Greece will NOT submit to BLACKMAIL: Desperate talks amid fears of HUGE ripple across EU
GREECE’s looming bankruptcy would have a “GIGANTIC” effect on the European Union, a top German minister has warned today – hours after eurozone leaders held desperate emergency talks in a bid to stave off crisis.
Greek prime minister Alexis Tsipras said he would not bow to EU creditors
In a last-ditch attempt to stave off the meltdown of Europe’s single currency, German chancellor Angela Merkel and French president Francois Hollande met with the heads of Greece’s creditors – the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission (EC).
An unscheduled midnight meeting attended by all of Europe’s top figures is almost unprecedented and underscores just how serious the situation has become.
The meeting came just two days before broke Greece is scheduled to make a €300 million (£216 million) debt repayment to the IMF and after the defiant Greek prime minister Alexis Tsipras made it clear that he would not bow to creditors’ “absurd” demands.
Alongside Ms Merkel and Mr Hollande, the IMF’s Christine Lagarde, ECB’s Mario Draghi and EC’s Jean-Claude Juncker last night tried to hammer out deal that the Greek government would accept – paving the way for Athens to receive the €7.2billion (£5.6billion) loan it urgently needs to stay afloat.
If Greece is left to default on its payments, it will have little option but to exit the euro and is then likely to descend into economic and political turmoil.
Although no one knows exactly what will happen in this situation, a run on the banks is certain and Athens will not be able to pay state pensions, benefits or wages.
The effect would not be limited to Greece; the shock will be a huge hit to the eurozone and even world economy. It’s of little surprise that in the past few days, America has urged a solution.
The German economic minister Sigmar Gabriel today warned that a bankruptcy would have have “gigantic” effects on Europe and has urged Greece to “embrace” its creditors.
Despite the pressures, Greek ministers vowed that the country would not “succumb to blackmail” in their quest to unlock a fresh €7.2bn tranche of rescue funds.
In a series of tweets Yannis Dragasakis, Greece’s deputy prime minister, said Greece was committed to balancing its books but added that any agreement must allow for a primary surplus of less than 1pc of GDP in 2015 and less than 1.5pc next year.
The crux of the disagreement between the two sides relate to Greek pension and economy reforms, with the Greek government wanting an end to the savage spending cuts that creditors demand.
Over the weekend, the Greek prime minister accused EU officials of trying to build anmonstrous all-powerful superstate that can bully entire countries into submission.
Today Mr Tsipras, leader of the leftist Syriza party, said that he has sent creditors a proposal and is waiting to hear if European leaders will accept the plan.
He said: “We have submitted a realistic plan for Greece to exit the crisis. A realistic plan, whose acceptance by the institutions, our lenders and our partners in Europe will mark the end of the scenario of divisions in Europe.”
“We are not waiting for them to submit a proposal, Greece is submitting a plan – it is now clear that the decision on whether they want to adjust to realism … the decision rests with the political leadership of Europe.”
As the deadlock remains and the deadline to find a solution draws closer, financial markets are sinking.
London’s FTSE 100 and stock markets across Europe are trading lower off the back of the no-deal situation.
David Madden, Market Analyst, IG said: “More dealers are exiting the market because they can’t stand the heat.
“Greece has years of practice of tough negotiating but on this occasion the stakes are even higher, and the nation is days away from defaulting.
“Previous Greek governments have given into Europe’s demands at earlier stages in talks, but this time the Syriza party is taking it down to the wire.”