Germany refuses to let Greece off hook
Osborne urges Merkel to back down and open talks with Athens as the eurozone crisis threatens to spiral out of control
The crisis in the eurozone was last night set to escalate after the Germans said they could not write off Greek debts without offering financial assistance to Ireland, Spain and Portugal.
George Osborne, the Chancellor, yesterday urged Angela Merkel, the German chancellor, to consider backing down to ensure there was not a “disorderly exit” from the eurozone.
He said “the situation risks going from bad to worse” and warned that “Britain will be affected the longer the Greek crisis lasts and the worse it gets”.
He suggested Britain could fly planeloads of euro notes to Greece to assist stranded tourists.The Chancellor urged the Greek government and its European creditors “to be open to new offers and to be ready to sit round the table”.
However, in the wake of Greece’s decisive “no” vote in Sunday’s referendum on creditor proposals, the Germans believe that a new debt relief deal is impossible as other countries across the EU will then demand a bail-out.
Sigmar Gabriel, Germany’s deputy chancellor, said the single currency would not be able to cope if it had to give financial assistance to other countries across the EU if they found themselves in similar economic turmoil to Greece.
German vice-chancellor Sigmar Gabriel has taken a hard line with Athens
Mr Gabriel said plans for humanitarian aid for Greece must now be drawn up amid fears the country could run out of fuel and food.
Mrs Merkel clashed yesterday with François Hollande, the French president, who wants Greece to be offered a generous deal.
Greek banks were pushed closer to the brink of collapse last night after the European Central Bank (ECB), the lender of last resort, demanded they put up more collateral in exchange for emergency loans. Paper is already running out in Greece and books may stop being published.
William Hague, the former foreign secretary, said that the Greek crisis was only the “beginning” and warned that the struggling economies of Italy and Spain could end up causing problems “for which Greece has only been a minor rehearsal”.
The leaders of all of Greece’s political parties last night backed far-Left leader Alexis Tsipras as he prepared to travel to Brussels to present a new proposal to the country’s creditors.
However, European leaders are expected to reject calls to provide Greece with “emergency liquidity assistance”.
In other developments yesterday:
• Yanis Varoufakis, the controversial Greek finance minister, quit in the hope of appeasing the country’s creditors.
• A split between France and Germany deepened as a senior ally to Mr Hollande accused Mrs Merkel of failure.
• British tourists travelling to Greece were told to take enough medicine to cover their stay amid fears of shortages.
• Valdis Dombrovskis, the European Commissioner for euro affairs, said the organisation will ignore a referendum demand made by Greece for debt relief because the vote was “not legally correct”.
• Vladimir Putin, the Russian president, yesterday spoke to Mr Tsipras. Raoul Castro, the Cuban leader, congratulated Greece on the result of the referendum.
• At least three companies in Greece, including its biggest electronic appliances chain, have paid staff in cash after the country imposed limits on withdrawals from banks last week.
"It’s about urgency for Greece, urgency for Europe," Mr Hollande said
Mr Osborne yesterday said that the chances of a positive resolution to Greece’s debt crisis are “sadly diminishing” after Greek voters’ rejection of recent creditor proposals and that the country’s economic situation will deteriorate quickly without a new push for stability.
Warning that “there is no easy way out”, he said there is a chance it could “spill over” into the UK and stall the economic recovery.
“The worst for the UK and indeed for the whole of Europe is that we have a completely disorderly situation over the next few weeks,” he said.
“That has an impact on Europe’s financial system and because Britain is one of the most open economies in the world we are impacted by that.
“We saw the impact of the problems in the Eurozone in 2012 and how they spilt over into the UK. That’s why we are urging all sides to try and resolve the situation.”
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The gulf between Germany, which is determined to stick to the rules of the bloc, and France, Greece’s last ally in the Eurozone in calling for a generous deal, widened last night.
At a joint press conference ahead of dinner at the Élysée Palace, Mr Hollande called for “solidarity” with the Greeks. “Europe is not just an economic, financial and monetary construction, Europe is a whole set of principles and values. A conception of the world,” he said
“In this Europe there is room for solidarity. Solidarity is everywhere to be seen in Europe and must be seen even more.”
But Mrs Merkel said the “preconditions” for a fresh bail-out “are not yet there”.
“We have already shown a great deal of solidarity to Greece,” she said. “The proposal we put to them was already extremely generous. We have to remain consistent.” She said that listening to the 18 other eurozone states “is also democracy”.
Benoît Hamon, the former French education minister, said: “Merkel has lost. Germany has lost. It is an opportunity for François Hollande to resume leadership.”Euclid Tsakalotos is the new man at Greece's finance ministry
Today, eurozone leaders will meet in Brussels to discuss if any prospect of a deal can be salvaged from the fallout of the Greek vote.
They are likely to be asked by the ECB whether they would guarantee Greek bonds being used as collateral on emergency aid. Refusal will give the nod for the lifeline to be cut, precipitating a devastating banking collapse.
Greece is currently being kept afloat with €89 billion of ECB emergency funding.
• European Central Bank tightens noose on banking system as creditor powers punish Greece
• Greece has done itself a favour - it'll soon be out of the euro
• Defiant Greeks reject EU demands as Syriza readies IOU currency
There was concern last night after Mr Varoufakis was replaced as the Greek finance minister by Euclid Tsakalotos, an Oxford-educated economist who is regarded as just as hardline.
In a blow to Greek hopes, the European Commission dismissed the No vote as nothing more than a “signal” because the poll was “neither legally nor factually correct”.
Mr Dombrovskis, the Latvian official responsible for the single currency, said any prospect of writing down Greece’s €380 billion debt mountain – a key Syriza demand – was now “off the table”. The vote “dramatically weakens the negotiating stance of the Greek government”, he said.
telegraphOs brits estão a ficar incomodados.
send planes loaded with euros to greece?
já tínhamos o helicopter money.
vamos ter o jumbo jet money.
yay.
