Greek PM bailout offer dismissed by Germany
Angela Merkel
(BRUSSELS) - Greece made a fresh reform offer, one day after defaulting on the IMF, but Germany immediately rejected any deal before a controversial weekend referendum.
Eurozone ministers were to consider the latest gambit by Greek Prime Minister Alexis Tsipras in a conference call later Wednesday with Tsipras set to make an unscheduled address to the nation imminently in Athens.
German Chancellor Angela Merkel effectively ruled out all negotiations, saying that Europe could "calmly" await the outcome of a referendum called by Tsipras for Sunday on bailout terms.
But the fate of that referendum hung in the balance after the Council of Europe rights group said the vote fell short of European standards amid rumours in Athens it would be called off.
"The world is watching us. But the future of Europe is not at stake," Merkel told Germany's Bundestag lower house of parliament, firmly defending her record on handling five years of crisis in Greece.
But there were signs the crisis was opening rifts in Europe's united front, with France's leader Francois Hollande urging an "immediate agreement" after six months of stalemate with the radical-leftists in Athens.
Greece entered uncharted waters with its default on a 1.5 billion euro ($1.7 billion) International Monetary Fund loan, the first by an advanced economy, and expiry of its European bailout at at 2200 GMT Tuesday.
It is now without external financial assistance for the first time in five years, while at home the banks will be closed all week, although around a thousand branches opened Wednesday to allow the elderly to receive pension payments.
- Deal 'never existed' -
The Greek proposal was sent by Tsipras to heads of the institutions that have overseen Greece's two bailouts worth 240 billion euros since 2010, just as the European part of the EU-IMF bailout expired.
"The Hellenic Republic is prepared to accept this ... agreement subject to the following amendments, additions or clarifications," the letter said, referring to the reforms-for-cash contract binding Greece with its creditors.
The government said any deal would have to allow Greece to maintain a 30 percent VAT discount on islands and postpone a 2012 pension reform until October 2015.
But German Finance Minister Wolfgang Schaeuble said that the proposal "doesn't exist any more and never existed" -- because the European offer in question was rejected by Athens last week and the aid programme formally expired on Tuesday night.
Greece is seeking a new two-year bailout package worth nearly 30 billion euros to avoid pushing it further towards an exit from the eurozone.
European leaders also want Tsipras to drop Sunday's referendum, in which the embattled far-left government in Athens is asking voters to say 'No' to reforms demanded by Greece's creditors.
A poll on Wednesday showed the 'No' camp in the lead, with 46 percent against 37 percent 'Yes' and 17 percent undecided. However the 'No' vote share was down compared to before capital controls were introduced Sunday, said the Prorata survey for the Ephimerida ton syndakton daily.
- Angry pensioners -
There were angry scenes as pensioners waited to be allowed into some banks that opened for them. For everyone else the only option for everyone else was to queue -- sometimes for hours -- at cash machines to withdraw a maximum of 60 euros a day.
Finance ministry employees meanwhile hung a huge banner saying "No to blackmail and austerity" out of the window of their office.
In Athens, around 20,000 people from the rival 'Yes' camp braved torrential rain late Tuesday to turn out to show their support for a bailout deal.
European and Asian stocks mostly rallied on hopes of a deal while the euro slid against the dollar, to $1.1082 from $1.1139 late in New York on Tuesday.
The European Central Bank's governing council will also meet on Wednesday to discuss the crisis in Greece.
It was the ECB's decision on Sunday to refuse to increase emergency funding for Greek banks that pushed Athens to close lenders and impose the capital controls, although it is thought likely to stick with its current stance.
Missing the IMF payment means that Athens "can only receive IMF financing once the arrears are cleared," IMF spokesman Gerry Rice said in a statement.
The IMF is now considering extending Greece's payment deadline -- something it has only done twice before in 1982 for Nicaragua and Guyana -- giving it the power to ease pressure on Athens as it starts fresh talks with the EU.
The EU's bailout fund meanwhile said that while the IMF non-payment was an effective default on Greece's own European loans, it was unlikely to call those in at any time soon.
The EU's EFSF fund, which handles the debt owed by Greece to eurozone governments, holds outstanding Greek loans of 131 billion euros.