European Union Chief Feels Betrayed By Greek Referendum Plan: Rejects Extension Of Greece Bail Out Period

By @diplomatist10 on
A metal sculpture depicting a stock exchange chart is seen in the reception hall of the Athens Bourse in Athens September 11, 2014. Greece on Thursday set the pricing on its offer to top up its recent three- and five-year bonds by about 1 billion euros (U
IN PHOTO: A metal sculpture depicting a stock exchange chart is seen in the reception hall of the Athens Bourse in Athens September 11, 2014. Greece on Thursday set the pricing on its offer to top up its recent three- and five-year bonds by about 1 billion euros (US$1.3 billion) and exchange them for outstanding T-bills instead of cash. Reuters/Yorgos Karahalis

With Eurozone finance ministers rejecting the Greek government’s request to extend its bailout, hours before it expired, and the €1.6bn payment to the IMF is due, a piquant situation has developed in the EU vs Greek tussle. The decision to reject Greek overtures came in the meeting of Eurozone ministers. What has angered the Eurozone is the plan to hold a referendum to say yes or no to the bailout conditions rather than the government itself taking the lead in examining the merits of the proposal.

Euro group chairman and Dutch Finance Minister Jeroen Dijsselbloem said it would be "crazy" to extend the Greek bailout beyond the deadline as Athens was refusing to accept the European proposals on the table. Speaking after the conference call, he said the Greek request for a new €29.1billion European aid program would be looked at separately.

European Union leaders have warned Greece that a “No vote” in the referendum, rejecting creditors' proposals, would open the doors for its exit from eurozone, though Mr Tsipras is saying he is not for it. They also point out that ECB has already disbursed all its emergency funds for Greece amounting to €89 billion.

New Deal Sought

As an interim relief from the crisis, Prime Minister Alexis Tsipras pitched for a short extension to Greece's current bailout backed by a 2-year rescue deal reports BBC.  Greece's "troika" of creditors are the European Commission, IMF and eurozone's European Central Bank . They all want Athens to raise taxes and cut welfare spending to meet the debt obligations. Greece is also facing domestic unrest. Amid fears of a default on its huge public debt, people queued at ATM's where the withdrawal limit is just €60 a day.

If the payment to the IMF is missed, managing director Christine Lagarde will inform her board to formulate further action. Failure to repay the IMF comes under "events of default" listed in the legal documents. Meanwhile, on Tuesday, thousands of pro-EU protesters gathered outside the Greek parliament to urge a "yes" vote in the referendum planned on Sunday. A similar demonstration advocating a "no" vote also took place the other day.

European Union Chief Betrayed

Meanwhile, European Commission President Jean-Claude Juncker is anguished and feels betrayed by PM Tsipras, whose surprise call for a referendum was described as "playing one democracy against 18 others is not an attitude worthy of the great Greek nation." After months of bonhomie with Tsipras over the bailout negotiations, Juncker turned against the Greek leader and accused that "egotism, tactical games, populist games" have given way to cool-headed economic analysis. Juncker said it would be advisable to the Greek government to tell the truth to the Greek people instead of trying for a 'no-message." German Chancellor Angela Merkel used a moderate tone and said if Greece wants to resume talks after the referendum, "we will not refuse such negotiations."

(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)

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