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White House: Greek Crisis Poses No Major Threat to US Economy

Monday, 29 Jun 2015 02:58 PM

The latest news on Greece's financial woes as it closes its banks and limits money withdrawals :

The White House says Greece's debt crisis poses no major, direct threat to the U.S. economy.

White House spokesman Josh Earnest says that's because the U.S. exposure to Greece's economy is small.

The White House is calling for Greece to remain in the eurozone. Earnest says the parties negotiating over Greece's debt must develop a package of reforms and financing that will leave Greece with a sustainable debt plan without leaving the eurozone.

Earnest is calling attention to "strong statements" from Greek leaders and other eurozone countries for Greece staying in the currency union. He says keeping Greece in the eurozone is in the interests of all parties involved.

President Barack Obama spoke about the developments in Greece in a phone call Monday with French President Francois Hollande.

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Irish Prime Minister Enda Kenny has criticized Greece's surprise decision to hold a referendum on the existing bailout offer as unfair to other EU democracies.

Kenny says Ireland came close to suffering a Greek-style crisis, but accepted six years of austerity as the price for escaping its own 2010-2013 bailout. He says his government in 2011 was concerned it might have "to restrict capital outflows from banks and indeed to have the army surrounding ATM machines."

He says Greece's approach was making economic matters worse for Greek citizens. He is urging Greece to "come back to the table."

Kenny says Greek Prime Minister Alexis Tsipras is making an unreasonable demand on other EU members to extend the existing Tuesday deadline for repayment of international loans. He says this would require votes in many parliaments, and Tsipras was wrong to unveil referendum plans only a few days before the deadline.

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Cyprus' president has sent a letter to Greek Prime Minister Alexis Tsipras saying he supports his request for an extension of a few days to the country's bailout.

The bailout expires Tuesday, and Tsipras asked for it to be extended so Greece can hold a referendum on creditor reform demands on Sunday.

The letter by Nicos Anastasiades, which was released by Greek officials, says Cyprus "not only supports but actually considers an extension necessary" for the bailout.

Anastasiades points out that Cyprus has already supported to extensions to the bailout, one in December and one in February.

Tsipras earlier requested an extension from eurozone country leaders, after finance ministers rejected a similar request on Saturday.

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The Greek association of pharmacies has issued a statement assuring Greeks there are no drug shortages, in an effort to stem concerns on the first day of capital controls.

The Hellenic Association of Pharmaceutical Companies says there was the same adequacy of medication supplies as before a bank run began over the weekend. The government put limits on cash withdrawals to stem the run.

Meanwhile, government officials say they had contacted Greece's oil companies following complaints that gas stations were refusing to accept credit cards. One official says the companies have assured that all credit and debit card transactions are being accepted.

Government officials also contacted the supermarkets' association, which has said there will be no problems in supplies or commercial transactions.

The officials spoke only on condition of anonymity, in line with government rules.

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Greek conservative opposition leader Antonis Samaras is challenging Prime Minister Alexis Tsipras to a TV debate on the referendum.

The conservative leader told his lawmakers that he was seeking a live debate with all the parliamentary party leaders ahead of Sunday's vote.

Samaras, who lost elections to Tsipras in January, echoed warnings made by a European leaders that a "No" vote would lead to the country's exit from the euro.

He said "it would be an unprecedented catastrophe ... If you want to stay in the euro, keep banks open, back Europe, vote Yes, otherwise cast a No ballot."

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German Chancellor Angela Merkel says she sees "no compelling reason" to hold a special European Union summit on Greece at present.

Merkel said Monday that "we have to be very cautious about what messages we are sending." She says nearly all governments have a similar position on creditors' offer to Greece and there's been no change in that.

She says that "if things change" then a summit could make sense "any time," and she believes there will be a meeting after next weekend's referendum

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German Chancellor Angela Merkel says that if Greece wants to resume talks after its referendum, "we will of course not refuse such negotiations."

Merkel says that Europe can only function if it's ready to compromise and "no one can get 100 percent." She says that the "generous offer" made by creditors "was our contribution to a compromise" and the will to reach one was not there on the Greek side.

She says there will be a debate on Greece in the German Parliament on Wednesday.

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Greece's Culture Ministry has announced that individuals and tour groups visiting the Acropolis will be able to pay for their tickets by credit card from now on.

It says that while there are cash difficulties in Greece, tour groups can pay by voucher if the group has one. Otherwise, the group agents can give a credit note to the ticket office including their tax ID number, and would be able to settle the cost after the banks re-open.

The ministry says this is a years-long request that is now being met.

