Europe ‘gives Greece ANOTHER £2billion’ to prevent banks closing as Tsipras snubs Brussels talks to ‘make a deal with Putin’
- It is European Central Bank’s second intervention in three days, having earlier agreed to make almost £1bn available
- Lifeline came as Greek banking officials insisted they had ‘no financing problems’ despite withdrawals by savers, with around £1bn being taken out yesterday alone
- Greek Prime Minister Alexis Tsipras warns that his country’s exit from the eurozone ‘would be an irreversible step’
- Emergency meeting of EU leaders called for Monday after crisis talks to stop Greece leaving single currency failed
- Russia says it is willing to consider giving financial help to Athens to protect its ‘investment projects and trade’
- Mr Tsipras has called Russia ‘one of Greece’s most important partners’
- Chancellor George Osborne says Britain is ‘prepared for the worst’ as Greek crisis reaches the ‘eleventh hour’
- EU president Donald Tusk delivered ultimatum to Greece yesterday: ‘Accept an offer or default’
European finance chiefs have poured fresh emergency funds into Greek banks in a desperate attempt to keep them afloat after panicking savers withdrew more than £3billion this week.
The amount being offered by the European Central Bank has not been revealed, but it is believed to be around £2billion.
It is the bank’s second intervention in three days, having earlier agreed to make almost £1billion available.
The lifeline came as Greek banking officials insisted they had ‘no financing problems’ despite withdrawals by savers, with around £1billion being taken out yesterday alone.
Greece has to pay back £1.15billion to the International Monetary Fund by June 30, but says it will be unable to meet this deadline – or its obligations to pensioners and state employers – unless it can unlock an extra £5.15billion bailout. However, the money is unlikely to be given unless the country agrees to economic reforms.
An emergency summit of the eurozone’s 19 leaders will be held in Brussels to discuss the crisis on Monday. If Greece refuses to agree reforms and a tighter budget, the central bank will come under intense pressure to stop pumping money into its banks.
Alexis Tsipras, the Greek prime minister, warned that a Greek exit from the eurozone – one of the potential outcomes of the crisis – could trigger the single currency’s collapse.
‘The famous Grexit cannot be an option either for the Greeks or the European Union,’ he said in an Austrian newspaper interview.
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Greek Prime Minister Alexis Tsipras met with Russian President Vladimir Putin on Friday evening in St Petersburg, but the question of Russian financial aid for Greece was not discussed, Putin’s spokesman said
Run on the banks: People line up at an ATM outside a branch of the National Bank, in central Athens, after Greece failed to secure a deal with bailout creditors, prompting the European Union to call an emergency leaders’ meeting for Monday
‘This would be an irreversible step – it would be the beginning of the end of the eurozone.’ Mr Tsipras hailed Monday’s emergency meeting as a positive development, saying those ‘who invest in crisis and horror scenarios will be proven wrong’.
Mr Tsipras added: ‘There will be a solution based on respecting EU rules and democracy.’
His comments came as EU president Donald Tusk delivered an ultimatum to Greece yesterday, claiming the country must ‘accept an offer or default’ at the emergency summit – in a last-ditch effort to stop the debt-stricken nation crashing out of the euro.
‘We are close to the point where the Greek government will have to choose between accepting what I believe is a good offer of continued support or to head towards default,’ Mr Tusk said today.
Yesterday, Mr Tsipras snubbed talks in Brussels to make a deal with Vladimir Putin – calling Russia ‘one of Greece’s most important partners’.
The pair met last night in St Petersburg, but the question of Russian financial aid for Greece was not discussed, Putin’s spokesman said.
Mr Tsipras said he recognised that some people would ask why he was in Russia but insisted that, as well as being an EU member, Greece saw itself as standing ‘at the crossroads of three continents’ with links to the east that were of growing importance in ‘the new emerging multi-polar world’.
The prime minister called on the the EU to show ‘solidarity’ with his country, rather than pursue ‘strict economic measures’ and used an elaborate maritime metaphor to stress his point.
