Greece in financial limbo; shuttered banks keep lifeline

Athens, Greece—Greece braced for more chaos on the streets outside its mostly shuttered banks, as Athens and its creditors halted talks on resolving the country’s deepening financial crisis until a referendum set for last weekend.

Banks have been closed all week to prevent a crash from mass money withdrawals, while a few have been reopened to help pensioners without automated-teller-machine (ATM) cards.

But they are still in business. The European Central Bank (ECB) left the terms of its emergency $100-billion cash support to Greece unchanged, a day after Athens slipped into arrears with
the International Monetary Fund and its bailout program expired.

The move kept chances alive for a settlement be- tween Greece and creditors. And Finance Minister Yanis Varoufakis publicly thanked the ECB and its president, Mario Draghi, for the decision.

“This allows us to breathe. It’s a very posi
tive move and a move of good will on the part of the European Central Bank. I welcome it,” Varoufakis told state television.

Draghi, he said, had faced down “hawks” among eurozone members who had demanded that Athens increase collateral needed to receive continued assistance.

Asian stock markets advanced last Thursday after gains on Wall Street as strong US payroll data over- shadowed worries about the Greek crisis.

Greece is seeking a third bailout from the eurozone rescue fund after the previous deal expired this week without agreement on the terms of final pay outs.

The impasse left billions bailout money
frozen or canceled and
saw Greece forced to close banks and its stock market for at least a week, while the country’s left-wing government called a referendum urging voters to denounce the previous deal offered by creditors.

Eurozone finance ministers decided to put the talks with Greece on hold until the vote takes place.

“Given the political situation, the rejection of the previous proposals, the referendum, which will take place on Sunday, and the recommendation by the Greek government to vote ‘No,’ we see no grounds for further talks at this point,” Dutch Foreign Minister and eurogroup chairman Jeroen Dijsselbloem said after a late-night teleconference.

“There will be no talks in the coming days.”

In Athens, crowds of anxious elderly Greeks thronged banks last Wednesday beginning before dawn, struggling to withdraw their maximum of 120 euros ($134) for the week after the government reopened some banks to help pensioners who don’t have bank cards.

“It’s very bad,” said retired pharmacy worker Popi Stavrakaki, 68. “I’m afraid it will be worse soon. I have no idea why this is happening.”

Business associations and the country’s largest labor union urged the government to cancel the vote.

And the Council of European independent body that monitors elections and human rights—told the Associated Press the referendum would fall short of international standards.

In a sign of serious financial deterioration, Greece suffered another sovereign downgrade, the fourth this week, as Moody’s slashed the country’s rating from Caa2 to Caa3, or just above default. AP