Greece has shut its banks for a week and imposed limits on cash withdrawals and transfers amid concerns the country could fall out of the euro.

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Greece's hotels association has issued a statement warning that Greece's move to limit money withdrawals is already having an impact on the vital tourism industry.

The Hellenic Chamber of Hotels said: "These recent developments in our country already have immediate, real negative consequences on tourism. All must understand this."

"We wish and hope that all political forces will assume their responsibilities, restoring the country as quickly as possible to normality and stability, which are absolutely essential requirements to protect Greek tourism and to support one more time the national recovery effort of the Greek economy."

The hotel association says it is working with other tourist industry bodies to "safeguard the country's international image and to deal with any instances of exploitation of the current situation."

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The Athens Stock Exchange is closed all week, but the country's government borrowing rates in bond markets are taking a pounding as uncertainty over Greece's future hit markets worldwide.

The two-year bond yield rocketed up to nearly 34 percent, 12 percentage points higher than Friday to their worst rate in more than a year. The 10- and 5-year rates also jumped.

Closely watched spreads in Spain and Portugal also rose, though not nearly as much. That suggests that while the prospect of a Greek exit from the euro is unnerving European investors, there is not much concern yet that it could destabilize weaker economies.

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A Greek official says Prime Minister Alexis Tsipras has spoken by phone with European Commission head Jean-Claude Juncker and with European Parliament President Martin Schulz.

The official says Tsipras told Juncker that preventing the Greek people's democratic expression by shutting down the banks is not within Europe's democratic tradition. He asked for Juncker to help ensure the Greek bailout can be extended by a few days and liquidity restored to the banks.

The official says Tsipras told Juncker that "as a European politician, he must defend the traditions of Europe, so that the Greek people can decide unhindered on Sunday." He did not say what Juncker's response was.

Tsipras also asked Schulz to support the Greek proposal for a bailout extension of a few days.

The official spoke only on condition of anonymity, in line with government rules.

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Britain's prime minister sees Sunday's referendum in Greece as essentially a vote on remaining in the eurozone — and that it is for the Greek people to decide.

David Cameron told the BBC that if the Greeks vote no on budget savings and reforms that the country's creditors had proposed in exchange for loans, he would "find it hard to see how that is consistent with staying in the euro."

Cameron says Britain's interests would best be served if there was an agreement between the eurozone and the Greek government that delivers the "stability and security that we want."

Britain has been holding meetings for months to prepare for the potential of a Greek exit from the eurozone, including advising British tourists to take money with them when they go to Greece and helping those who have retired there.

He says a team will meet Monday to discuss "final touches" on such plans.

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The European Union's top executive has called on the Greek people to vote against their government's wishes in Sunday's referendum and back the country's continued stay in the euro currency union.

European Commission President Jean-Claude Juncker says "It is time for Greeks to speak up and to shape their own destiny."

Months of bailout negotiations went off track over the weekend, when Greek Prime Minister Alexis Tsipras called a surprise referendum on the creditors' proposal for reforms in exchange for loans. Tsipras advised Greeks to vote 'No' to the proposals.

Juncker countered by saying "I'd like to ask the Greek people to vote 'yes.'"

"I very much like the Greeks, and I'd say to them 'You should not commit suicide because you are afraid of death. You should say 'yes.'"

Fears are that if the Greeks vote no and go with their government, the nation might fall out of the eurozone and face financial chaos.

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European Commission President Jean-Claude Juncker says he feels betrayed by Greek Prime Minister's Alexis Tsipras suprise call for referendum last weekend and says that "playing one democracy against 18 others is not an attitude worthy of the great Greek nation."

After months of good relations with Tsipras as the bailout negotiations dragged on, Juncker turned against the Greek leader on Monday, complaining that "egotism, tactical games, populist games" took over from cool-headed economic analysis.

He said: "I feel a little betrayed."

The Greeks will vote on reforms that the country's creditors had proposed in exchange for loans.

Juncker said that ahead of the referendum "it would be advisable to the Greek government to tell the truth to the Greek people instead of simplifying its own message to a 'no-message.'"

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German Chancellor Angela Merkel says that Europe must be able to find compromises but also must stick to its principles — insisting that aid can only be offered in exchange for efforts by the countries that receive it.

Merkel told an event Monday marking her conservative party's 70th birthday that "we must find compromises in every challenge."

She added: "If this ability to find compromises is lost, then Europe is lost, and that's the sense in which the sentence I have often said should be understood: 'if the euro fails, Europe fails.'"

Merkel said five years of crisis-fighting efforts have strengthened Europe. She said: "Europe can cope much, much better with crisis situations such as we have in connection with Greece because we have achieved a lot together."

