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8th Aug 2022

Eurozone: No talks with Greece until after referendum

  • Dijsselbloem: No more negotiations until after Sunday's vote (Photo: consilium.europa.eu)

The eurozone has refused to negotiate with Greece on a third bailout package until after Sunday’s referendum - a referendum that is itself clouded in confusion.

Greek leader Alexis Tsipras’ last ditch attempt to reach a deal by offering to accept most of creditors' demands in return for a new €29 billion loan was spurned first by Germany and then by the eurozone finance ministers.

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"We'll wait for the referendum - no new programme can be negotiated beforehand,” German chancellor Angela Merkel told parliament Wednesday (1 July).

She added, in an address that was also run live on Greek TV, that Europe is able to wait "calmly" for the vote because its recent reforms have made it "strong".

"The current situation is without doubt a big challenge for us. But it is especially a torture for the people in Greece."

The chancellor said the door remains open to Greece but that she is not prepared to make a deal "at any price" and stressed that the eurozone is built on rules and responsibility.

Italian prime minister Matteo Renzi, who would normally be expected to be more sympathetic to a fellow southern member state experiencing difficulties, also insisted that the euro rules must be followed.

“As long as we are within a shared community, that is Europe, what is important is to keep rules, shared rules,” said Renzi.

Eurogroup finance ministers had a brief teleconference late Wednesday afternoon to discuss Athens’ proposal that it would accept most of creditors’ demands in return for a new loan and debt restructuring.

But they also concluded that they would not yet return to the negotiating table.

“We will come back to your request for financial stability support from the ESM [bailout fund] only after and on the basis of the outcome of the referendum,” Eurogroup chief Jeroen Dijsselbloem said in a letter to Tsipras.

Greece’s second bailout expired at midnight on Tuesday, meaning the country is without an international financial lifeline for the first time since 2010.

This brings more uncertainty for the Greek people who are already faced with closed banks and a €60 cap on daily cash withdrawals.

Euro commissioner Valdis Dombrovskis said on Wednesday that a new bailout deal for Greece is possible before new major payments come due, with 20 July and an ECB repayment seen as an absolute deadline for Athens.

He also noted that with capital controls, in place since Monday, "much more efforts will be needed to restore the situation".

Tsipras, for his part, struck a defiant note on Wednesday evening. In a TV address he reiterated that a referendum would be held and urged Greeks to vote No.

A No would mean a “return to a Europe of values” he said and would help the government get a better deal. He also said it would not mean that Greece would have to leave the eurozone.

Still, confusion about the referendum continues. Greeks are being asked to approve or reject two highly technical documents from creditors.

In addition the documents refer to a bailout that has already expired and there have been reports of translation problems.

Referendum not meeting international standards

Despite Tsipras’ assurances, it is also unclear what the practical consequences of a No vote would be. France and Germany have indicated that a No would mean a euro exit.

These uncertainties have led to the Council of Europe, the continent's human rights watchdog, to condemn the proposed vote as falling below international standards.

Thorbjorn Jagland, head of the organisation, told AP that the questions were "not very clear" and the referendum itself had been called at very "short notice".

Meanwhile the latest polls show that the Yes camp has gained a narrow lead. A poll by GPO showed 47 percent would vote Yes in Sunday's referendum, and 43 percent No. A few days ago the No side had a big lead.

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