ATHENS // Greece’s banks will remain shuttered for the next six days as the country lurches towards insolvency.
The stock exchange will also be closed today and after an emergency cabinet meeting last night the prime minister Alex Tsipras announced capital controls and new restrictions on bank withdrawals.
Yesterday’s moves followed Mr Tsipras’s sudden decision to call a referendum on creditor proposals for more austerity in return for badly needed bailout funds.
International creditors have refused to extend Greece’s bailout and savers queued to withdraw cash yesterday.
The European Central Bank piled on the pressure when it refused to increase the amount of emergency liquidity available to Greek banks.
“It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum,” Mr Tsipras said last night.
The referendum is set for next Sunday, but Greece’s current bailout expires tomorrow and the 7.2 billion euros remaining in the fund will no longer be available.
Without that cash, Greece is unlikely to be able to pay a 1.6 billion-euro International Monetary Fund debt repayment also due tomorrow.
Several hundred anti-austerity protesters, chanting slogans against the European Union and IMF, rallied near parliament in Athens yesterday.
The protest began with a demonstration in front of the offices of the European Commission. The ground was strewn with leaflets reading “Drachma better than submission” and “We don’t owe, we won’t sell, we won’t pay”.
The Greek government is advocating a no vote in next Sunday’s referendum. It says the proposals are humiliating for Greece and would push the already devastated economy farther into recession.
The finance minister, Yanis Varoufakis, suggested yesterday that Greece might not pay the 1.6 billion euros due tomorrow to the IMF.
He said the European Central Bank should pay the money to the IMF out of the profits it made on Greek bonds in 2014, which would be “a very sensible transfer”.
“We are owed money by one part of the troika and we owe money to another part of the troika. Why don’t they sort themselves out and transfer money from one pocket … to the other?” he said.
France’s prime minister Manuel Valls urged Greece and other nations to do whatever they could to keep Greece in the euro zone.
“We don’t know, none of us, the consequences of an exit, either on the political or economic front. We must do everything so that Greece stays in,” he said.
Mr Valls said that meant “respecting Greece and democracy, but it’s also about respecting European rules. So Greece needs to come back to the negotiating table.”
The president of the European Commission, Jean-Claude Juncker, also said the door remained open for talks.
The Commission published what it said was the improved offer that Greek negotiators were looking at on Friday night in Brussels when Mr Tsipras announced in Athens that Greece rejected it and he was calling a referendum.
Euro zone finance ministers could have agreed to the deal on Saturday but instead took it off the table because of “the unilateral decision of the Greek authorities to abandon the process”.
Mr Juncker said he was publishing the offer “in the interest of transparency and for the information of the Greek people”.
It included an easing of demands on pensions and a reduction in VAT for the vital hotel industry from 23 per cent to 13 per cent.
A Greek government official said Athens had not been sent the offer.
* Associated Press and Reuters
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