As Greek Pensioners Storm Banks, Their Prime Minister Blinks

Greek Prime Minister Alexis Tsipras caved to European austerity demands. Germany says it's too late.


The Greek government is now in default to the International Monetary Fund, and the stark reality of the financial upheaval Athens is facing appears to have Prime Minister Alexis Tsipras in a panic. Tsipras executed an about-face Wednesday, agreeing to spending cuts he previously rejected. But Europe isn’t having it.

Pensioners stormed Greek banks, which are closed to the rest of the public, to collect a maximum of 120 euros, or $134. More and more ATMs in Greece are empty. And as concerns reached a fever pitch, Tsipras tried to reassure Greeks that their bank deposits were safe.

“I provide my personal guarantee that I will do whatever is possible to make these difficulties temporary,” the prime minister said in a televised address Wednesday evening.

But even a casual observer of the five-year crisis knows this isn’t the case. As part of a $270 billion bailout package, the European Central Bank had given Greek financial institutions emergency lines of credit when they were short on cash. With the expiration of the bailout Wednesday morning, that lifeline no longer exists. It’s why Greek banks are closed until Monday, at least, and withdrawals from accounts are limited to 60 euros, or about $67, per day.

Perhaps sensing the growing unease within his population, Tsipras caved to many European demands late Tuesday. In a letter to his creditors — the European Central Bank, the IMF, and the European Commission — he acquiesced to many previously rejected austerity demands, including pension reforms. In exchange, he wants a guarantee that Europe will help Athens pay its bills for the next two years. Officials from Syriza, Tsipras’s party, hinted an agreement would cancel Sunday’s referendum for the Greek people to decide whether to accept Europe’s austerity demands — or potentially withdraw from the eurozone, starting the process known as the “Grexit.”

“Look, if a deal is found, there is a chance there could be this possibility too. Everything is developing,” Health Minister Panagiotis Kouroumplis said on Greek television.

Tsipras, who is urging Greeks to vote “no” to austerity on the referendum, continues to insist that his desired result would still be part of Europe.

“’No’ does not mean a rift with Europe, but a return to a Europe with principles,” the prime minister said during his televised address.

This notion — and the new Greek concessions — were immediately dismissed by Germany, which shows no interest in extending the crisis any longer.

“Before a referendum, there is indeed no basis [for an agreement],” German Finance Minister Wolfgang Schaeuble said Wednesday. German Chancellor Angela Merkel also rejected making a deal before the referendum.

“Greece is in a difficult situation, but purely because of the behavior of the Greek government,” Schaeuble added. “Seeking the blame outside Greece might be helpful in Greece, but it has nothing to do with reality.”

Greece owes the IMF $1.7 billion. As of July 20, it will owe the European Central Bank 3.5 billion euros, or $3.9 billion.

Olaf Boehnke, head of the Berlin office of the European Council on Foreign Relations, told Foreign Policy on Wednesday these comments reflect the sentiment within the German government. Simply put, Berlin wants Greece out of the eurozone.

“People are really fed up with them. They’re trying to provoke the establishment as much as possible,” Boehnke said.

“Folks in Merkel’s party think Greece should have never become a member in the first place and should leave as soon as possible,’” he added. “The EU members want Greece to leave, but they don’t have any instruments to kick them out.”

It now appears Merkel and Schaeuble might not get the “no” vote outcome they want from Sunday’s upcoming Greek referendum. A poll by ProRata found that support for rejecting the bailout is shrinking. Before Greece closed its banks, 57 percent of Greeks wanted to reject European austerity. Now, that percentage has dropped to 46.

Photo credit: Angelos Tzortzinis/Getty Images

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