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The Greek government is making public transport in Athens free while the banks are closed.

Transport Minister Christos Spirtzis says fares in greater Athens for the capital's metro, tram, bus and trolley-bus services will be scrapped effective Monday.

Fares normally cost 1.20 euros ($1.34) for a 70 minute ride on a city transport service. Spirtzis says the decision would cost the government about 4 million euros per week.

Spirtzis says the decision was only effective in greater Athens, where about 40 percent of the country's population lives.

Services in Thessaloniki, Greece's second largest city, are partially privatized, not allowing the government to waive fares.

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Spain's economy minister is brushing off suggestions that the possibility of a Greek exit from the eurozone could economically damage his country.

Luis de Guindos said economic contagion is much less likely to happen now than it was in 2011 and in 2012, when many feared a Greek economic implosion could destabilize Spain financially.

Spain has the eurozone's fourth largest economy, but de Guindos said there are no longer fears of contagion that would slam his country and possibly cause the breakup of the zone.

De Guindos told reporters Monday that "we're much better prepared than we were two, three years ago."

He cited moves that propped up Spanish banks saddled with toxic property and loans, a lower Spanish deficit and relatively strong economic growth.

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The head of Germany's main business lobby group says Greece cannot be kept in the euro "at any price" and that the immediate impact on German industry of a possible Greek exit would be limited.

Ulrich Grillo, the head of the Federation of German Industries, says that leaving the euro would be "a huge problem for the Greek economy, which is strongly dependent on imports." But he says the direct impact on German industry would be limited in view of the relatively small trade volume between the countries.

He added: "it is hard to calculate the indirect consequences, on the countries of the eurozone, the financial markets and economic expectations in Europe."

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French President Francois Hollande says France has "nothing to fear" from an eventual Greek departure from the eurozone.

Hollande, speaking after an emergency meeting of top economic officials Monday, told reporters that he regrets Greece's decision to cut off negotiations "because we were very close to an agreement."

He says he wants negotiations to resume, and that France is in favor of Greece staying in the euro.

But if Greek voters choose to leave, Hollande says France "has nothing to fear from what could happen" because the French economy is "more robust" than it was when the Greek debt crisis first panicked markets five years ago.

He says France is pushing for Greece to stay in the euro not out of fear but out of solidarity and a belief that it would be better for Europe as a whole.

He says he respects Greek voters' right to decide their future but warned that the "stakes are fundamental."

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Spain's economy minister says a Greek debt deal is still reachable before a deadline on the nation's credit from the European Central Bank runs out at midnight Tuesday.

Luis de Guindos told Spanish National Radio: "I hope that rationality and common sense will return and we can redirect the situation over the next 48 hours. The bottom line is that the agreement is best for everyone, but especially for Greece."

Spain's benchmark stock index is down nearly 4 percent Monday morning.

But de Guindos says Spain is not threatened by a potential Greek exit from the eurozone because Spain fixed problems with its banks, reduced its deficit and is experiencing relatively strong economic growth.

De Guindos says Greece's decision to close banks for six business days and limit cash withdrawals will give stressed banks a break but can't be kept in place for long.

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The European Union's executive Commission, which enforces the bloc's laws, says that Greece's decision to impose capital controls was "prima facie, justified."

Jonathan Hill, the Commission's top official responsible for financial stability, says "the stability of the financial and banking system in Greece constitutes a matter of overriding public interest and public policy that would appear to justify the imposition of temporary restrictions on capital flows."

He adds: "Maintaining financial stability is the main and immediate challenge for the country."

But Hill says that the free movement of capital should be restored as quickly as possible and that the Commission will monitor the way any restrictions are imposed.

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France's finance minister says this week marks a moment of truth for both Greece and Europe but that talks can resume anytime as a Tuesday deadline looms for a bailout program.

Michel Sapin told France-Inter radio that "Greece is trapped by reality, by hard reality" as the Paris Bourse dropped more than 4 percent at opening Monday.

Greece imposed capital controls and closed banks following Prime Minister Alexis Tsipras' abrupt decision to call a referendum on creditor proposals for Greek reforms in return for vital bailout funds.

Pierre Moscovici, the European commissioner for economic affairs, said negotiations were cut off when an agreement seemed within reach, and he said now the situation largely rests on a 'yes' vote in Greece. He said European Commision President Jean-Claude Juncker would speak at midday.

© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

   
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The White House says Greece's debt crisis poses no major, direct threat to the U.S. economy.
EU, Greece, Bailout, The Latest
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2015-58-29
Monday, 29 Jun 2015 02:58 PM
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