The eurozone’s finance ministers have rejected the Greek government’s request to extend its EU bailout programme through next week’s surprise referendum, a move that will probably force Athens to hold the vote in the midst of unpredictable instability.
According to two eurozone officials, the ministers rejected the request after three hours of deliberations and, after a brief recess, were to reconvene their emergency meeting without the Greek delegation to discuss “plan B” — how to protect the rest of the eurozone from a Greek default.
Earlier Alexis Tsipras, the Greek prime minister, stunned his nation and its international creditors by announcing a referendum on the final bailout offer made to his country, arguing only the Greek people should decide how to “answer this ultimatum”.
The creditors had been preparing to present a new compromise offer to the Greek authorities that, according to one EU diplomat, included “lots of things they could sell”. But the decision by Mr Tsipras to overtly reject last Thursday’s previous creditor text and use it as the basis of a national referendum short-circuited hopes of striking a deal at Saturday’s meeting.
The rejection of the extension — Mr Tsipras had originally suggested “a few days”, but Yanis Varoufakis, finance minister, said he was seeking a month — raises questions about what will be voted on in next Sunday’s referendum.
The bailout is now scheduled to expire on Tuesday, meaning there will be no programme in place when Greek voters go to the polls to offer a verdict on a creditors’ proposal to complete the programme and gain access to €15.3bn in remaining bailout funds.
Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting, suggested even if Greece voted to approve the bailout plan it would be hard for its eurozone partners to continue to trust Mr Tsipras’s leftwing Syriza government to implement it — hinting a new government would be necessary.
“If a government has spoken so negatively about the package and approach, then there is little credibility that even after a Yes [vote] that it would implement it in a right and conscientious way,” Mr Dijsselbloem told reporters after the Greek delegation left the meeting.
He said that the two sides were still engaged in negotiations on Friday evening in an effort to strike a deal when the Greek team was pulled out ahead of the referendum announcement.
He said that the programme would now expire on Tuesday night and warned that even if the government sought to reopen negotiations after the referendum, Greece would suffer gravely.
“I think we have to realise that [during] the in-between period the situation in Greece will deteriorate very rapidly,” Mr Dijsselbloem said. “How does the Greek government think it will survive and deal with the problems in that period I do not know.”
Mr Varoufakis said his government had been willing to reshuffle its coalition or its cabinet in order to win eurozone backing for a renegotiated agreement, quoting Mario Draghi, the European Central Bank president: “We would do whatever it takes.”
A key issue now will be the continued functioning of the Greek financial system. One person familiar with the matter said a teleconference had been scheduled for Sunday morning between the Bank of Greece and the European Central Bank to discuss options for possible capital controls to be imposed from Monday.
One option would be to declare a bank holiday, rather than formal restrictions on capital movements, until a referendum was held. But Mr Varoufakis told Reuters that the banks should stay open during the referendum period. The government has the final say on capital controls, although the Greek banking system has been relying heavily on ECB liquidity support to keep functioning.
Mr Varoufakis said he had hoped a programme extension would have given negotiators more time to strike a deal that his government could then recommend to voters when they went to the polls on Sunday.
“The proposal on the table from the institutions was technically inadequate,” Mr Varoufakis said. “The numbers simply did not add up.”