Greek crisis: Protesters demand end to austerity, with EU future in doubt - as it happened

Graeme Wearden (now) and Nick Fletcher

from on 2015-06-17 21:15 (#BHMY)

Central bank issues chilling warning that Greece could be thrown out of the European Union unless it reaches a deal fast

10.17pm BST

PS: Greece has, once again, made the front pages of several newspapers:

Thursday's Guardian front page: Greece: can't pay, won't pay #tomorrowspaperstoday #bbcpapers #Grexit pic.twitter.com/ch6L0casw5

Thursday's FT front page: Fed opens door for September increase in interest rates #tomorrowspaperstoday #bbcpapers pic.twitter.com/T1vUvte6Vd

Thursday's Telegraph front page: Early retirement rip-off to end #tomorrowspaperstoday #bbcpapers pic.twitter.com/LWbriGnuAA

Thursday's International NY Times: Critics say U.S. is falling short in drive to halt Bashir #tomorrowspaperstoday pic.twitter.com/DjDu6mRlSc

9.18pm BST

That's it for us for tonight, I think, after another busy day.

Greece has put the onus on its creditors to prevent it being forced out of the single currency, warning that an economic collapse on a par with the Great Depression of the 1930s had left it broke and unable to pay its debts.

Athens announced on Wednesday that it had run out of money, and would not be able to pay a1.6bn (1.15bn) owed to the International Monetary Fund (IMF) at the end of this month, on the eve of a meeting of eurozone finance ministers. The meeting is seen as the last realistic chance of striking a deal before Greece's current bailout runs out in 12 days' time.

9.01pm BST

A couple more photos from tonight's anti-austerity, pro-government protest in Athens:

8.17pm BST

The head of the US Federal Reserve, Janet Yellen, has warned that there will be disruptions in the financial markets, and the global economy, if Greece doesn't reach a deal with its creditors.

This is a very difficult situation. In the event there is not an agreement, I do see the potential for disruption that could affect the European outlook and global financial markets.

There would undoubtedly be spillovers to the US that would affect our outlook as well.

8.01pm BST

The Speaker of the Greek parliament is at tonight's rally, hours after tangling with Bank of Greece governor Stournaras over his warning that Greece could crash out of the EU without a deal.

#Greece Parliament President Zoe Kostantopoulou joins anit-austerity protest in Athens, #Syntagma #17jgr v @prezatv pic.twitter.com/bPK6HsrysU

7.35pm BST

There are plenty of schoolteachers at tonight's demonstration, who have told Helena they believe the government should toughen its stance.

7.30pm BST

Our correspondent Helena Smith is in Syntagma Square.

She says the turnout at tonight's rally isn't great, and several of the demonstrators have told her they believe Greece should 'rupture' away from the European Union.

7.27pm BST

A glance at the posters and banners on display tonight in Athens show there is still support for Alexis Tsipras's government in its battle to get an 'honourable compromise':

7.23pm BST

As if the Greek crisis wasn't dramatic enough, the spotlight will shift to Russia on Friday when Alexis Tsipras visits St Petersburg.

He'll meet with president Vladimir Putin, on the sidelines of an economic summit. And there is speculation that Moscow could potentially offer Athens a credit line, as my colleague Shaun Walker reports:

"A financial deal package to Greece is definitely possible, but it's unlikely to come as a straight bailout loan, and more likely to be packaged as part of an advance payment deal over gas transfer or something similar," said Chris Weafer, a Moscow-based financial analyst.

The two leaders will discuss Greek participation in a major pipeline project that would bring Russian gas to Europe through Turkey and Greece, bypassing Ukraine - a long-term Russian strategic aim....

7.00pm BST

Here's Greek finance minister Yanis Varoufakis telling reporters in Paris that "it is our moral duty to reach an agreement very, very quickly".

6.46pm BST

Placard of the night pic.twitter.com/WzPQFFT28v

6.39pm BST

The Daily Telegraph's Merheen Khan is at Syntagma Square, and reports that there is a pretty decent atmosphere despite the crisis gripping Greece.

