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04/12/2016

Commission publishes offer to Greece, Juncker to speak out

Euro & Finance

Commission publishes offer to Greece, Juncker to speak out

In an unusual move that underlined frustration with the Greek government, the European Commission published on Sunday (28 June) what it said were the last proposals creditors made to Athens before Greece broke off funding talks. Commission President Jean-Claude Juncker will speak to the press today at noon.

Greek Prime Minister Alexis Tsipras called a referendum for next Sunday, urging voters to reject the offer on the table in Brussels, leading to the Eurogroup meeting of eurozone finance ministers on Saturday saying a bailout scheme was now finished.

>>Read: Defiant Greek PM calls referendum to break bailout deadlock

“In the interest of transparency and for the information of the Greek people, the European Commission is publishing the latest proposals,” the EU executive said in a statement, adding that these had been agreed by itself, the European Central Bank and the International Monetary Fund, taking into account Greek proposals made throughout the past three weeks.

Noting that negotiators were working until late on Friday, it said: “The understanding of all parties involved was that this Eurogroup meeting should achieve a comprehensive deal for Greece, one that would have included not just the measures to be jointly agreed, but would also have addressed future financing needs and the sustainability of the Greek debt.”

The Eurogroup was, however, unable to approve the deal “due to the unilateral decision of the Greek authorities to abandon the process”, the Commission said in a statement accompanied by the 10-page list of “prior actions” Athens would have had to agree to take on tax and spending in order to receive funds.

>>Read: Information from the European Commission on the latest draft proposals in the context of negotiations with Greece

Greece can still restart negotiating with its creditors and the country should stay in the eurozone, EU Economics Commissioner Pierre Moscovici said on Twitter on Sunday.

“To those who wonder what’s next, 1. Greece should stay in euro; 2.The door is still open for negotiations on latest EU Commission proposals,” Moscovici said.

Juncker spokesperson Mina Andreeva said that the Commission President will speak to the press today at 12:45 Brussels time.

Greece imposes capital controls

Meanwhile, Greece closed its banks and imposed capital controls on Sunday to check the growing strains on its crippled financial system, bringing the prospect of being forced out of the euro into plain sight.

After bailout talks between the leftwing government and foreign lenders broke down over the weekend, the European Central Bank froze vital funding support to Greece’s banks, leaving Athens with little choice but to shut down the system to keep the banks from collapsing.

Banks will be closed and the stock market shut all week, and there will be a daily 60 euro limit on cash withdrawals from cash machines, which will reopen on Tuesday. Capital controls are likely to last for many months.

“The more calmly we deal with difficulties, the sooner we can overcome them and the milder their consequences will be,” a sombre-looking Prime Minister Alexis Tsipras said in a televised address. He promised bank deposits would be safe and salaries paid.

Even as Tsipras spoke late on Sunday, lines formed at petrol stations and the dwindling number of bank machines still holding cash, highlighting the scale of the disaster facing Greeks, who have endured more than six years of economic decline.

The failure to reach a deal with creditors leaves Greece set to default on €1.6 billion of loans from the International Monetary Fund that fall due on Tuesday. Athens must also repay billions of euros to the European Central Bank in the coming months.

The impending default on the IMF loans leaves Greece sliding towards an exit from the euro, with unforeseeable consequences for Europe’s common currency project. It also carries broad implications for the global financial system.

The euro fell almost 2% against the dollar in early Monday trade and share prices tumbled, while safe-haven U.S. government debt futures rallied.

“We are in uncharted territory, and European equities, like all markets, will have a difficult time processing this,” said Deutsche Bank Managing Director Nick Lawson.

Obama calls Merkel

Officials around Europe and the United States made a frantic round of calls and organised meetings to try to salvage the situation.

US President Barack Obama called German Chancellor Angela Merkel, and US Treasury Secretary Jack Lew called German Minister of Finance Wolfgang Schäuble, his French counterpart Michel Sapin, and IMF Managing Director Christine Lagarde over the weekend, pressing them to agree a “sustainable solution” for Greece that includes debt relief – a step Merkel has resisted.

More worrying than complaints from Washington would be cracks in the European consensus on Greece.

French Prime Minister Manuel Valls urged the Greeks to come back to the negotiating table.

“I cannot resign myself to Greece leaving the eurozone … We must find a solution,” Valls told media.

Greek opposition wants unity government

Former conservative Prime Minister Antonis Samaras, who on Sunday met Greek President Prokopis Pavlopoulos, said Tsipras should drop the referendum plans and return to the negotiations, or make way for a government of national unity.

Greek President Prokopis Pavlopoulos normally plays a ceremonial role in Greek politics but he is responsible for appointing prime ministers and calling elections and will play a central role if the gathering crisis forces a change of government.

“The course of the country in Europe and in the eurozone must be undisturbed,” Pavlopoulos said, before the meeting. “I am confident that next Sunday, people will once more show that in crucial times it displays greater maturity and resolve.”

As head of state, Pavlopoulos, a former conservative politician, normally stays clear of politics but was quoted by Greek newspaper Real News this month as saying that he would not be prepared to serve as president if the country left the euro.