Tags: europe | greece | tsipras | default

Crisis-Ready Europe Urges Greece's Tsipras to Step Back From Brink

Monday, 29 June 2015 02:58 PM

European leaders raised pressure on Greek Prime Minister Alexis Tsipras to re-engage, saying it’s down to his government to step back from the brink and stay in the euro.

With Greece under capital controls and banks closed, German Chancellor Angela Merkel and French President Francois Hollande offered no concessions beyond saying that they remained open to talks, even after the referendum on the EU’s aid proposal planned for July 5. European Commission head Jean-Claude Juncker said the “whole planet” would view a “no” vote as Greece turning its back on Europe.

Leaders were emboldened by a measured investor response to a weekend of turmoil as Tsipras’s government took emergency steps to avert the collapse of Greece’s financial system. While his decision to hold a ballot increased the risk of Greece exiting the euro, evidence of contagion elsewhere was limited, reducing his leverage over creditors.

“Europe can cope with such crises much, much better today because it has taken precautions,” Merkel said in a speech in Berlin on Monday.

The euro erased its losses after earlier dropping to a near one-month low against the dollar, and traded 0.3 percent higher at $1.1204 as of 6:59 p.m. in Berlin. European equities sank, with the Stoxx Europe 600 Index down 2.7 percent, while bond yields jumped in Italy, Spain and Portugal.

Little Leeway

While the situation remains one of “drama,” the reaction on capital markets was “less than feared,” Credit Suisse Group AG Chairman Urs Rohner said at a conference in Bern on Monday. “A lot was priced in already.”

European leaders sought to reach out to the Greek people while offering Tsipras’s government little leeway after he broke off negotiations over future bailout aid at the last-minute on Friday. Tsipras, who promised to return “dignity” to the people and reject budget cuts imposed by creditors, appealed for “calm” after weekend-long queues at ATMs and gas stations.

The prime minister’s efforts to shield the poorest Greeks from the effects of his decision are already starting to unravel. Twelve hours after issuing the capital controls decree, the government revoked a provision in the law exempting pension payments from the 60-euro ($67) daily limit on bank withdrawals.

The about-face came as industry officials warned that the move to waive limits for pensions would have soaked up much of the system’s remaining liquidity and highlights the hurdles Tsipras still has to negotiate to reach the July 5 vote.

“A lot is still conceivable,” Jeroen Dijsselbloem, the Dutch finance minister who leads meetings of his euro-area counterparts, told reporters in the Hague. “But it’s clear the Greeks seem to have made up their minds on the route they’re choosing.” Dijsselbloem said he “continues to regret” that they walked away “but they’ve chosen their path and we cannot interfere.”

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European leaders raised pressure on Greek Prime Minister Alexis Tsipras to re-engage, saying it's down to his government to step back from the brink and stay in the euro.
europe, greece, tsipras, default
Monday, 29 June 2015 02:58 PM
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