Anti austerity protestors gathering in Athens. Plenty of music, carnival atmosphere so far pic.twitter.com/15V45Grusl

6.36pm BST

Sorry, that banner's hung outside the Greek parliament, not actually on it (as a reader across the square kindly reports):

6.27pm BST

Demonstrators have hung a banner outside the Greek parliament, urging people to support Greece at this crucial time and help end austerity in the country.

6.24pm BST

Expectations for Thursday's eurogroup meeting were not high, but they've been given another shunt by Greek finance minister Yanis Varoufakis:

Greece's Varoufakis doubts debt deal will be reached at Luxembourg Eurogroup tomorrow, AFP in Paris reporting. No kidding

6.22pm BST

Crowds are gathering in Syntagma Square, outside the Greek parliament, for tonight's anti-austerity rally:

Panoramic pic of the anti-austerity demo RT @Hibai_ Miles de personas contra la austeridad en Pl #Syntagma. #17junegr pic.twitter.com/2UGDBiDAbQ

6.18pm BST

There's talk that a senior US department of state official, Amanda Sloat, will visit the Greek capital on Thursday to push for an agreement.

Important: Amanda Sloat, US Dep AssistSec (European/Eurasian Affairs), will be in Athens tmrw w/ WH msg "close the deal". via @g_evgenidis

5.53pm BST

And signs the demonstrations are beginning:

#Greece People gathering at #Syntagma sq. to join the pro-gov, anti-austerity demo. Pic by @Hibai_ pic.twitter.com/yeqR7zfBYw #june17gr

5.50pm BST

Over in Athens the governing Syriza party has issued a thinly veiled attack on the governor of the Bank of Greece saying he has gone beyond the boundaries of his constitutional role by warning that the country is on the brink of "uncontrollable crisis." Helena Smith writes:
Following House president Zoe Konstantopoulou's criticism of Yannis Stournaras, Syriza has also released a statement saying the Bank Governor had not only breached his constitutional role but actively attempted to limit the room the government had for maneuver in its negotiations with creditors.
"With his report today the governor of the Bank of Greece not only exceeded the boundaries of his institutional role, he is attempting to contribute to the creation of an asphyxiating framework in the moves and negotiating abilities of the Greek government," said the statement. "And it is worth asking why this is happening when it is presumed that the role of the Bank of Greece is maintaining the stability of the banking system."
Stournaras, who served as finance minister under the previous conservative-led "pro bailout" government, warned that failure to meet a deal would "mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and - most likely - from the European Union".

5.48pm BST

More detail on those comments from the US. Reuters reports:

A senior U.S. State Department official on Wednesday repeated warnings from Washington that Greece had to make a "serious move" to break a deadlock with its international creditors.

Deputy Assistant Secretary for European and Eurasian Affairs Amanda Sloat met Greek Alternate Foreign Minister Euclid Tsakalotos and reaffirmed recent messages from President Barack Obama and Treasury Secretary Jack Lew, a statement from the U.S. embassy in Athens said.

5.35pm BST

The US continues to show its concern over the (lack of) progress in Greece's standoff with its creditors:

5.18pm BST

And because it's always good to have a quick reminder of where things stand:

The key dates for Greece over the next 2 months, via RBC: pic.twitter.com/vOkthUAn8d

5.16pm BST

European shares lost some of their early calm, notably after Greece warned it could not make the a1.6bn IMF payment due at the end of the month without agreeing a deal with its creditors. Investors were also nervous ahead of the latest news on a possible US interest rate rise from Federal Reserve chair Janet Yellen. After the markets closed the ECB reportedly lifted its emergency liquidity assistance level to a84.1bn for Greek banks. The final scores showed:

5.07pm BST

After comments from ECB board members yesterday that Greek banks were solvent - a prerequisite for the emergency liquidity assistance - it seemed likely the central bank would continue its support. But it made us wait for the news ......