Desperate measures: People withdraw cash from ATM machines in central Athens as a beggar lays on the pavement
Snubbed talks: Greece’s PM chose not to attend eurozone talks in Brussels yesterday, instead visiting Mr Putin to make a deal with Russia, who Mr Tsipras called ‘one of Greece’s most important partners’
He said: ‘We are at the moment at the centre of a storm, of a whirlpool. But we live near the sea, so we are not scared of storms, we are not scared of open seas, and of going into new seas. We are ready to go to new seas in order to reach new, safe ports.’
Russia today said it was ready to consider the question of giving financial aid to Greece.
‘We will support any solution on regulating the Greek debt crisis that is suggested by Greece and our European partners,’ Russian Deputy Prime Minister Arkady Dvorkovich was quoted as saying by TASS news agency.
‘The most important things for us are investment projects and trade with Greece. If financial support is required, we will consider this question.’
The ECB’s injection of credit is a bonus for Greece, whose hard-left politicians have defied calls by their creditors to implement economic reforms.
It also reveals the depth of Europe’s fears that its currency could implode if Greece withdraws from the euro, amid concerns that it could form a strategic alliance with Russia .
The Russian deputy prime minister, Arkady Dvorkovich, said yesterday that Moscow ‘will support the resolution of Greece’s financial crisis by all possible means’.
Stark: A stray dog passes by people looking at the newspapers reporting about Greece’s bailout hanging at a kiosk in central Athens
THE £170BILLION DEBT ROW THAT COULD BRING DOWN THE EURO
Greece needs extra funds by the end of the month in order to pay public sector salaries and pensions – and a looming £1.1billion repayment to the International Monetary Fund.
But in return, the ‘Troika’ of lenders keeping Greece afloat – made up of the European Commission, IMF and European Bank – are demanding a fresh round of austerity including cuts to pensions.
However, the Greek government are refusing any further pension cuts and have threatened to default on their debt repayments, saying its people have suffered enough.
Greece owes official lenders €242.8 billion (£172billion), according to a Reuters calculation from official data.
George Osborne warned yesterday that the EU had to be prepared for Greece crashing out of the euro.
Speaking before a meeting with finance ministers in Luxembourg, he said: ‘We have entered the 11th hour of this Greek crisis, and we urge the Greek government to do a deal before it is too late. We hope for the best but we now must be prepared for the worst.’
The Chancellor made it clear that Britain had already taken steps to protect itself from the eurozone crisis.
British financial institutions have reduced their exposure to risk in Greece. Figures from the Bank of England showed UK banks, pension funds and other financial firms had £2billion tied up in the country at the end of March.
That was the smallest amount since records began in 2004, and down from £9.6billion a year earlier and a peak of £12.4billion in March 2008.
However, experts warned of chaos on financial markets if Greece defaults on its debts.
Speaking yesterday, Mr Tsipras said: ‘The so-called problem of Greece is not just a Greek problem, it is the problem of the whole European Union.
‘This is a problem deeply rooted in the structure of the EU. So the question is whether the EU can once again become a development centre, a region that will enjoy prosperity and solidarity, whether the EU will again be a social solidarity hub, or if it will continue to pursue the path that will lead to a dead end.
‘We can’t continue carrying the burdens of the past. If we continue doing so, continue making the same mistakes again and again, then we are doomed to failure.
‘The question is how we have to improve, what we have to do in order to be successful.’
Earlier, Tsipras welcomed Monday’s meeting and dismissed those predicting catastrophe.
‘The leaders summit on Monday is a positive development on the road toward a deal,’ his office said in a statement.
‘All those who are betting on crisis and terror scenarios will be proven wrong.’
‘There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro.’
Greece – deal or no deal?
- Option 1: No deal: Greece defaults on IMF and ECB repayments; ECB pulls plug on emergency bank assistance leading to run on Greek banks, capital controls and potential Grexit
- Option 2: Greece agrees reform deal with creditors at last minute and avoids default, staying in euro
- Option 3: No deal reached but both sides paper over cracks and Greece stays in euro for now