27th Oct 2021

EU mulling emergency measures on Greece

  • Dombrovskis (l), in May, unveiling a Greek-designed €2 coin (Photo:

Greece and the EU were Tuesday (16 June) heading for a showdown, with rumours of an emergency EU summit or of imposing capital controls on the country if no deal is clinched at Thursday's meeting of euro finance ministers.

European Commission vice-president Valdis Dombrovskis fueled rumours on Tuesday when he said the EU was working on "the possible implications of some less favorable scenarios".

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One of these scenarios would be to impose measures to avoid a Greek bank run that would accelerate the collapse of Greece's financing system.

According to the latest European Central Bank (ECB) figures available, an average €1.5 billion left bank accounts over the first four months of this year and Greek bank deposits fell by 15 percent since December last year.

The trend is thought to be accelerating amid uncertainties over a political agreement and concerns about a possible default.

"We are very vigilant," an EU source said, who declined to comment on capital control plans.

This step was taken in Cyprus in 2011 when the country's two main banks failed.

Withdrawal at ATM machines and bank counters were limited, as well as the amount of money that could be taken out of the country.

However capital controls cannot be imposed without the Greek government's consent and a parliamentary vote.

In the meantime, talks to find an agreement on Greek reforms to unblock a €7.2 billion loan were still blocked on Tuesday.

IMF playing a 'criminal' role

While a commission spokesman repeated that Greece's lenders were ready to start talking again if there was a new proposal, Greek prime minister Alexis Tsipras said once again he's "ready to fight".

In an inflammatory speech at the Greek parliament, Tsipras accused the International monetary fund (IMF) of playing a "criminal" role and the ECB of adopting "a policy of fiscal suffocation".

Tsipras urged Europeans "to stop the pressure and end the blackmail" on his country.

The current policy towards Greece is "not being conducted in a democratic framework, it is not a logical strategy," he said.

"It is not a strategy Europeans should be proud of."

Beyond the aggressive rhetoric, Tsipras also seemed to appeal for a discussion on Greek debt.

"I would like the creditors to speak clearly," he said. "Do they want a solution?".

"If they want a solution, they have to close the door on these failed policies we had for the last four years," he noted, hinting at a political discussion over long-term financing of the country.

Greeks blame creditors

His strong stance comes as a GPO poll pulished Monday found that over half (56.3%) of Greeks believe that the deadlock is creditors' fault while 37.4 percent blamed the Athens government.

EU commission president Jean-Claude Juncker reacted angrily to Tsipras' latest speech.

"I was not in favour of an increase if the VAT on medecines and electricity, and the Greek prime minister knows that," he said at a press conference in Brussels.

"The debate in Greece and outside Greece would be easier if the Greek government would tell exactly what the commission is really proposing," he said.

"I am blaming the Greeks for telling things to the Greek public which are not consistent with what I've told the Greek prime minister."

In Berlin, German chancellor Angela Merkel said she would “do everything possible to keep Greece in the eurozone” but avoided appearing to be the main player.

"I’m concentrating all of my energy on helping the three institutions find a solution," she said.

Greece situation 'dramatic'

ECB chief Draghi has said "urgent action is needed" for a bailout deal, but Greek PM Tsipras says he's waiting for creditors' "realism".

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