5.05pm BST

Here's the ECB liquidity news we've been awaiting:

*ECB TO RAISE GREEK ELA CEILING TO EUR 84.1bn FROM EUE 83bn #forex

#ECB stick to regular practice & roll the ELA again... now stands at EUR 84.1bln, according to latest sources..Greek banks live another day!

4.28pm BST

More from Tsakalotos (courtesy Reuters):

[He] suggested Athens be offered debt relief in the form of having the European bailout fund - known as the European Stability Mechanism - take over Greek bonds held by the ECB - as one option that would not increase debt for Greece or its partners.

"There are lots of technical solutions on how that could be done," he said. "If there is goodwill, I can think of 10-15 solutions right now of how that could be done. If there's no political goodwill then for any solution I can think of a drawback."

4.07pm BST

Greece's top negotiator has confirmed the country does not have the cash to make the a1.6bn payment due to the International Monetary Fund at the end of the month without a new deal.

And any deal looks as far away as ever, given the opposing positions held by the country and its creditors.

"At the moment we haven't got the money," he said, adding that Athens was already "squeezing every last bit of drop of liquidity" to service debt so far.

"There is no financing, we haven't got access to the markets, we haven't got money that hasn't been paid since the summer of 2014 so obviously we won't be able to have the money to pay that [the a1.6bn to the IMF]."

Athens could accept a deal only if it was sustainable and addressed debt, financing and investment issues, said Tsakalotos.

"If you have that, then the Greek government will sign the deal," Tsakalotos said. "If it doesn't have that kind of deal there is no point in signing onto something that you know is going to fail."

3.52pm BST

Are the Greek prime minister' negotiating skills perhaps paying off? The leader has been the butt of rare praise " in no other than the German Die Welt. And it has not been lost on the Greek media, reports Helena Smith.

The posturing, foot-dragging and sheer brinkmanship that the Greek government has displayed may not be the work of "hot-heads" but two very level-headed men who may well be Europe's most successful politicians. So says, Germany's leading newspaper Die Welt of the Greek leader Alexis Tsipras and his finance minister Yanis Varoufakis. The paper writes that the Greek duo are deliberately drawing out the process so that Tsipras can eventually arrive at the higher-level "political solution" he so publicly wants. The paper says the two men may have pulled off the feat of deconstructing the German psyche. "They are soberly observing the fear that is eroding German souls and drawing their conclusions. What we have been continuously reading in recent months, that Tsipras and Varoufakis have been pushed in a corner, is wrong. Right now, they are probably the most successful politicians in Europe."

3.32pm BST

The Greek stock market has fallen sharply again today, unsurprisingly given the apparent slow march the country is making towards default:

#Greece stock market -3.15% today & -17.3% in the last four sessions, banks -1.38% today & -27% since last Thu. #banking #markets #economy

3.31pm BST

Of course the timing of any capital controls in Greece could not be worse, with the summer pretty much here...

In the bad scenario that CCs are imposed right before the primetime of the tourist season in #Greece, I wouldn't wanna be Yanis. Or Alexis.

3.28pm BST

3.24pm BST

3.10pm BST

Just how short could Thursday's short talks on Greece at the Eurogroup meeting be?

EZ ministers to hold short discussion on Greece on Thursday, official says - - -Do the failed weekend talks imlpy shorter than 45mins?

3.00pm BST

As the prospect of a Greek default and/or exit from the eurozone comes closer, there is more talk of what to do if a Grexit does happen.

British Chambers of Commerce director general John Longworth looked at the possible effect on the UK:

With a messy Grexit looking increasingly likely, many UK businesses may be hit by the resulting market upheaval, changes in trade flows, and payment issues. Central banks and governments must work to limit the disruption to business through all means possible.

As with every crisis, we need to be hard-headed enough to see if there is an opportunity in the agony. It is possible that Grexit may produce a silver lining for the UK as it seeks to redefine its position in Europe. In the aftermath of Grexit, the eurozone would have to hold an honest debate about further integration and its future operation to prevent something similar ever happening again. Within those discussions there would be an opportunity for the UK to secure meaningful changes and opt-outs that ensure a reformed EU aids our competitiveness.

