished.
Earlier this week, Mr Tsipras remained defiant as he looked ahead to the referendum. In a television interview, he urged voters to reject creditors’ demands. On Monday, more than 13,000 people gathered in Athens to support him and denounce Greece’s creditors, as they chanted: “Take the bailout and go!”
“We ask you to reject it with all the might of your soul, with the greatest margin possible,” Mr Tsipras said on state television. “The greater the participation and the rejection of this deal, the greater the possibility will be to restart the negotiations to set a course of logic and sustainability.”
A protest by supporters of a Yes vote took place yesterday.
The government insists that a No vote on Sunday will not mean an exit from the euro, with Mr Tsipras saying in his Monday night interview that Europe would not dare kick Greece out of the joint currency.
Finance minister Yanis Varoufakis went further, threatening court action if attempts were made to remove the country from the joint currency.