Nation at crossroads as bailouts expire

Fears increase that Athens will default on loans, leading to a messy eurozone exit

It's crunch time for Greece, with the European part of its international bailout expiring on Tuesday and with it any possible access to the remaining rescue loans it contains.

As a result, the government was unlikely to repay a roughly 1.6 billion-euro ($1.87 billion) debt to the International Monetary Fund due on Tuesday, too - a move that increases fears the country is heading for a messy default and potential exit from the euro currency.

With banks shut and Greeks limited to cash withdrawals of 60 euros per day, long lines formed once more at ATMs. Capital controls began on Monday and will last at least a week, after a weekend bank run prompted by the prime minister's call for a referendum on creditor demands in return for bailout loans.

Prime Minister Alexis Tsipras argues that the demands from creditors for further, tougher austerity measures cannot be accepted after six years of recession.

European officials and Greek opposition parties have warned that a rejection of the creditor proposals in Sunday's popular vote will lead Greece out of the eurozone and potentially out of the European Union.

The government has responded by saying this is scaremongering, and that a "no" vote will mean the country is in a better negotiating position.

But European Council President Donald Tusk has warned that will not be the case.

The crisis has unsettled global markets as investors fret over the repercussions of a Greek debt default and the country's exit from the euro - developments that could derail a fragile global economic recovery, as well as raise questions over the long-term viability of the euro.

In Brussels, European officials said European Commission chief Jean-Claude Juncker is willing to help give Tsipras a belated way out of his financial crisis if he accepts creditors' conditions on the bailout standoff and campaigns for staying in the euro.

An EU official, who asked not to be identified because of the sensitivity of the talks, called it "a sort of last-minute offer" before Tuesday's dual deadlines.

Under the offer, Tsipras would need to write to Junker and other leaders saying he accepts the latest offer that was on the table last weekend. He would also have to change his position on Sunday's referendum.

But there appeared to be scant desire to do that, with numerous officials from Tsipras' Syriza party arguing for a "no" vote on a series of television and radio appearances.

AP - Reuters

(China Daily 07/01/2015 page11)