2.31pm BST

Slovakia's finance minister has tweeted that there is still time for a "miracle":

We still have few days left for miracle to happen with #Greece - agreement which could lead to conclusion of program or extension #eurozone

Our criticism points at govt in #Greece, not Greek people. Greek govt officials need to drop inappropriate attacks on international partners

2.12pm BST

Time for a recap, for the benefit of any new readers joining us.

The Greek central bank has raised the stakes in the battle with its lenders, warning that the country could be plunged into an unprecedented slump unless a deal is agreed soon.

Failure to reach an agreement would....mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and - most likely - from the European Union.

A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability. An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring.

All this would imply deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership.

From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South.

We don't go into the specifics of these plans but of course they will be looking at how do we make sure we have looked at the impacts on business, the banks and the financial sector and tourists....

This is about making sure we are as prepared as we can be. Of course, the potential default does present some serious economic risks, so alongside contingency plans it is about making sure we have an economy that is growing and that our public finances are in good order."

"We have only one option and that is to find a solution that will be accepted and passed by the government and the parliament.....

If we do not have an honourable compromise, we will once again say the big no."

Greek/EU break-up at the "I'm packing my bags and heading out the door!" "Yea, do that, see if I care!!" phase..

1.49pm BST

Over in Athens reports are coming in that EU commission president Jean-Claude Juncker is poised to propose a new compromise, in a bid to end the stalemate between Greece and its lenders.

1.37pm BST

The Bank of Greece's warning about the perils of not reaching a deal has caused a political flap in the Greek parliament.

Parliamentary speaker Zoe Konstantopoulou has dismissed the Bank's hard-hitting report as "totally unacceptable", and returned it to BoG governor Yiannis Stournaras.

@graemewearden #Syriza MP Athanasios Petrakos just said #Stournaras should be called to answer about his statement in the Parliament.

Syriza's parliamentary speaker returned BoG report to governor, demanded verbatim minutes of all his ECB discussions

Clearly governor of Greek Central Bank and government in complete breakdown of confidence. Rare in era of CB primacy #Greece

1.12pm BST

Far left elements inside the Syriza party are now calling on Greeks to take en masse to the streets, giving Alexis Tsipras another headache.

"I don't mean tanks in the classic sense of the word. Today tanks have been replaced by a communications game that they play in great skill in the euro zone."

"I don't believe [euro exit] would be a catastrophe. Despite the difficulties our country would have acquiring a new national currency, it could be a way out."

"It is clear that after five months of so called negotiations, creditors are clearly trying to impose a destructive agreement on the Greek people."

12.44pm BST

Back in Athens, Alexis Tsipras warned that he would give Europe the "big no" if an acceptable deal cannot be reached.

"We have only one option and that is to find a solution that will be accepted and passed by the government and the parliament.....

If we do not have an honourable compromise, we will once again say the big no."

Faymann trifft Tsipras. pic.twitter.com/Lwn4uqTpPg

12.29pm BST

The German government has reiterated that it doesn't want Greece to leave the eurozone.

But a spokesman has also warned that it will be hard to reach a deal at tomorrow's Eurogroup meeting, as Athens has not tables any new proposals:

12.20pm BST

Martin Schulz, the president of the European Parliament, has told the Guardian that Greece could end up out of the European Union.

"I think that leaving the euro is also leaving the European Union".

'Legally it's unclear.'

12.05pm BST

Back at the Athens press conference, Alexis Tsipras has said he's not planning to ask voters for a fresh mandate - implying no early elections or a referendum.

He also vows to take responsibility if an "honourable compromise" is reached (ie, if it doesn't live up to the pledges he made before winning January's general election)

Tsipras says gov't has no intention of seeking new mandate (elections/referendum) from voters regarding negotiations with lenders #Greece

Tsipras says if there's "honourable compromise" with lenders, he & his gov't will take responsibility for pasing & implementing deal #Greece

11.54am BST

My colleague Rowena Mason has just emailed from Parliament, with details of Britain's plans to protect itself against the Greek crisis.

