BackEurope rebuffs Greek overture as poll shows voters leaning ‘Yes’
As rationing of pensions began in the first week of capital controls, a poll showed a narrow majority going against govt's wishes to keep the euro
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Athens: Greek prime minister Alexis Tsipras and his creditors sparred heading into Sunday’s referendum on austerity as a poll suggested voters are inclined to accept deeper cuts.
As rationing of pensions began in the first week of capital controls, a poll showed a narrow majority going against the government’s wishes in order to keep the euro. A late compromise bid by Tsipras, who’s urging citizens to vote “No," was roundly quashed by the rest of the euro region, meaning negotiations will have to wait until after the plebiscite.
The battle lines ahead of the vote now appear immovable as Greeks adjust to financial misery with no prospect of their economic woes ending any time soon. The political posturing, along with the expiry of its bailout deal and a missed payment to the International Monetary Fund (IMF), masked the desperation as the economy sputtered and cash ran low.
“The clock cannot be simply set back to where it was Friday night before Tsipras broke off the talks," Holger Schmieding, an analyst at Berenberg Bank, wrote to clients. “A deal is still possible, but it would require more than just this letter."
First poll
If it means staying in the currency bloc, the majority of Greeks may be willing to vote against the very government they elected five months ago to take a stand against austerity.
A GPO poll cited by euro2day.gr said 47% of people are leaning toward a “Yes" vote, with those in the “No" camp not far behind with 43%. GPO interviewed 1,000 adults on Tuesday, four days after Tsipras’s call for referendum. There is a margin of error of 3.1%.
European stocks and bonds rose on the thaw in Athens. The Stoxx Europe 600 index rallied 2.2%. Yields on debt from Italy, Spain and Portugal all fell and the euro weakened 0.87% to below $1.105.
In the letter to European Commission president Jean Claude Juncker, European Central Bank (ECB) president Mario Draghi and IMF chief Christine Lagarde, Tsipras resisted their demands on pensions and tax discounts to Greek islands.
He proposed delaying implementation of the zero-deficit clause for retirement funds and other pension reforms until October instead of July and maintaining a 30% discount on sales tax for islands. He also wants to proceed with changes to collective-bargaining rules that creditors opposed.
Pensioners’ pain
Creditors are insistent on pension reforms that would bring savings of as much as 1% of gross domestic product (GDP) by 2016 and immediate steps to eliminate early retirement benefits and allowances for lower pensions.
In Athens, the queue of retirees at the few banks that opened this morning underscored the country’s plight. At 7am, a few dozen pensioners were outside a central branch of the National Bank of Greece. They were to receive a maximum of €120 ($133), compared with the average monthly payment of about €600. Many left with nothing after being told only those with last names from letters A to K would get paid.
A call among euro-area finance ministers failed to budge the situation.
“We see no grounds for further talks at this point," Dutch finance minister and Eurogroup chief Jeroen Dijsselbloem said in a video message. “We will simply wait now the outcome of the referendum on Sunday and take into account the outcome of that referendum."
ECB freeze
In Frankfurt, the ECB maintained its emergency support for Greek lenders following Greece’s failure to repay $1.7 billion to the IMF. The cap, which was frozen after the referendum was called, was kept unchanged.
With banks now shut and Greeks limited to daily withdrawals of €60, the decision by ECB policy makers gives the country a bit more time for a political solution to succeed.
Following reports of his letter to his creditors, Tsipras addressed the nation to quash speculation swirling on social media that he might cancel the referendum.
Instead, he doubled down, reiterating his call to reject austerity. He said it would strengthen his bargaining position.
“Come Monday, the Greek government will be at the negotiating table after the referendum, with better terms for the Greek people," Tsipras said in a Twitter message posted as he spoke on national television. “A popular verdict is much stronger than the will of a government."
Angela Merkel, Europe’s dominant political figure and his chief adversary, took it in her stride.
Asked whether she and Tsipras are still on speaking terms, the German chancellor said the two had talked several times in the last few days.
“Our personal relationship has not been damaged at all," Merkel told reporters. “We can talk to each other anytime and have done so recently." Bloomberg
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