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Greece, EU near brink

June 29, 2015

Greece and lenders remain locked in brinkmanship, with one EU commissioner saying Athens had been only "centimeters away" from a deal to avoid default and euro exit. Greek bank dispensers are low on cash.

Griechenland Geld Geldautomat
Image: Reuters/S. Rapanis

EU economic affairs commissioner Pierre Moscovici told French radio Monday that Greece's leftist government had been only "centimeters" away from reaching a deal when talks with its international lenders broke down over the weekend.

There was still "room for negotiation," Moscovici said, adding that European Commission president Jean-Claude Juncker would "indicate the route to follow" at a press conference in Brussels at around midday on Monday.

"We must continue to talk," Moscovici said, echoing a remark from French Finance Minister Michel Sapin that talks "could re-start at any moment."

German Finance Minister Wolfgang Schäuble had openly questioned Greek bank solvency over the weekend, after Athen's decision to test its negotiating stance in a referendum among Greeks next Sunday.

That was followed by a European Central Bank (ECB) decision to freeze extra cash for Greek banks.

Schäuble said the liquidity of "some Greek banks could be in doubt."

Tuesday deadline

Greece and its creditors face a Tuesday deadline for Athens to repay 1.6-billion-euro ($1.76 billion) tranche to the International Monetary Fund (IMF), or default, thereby raising the prospect of a Greek euro zone exit.

On Sunday, Greek Prime Minister Alexis Tsipras, whose Syriza party opposes harsh austerity remedies, urged Greeks via television to keep calm after his government imposed capital controls and said it would keep banks closed until next Sunday's referendum.

Greeks were told their cash withdrawals from automatic teller machines (ATMs) or bank dispensers were capped daily at 60 euros.

Tourists nervous

Anxious tourists, a mainstay of Greece's economy, were told the ATM withdrawal limit did not apply to people using foreign credit and debit cards.

However, a banking source quoted by the news agency AFP early Monday said only 40 percent of cash machines now had money in them.

Canadian tourist Cassandra Preston told Reuters that she had scoured Athens for a machine with cash.

"I am here for another month, and I would like to make sure I have some cash on me," she said.

An Athens resident, who gave her name only as Anna, told AFP she he searched in vain for a working cash machine.

"There is no more money," she said, adding that she hoped for a referendum outcome so that Greece would stay in the eurozone and that the "nightmare will finally end."

Since Friday night alone, 1.3 billion euros ($1.45 billion) had been withdrawn from the Greek banking system, according to the head of the bank workers' union Stavros Koukos.

More emergency talks

Greek Finance Minister Yanis Varoufakis told the German daily Bild that Athens remained "open to new proposals by the (creditor) institutions."

In Berlin, German Chancellor Angela Merkel called an emergency meeting with the heads of parliamentary groups and party leaders for Monday.

In Paris, French President Francois Hollande will chair crisis talks with key ministers.

French Prime Minister Manuel Valls warned of a "real risk" of Greece leaving the eurozone if Greeks vote against the EU's bailout proposals in the planned referendum.

Top Japanese government spokesman, Yoshihide Suga said G7 finance ministers had held consultations over the weekend. He described the breakdown between Greece and its lenders over the weekend as "extremely regrettable."

Controls 'justified'

The EU commission's top official for monitoring financial stability in the 28-nation bloc, Jonathan Hill, said Greece's decision to impose capital controls was "prima facie, justified."

"The stability of the financial and banking system in Greece constitutes a matter of overriding public interest, said Hill

Free movement of capital should, however, be restored as quickly as possible, he added.

Exit fears in Berlin

Reuters, in an analytical article, said Merkel - unlike her finance minister Schäuble - was "determined to avoid" a Greek exit from the 19-nation eurozone, because of its potentially severe consequences, including a humanitarian crisis on Europe's southern rim.

It quoted Merkel's "closest advisers" as saying her biggest fear was that Germany would be blamed for "blowing up Europe" for the third time in a century."

ipj/rc (Reuters, AFP, AP)

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