The prime minister's official spokeswoman said contingency planning was looking at the potential impact on businesses, banks, the financial sector and tourism, among other areas.

"The chancellor was talking in the House yesterday about the potential exit of Greece and how that presents serious economic risks and of course as part of that we take all steps to protect ourselves from such eventualities...

You will expect we are continuing to make sure we have the right plans in place and stepping up operations given where discussions have got to. We don't go into the specifics of these plans but of course they will be looking at how do we make sure we have looked at the impacts on business, the banks and the financial sector and tourists....

"You would expect us to have plans in place that look at a range of potential consequences."

11.48am BST

Heads-up. Greece's prime minister is criticising the demands made by the country's creditors, at a press conference with the Austrian chancellor right now.

Tsipras: Greek proposals "fully cover" budget needs set out by lenders #Greece pic.twitter.com/oPP8LZyedr

Greek PM Tsipras: Greek Proposals Meet Creditor Budget Demands $EURUSD

11.27am BST

David Cameron's spokeswoman has just announced that Britain is "stepping up" its preparations in case Greece leaves the eurozone.

Speaking a few moments ago, she said the UK government believes there would be a "serious economic risk" from a Greek default.

11.14am BST

The Bank of Greece's dire warning that the country could crash out of the EU unless it reaches an agreement sent a ripple though the Athens stock market.

The AGT index dropped another 5 points, or 1%, to 698 points, having been up in early trading.

11.00am BST

Brussels reporters have been told that Cyprus's bailout crisis of spring 2013 shows that capital controls can be imposed in the euro area:

10.47am BST

Werner Faymann's 'solidarity visit' to Greece hasn't gone down terribly well in Brussels:

"I'm not quite sure what the Austrian chancellor is doing in Athens," says senior #EU official. #Greece

10.40am BST

The chancellor of Austria has now arrived at the Greek PM's residence, Maximos Mansion, for talks with Alexis Tsipras.

"For Europe to be stronger, it must show solidarity and support to any country which needs it."

10.39am BST

EU officials are also telling reporters in Brussels that they have already made serious concessions to Greece, since agreeing a four-month bailout extension in February.

That implies they're not willing to make further compromises to reach a deal.

Senior #EU Official says the Institutions have moved significantly beyond what was agreed on February 20 #Eurogroup #Greece

"Institutions have moved very, very significantly beyond what was agreed by Feb 20," says sr #EU official. "They are extreme movements."

10.29am BST

The head of the eurozone's finance ministers has declared that there is still time for an agreement to be reached, to avert the alarming scenario painted by Bank of Greece today.

Jeroen Dijsselbloem told reporters at the Dutch parliament that:

"Time is running out but a deal is still possible".

Senior #EU official adds to growing feeling nothing on #Greece will be agreed at Thurs #Eurogroup: "I believe this will be pretty short."

Eurogroup looks unpromising/promising depending on your perspective: 'I honestly belive this will be pretty short,' says EU official #greece

10.05am BST

Greece's central bank has issued an urgent plea to both sides to hammer out a deal, warning that the country could be forced out of the European Union.

From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South.

...largely taken the form of cash withdrawals and hoarding, while flight of capital has also been recorded.

#Greece | Deposits down to '04 levels...Comical Ali says still no bank runs here pic.twitter.com/IXl2y3bHDy

The deterioration of economic sentiment indicators and financing conditions in the private sector suggest that the slowdown of the economy is likely to accelerate in the second quarter of 2015, putting the economy at risk for a renewed bout of recession.

9.40am BST

The British government has embarked on contingency planning to prepare for the "serious economic risks" posed by a Greek default and a possible exit from the euro, the chancellor, George Osborne, has confirmed.

As David Cameron prepares to discuss the Greek crisis with the prime ministers of Italy and Luxembourg on Wednesday, the chancellor said the UK government was taking "all steps" to protect Britain.

Whitehall officials, who held contingency planning meetings on the implications of a possible Greek exit from the euro in February, have stepped up their preparations in recent weeks amid fears that Greece could be on the verge of a debt default...

9.35am BST

My colleague Jon Henley is in Athens, and found plenty of evidence that Greeks have been stashing funds away in case their banking sector collapses:

"Our friends have all done it. Nobody wants their money to be worthless tomorrow. Nobody wants to be unable to get at it."

"If I was, I certainly wouldn't tell you."

"I think those who could, have already transferred some money abroad. And lots of others have taken out a few thousand, enough to see them through any immediate crisis. I have."

"Not much. But it's safe, isn't it? That's what they say."

9.29am BST

Austria's finance minister Hans Jirg Schelling may not be as supportive towards Greece as chancellor Faymann, suggests our Europe editor Ian Traynor.

#grexit doubt whether #schelling will echo #faymann in lux tomorrow

9.18am BST

Freelance journalist Omaira Gill reports that the Greek people are feeling increasingly worried by the crisis:

Mood on the ground: public is spooked. #troika #greece #austerity #euro #eurocrisis #syriza

9.09am BST

Over in Athens, demonstrators have occupied the offices of the European Commission in an anti-austerity protest.

The demonstrators are members of the trade union affiliated to Syriza, called META.

They have raised a banner saying: "The people cannot be blackmailed - The country isn't for sale".

8.38am BST

Europe should be able to handle the "contagion risk" if Greece were to default on its debts and crash out of the eurozone.

That's according to Moritz Kraemer, managing director of sovereign ratings at S&P.

If you really look at the contagion risks - the direct links through common creditors, it's not really that important any more.

There is really a much bigger, more powerful toolbox than last time.

S&P's Kraemer says Greek contagion manageable in default case b/c of fire walls and ECB QE. (BBG) pic.twitter.com/pAlhONjMhY

8.19am BST

Here's a couple more key quotes from the Austrian chancellor this morning, ahead of his meeting with Alexis Tsipras at noon local time (10am BST):

#Austria Chancellor Faymann: Institutions must help #Greece deal with poverty; #EU will show solidarity if Greece does homework

#Austria Chancellor Faymann: Some proposals for #Greece were 'not Ok'; Greece must improve tax collection, rule of law

8.15am BST

Europe's stock markets are creeping higher this morning, as traders watch events in Greece nervously.

The FTSE 100 has gained 20 points, or 0.3%, in the first few minutes of trading, having been driven to a four-month low earlier this week.

The nation's fate is perilously in the balance as failure by Greece and its Creditors to cede ground continues, and a mud-slinging blame game by all and sundry for the lack of progress gathers pace. The clock ticks ever closer to default.

8.05am BST

The Austrian Chancellor has issued a strong declaration of solidarity with Greece, hours before meeting Greek prime minister Alexis Tsipras in Athens later today.

"I know there were a number of proposals, also from the institutions, that I also don't find in order."

"High joblessness, 30-40 percent (with) no health insurance and then raising VAT on medicines. People in this difficult situation cannot understand that."

"I stand on the side of the Greek people who in this difficult position are being proposed more things detrimental to society."

"I assume that someone who is elected lives up to his responsibility."

7.54am BST

Good morning, and welcome to our rolling coverage of the Greek bailout crisis.

Athens now has just 13 days to reach a deal with its creditors before its bailout programme expires, and a matter of hours until finance ministers meet to discuss the situation in Luxembourg on Thursday.

Guardian front page, Wednesday 17 June 2015: Greece accuses 'criminal' creditors as default nears pic.twitter.com/kvxJC9VrCU

Varoufakis to meet OECD's Gurria in Paris - http://t.co/H0TRU0es3q pic.twitter.com/wOk4SsZo0M

Morning Note: 1. ECB ELA decision. 2. Lagarde speaks 7:30 UK time. 3. Yellen speaks 7:30 UK time = bad scheduling pic.twitter.com/7wWexgtrvp

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