After delivering a decisive No vote in Sunday’s referendum, in which voters backed Athens’ call to reject a compromise with international creditors, Greece is facing the prospect of even greater turmoil as it tries to tries to prevent the collapse of a financial system that is rapidly running out of cash.
Prime minister Alexis Tsipiras has said he is ready to resume talks immediately, while politicians and officials in the rest of the eurozone are holding a series of meetings to decide what to do next.
Key developments so far:
● Greek PM Tsipras will present fresh bailout proposals at the EU summit on Tuesday
● Greek finance minister Yanis Varoufakis quits and is replaced by Euclid Tsakalotos, previously the coordinator of negotiations with Greece’s lenders
● Markets remain relatively unruffled after No vote
● ECB governing council increases the haircut on the collateral posted by Greek banks in exchange for emergency liquidity
Albanian Prime Minister Edi Rama (Getty)
His hair is receding, his beard is splashed with grey, and he speaks English with the grammatical precision of an independent-minded Balkan intellectual who grew up in the communist era – which is exactly what he is. But Edi Rama, Albania’s prime minister, is also so tall and muscular that, as a young man, he played for the national basketball team. Before he gave up art for politics in the post-communist era, his paintings were exhibited in Berlin, New York and beyond.
As he explained over dinner in Tirana on Thursday night, he is also old enough – he turns 51 on Saturday – to have searing memories of the cruel, isolated madhouse that was Albanian communism under Enver Hoxha, the dictator who ruled from the end of the second world war until his death in 1985. This is why Rama passionately wants Albania’s future to be in the EU, and why he foresees danger ahead if his and other Balkan countries are denied this prospect. Read more
I contributed to the Weekend FT’s “Summer Books” round-up last week. But there are lots of other interesting titles that have come my way, over the past six months, and that might interest readers. Here is a selection:
Greece, the EEC and the Cold War 1974-1979 (Palgrave Macmillan) by Eirini Karamouzi -A scholarly and readable history of how Greece joined the EU provides a fascinating and valuable context to today’s events. Read more
Terror attacks hit Tunisia’s economy
Last week saw the second deadly attack on Western tourists in Tunisia in four months, dealing a severe blow to the industry that is the country’s economic mainstay. Siona Jenkins is joined by Erika Soloman and Roula Khalaf to discuss what the government can do to tackle the jihadi threat.
By Gideon Rachman
The shuttered banks of Greece represent a profound failure for the EU. The current crisis is not just a reflection of the failings of the modern Greek state, it is also about the failure of a European dream of unity, peace and prosperity.
Global equities, the euro and German Bund yields are all sharply lower as markets react to the imposition of capital controls in Greece. Greek banks are closed this morning, triggering long queues at ATMs.
Another chapter will be written this weekend in Greece’s proud, painful history of national suffering, defiance and martyrdom, real as well as imagined, at the hands of foreign oppressors.
Whether Greece’s radical leftist-led government capitulates to the demands of its eurozone partners and the International Monetary Fund, or whether it rejects them, the essentials of this narrative will not vary much.
Here is the reason: thanks to the way that Greece and its creditors have mishandled the debt crisis since it erupted in October 2009, the only available choice now, from the perspective of ordinary Greeks, is between extremely bad and worse. Read more
Satellite image of man-made islands in the South China Sea
This week I have had the pleasure of escaping from Europe’s obsession with the Greek crisis and travelling to Sydney for the Australia-UK Asia dialogue, which is taking place at the Lowy Institute – Australia’s leading foreign-policy think-tank. The idea is to bring together British and Australian experts to discuss trends in Asia – and, it is hoped, to form common views and approaches. But, after the first day of discussion, I was left wondering whether the “tyranny of distance” may ensure that the Brits and the Australians will struggle to form a common view.
It is not so much a difference of interpretation, between the two sides, as a gap in urgency. For the Australians, the rise of China overshadows all other issues and raises fundamental questions about the role and future of their country – as an outpost of the west in the southern Pacific, with a rising China to the north. For the moment, however, the British can still treat the rise of China as a second-order issue – while policymakers in London obsess about Europe and keep a wary eye on Russia and the Middle East. Read more
After another day of negotiations the Greek government has failed to reach an agreement with its bailout monitors – the International Monetary Fund, the European Commission and the European Central Bank – on Athens’ reform plans.
Eurozone finance ministers are going to meet again on Saturday to try and broker a deal before the Greeks’ June 30 deadline to repay €1.5bn to the IMF.
Nato renews its commitment to collective defence
Defence ministers from the Atlantic Alliance’s 28 members are meeting in Brussels to discuss the reinvigoration of the alliance in the face of Russian aggression. The US is to make the biggest reinforcement of its forces in eastern Europe since the fall of the Soviet Union. Ben Hall discusses the development with Geoff Dyer and Sam Jones.
Greek Prime Minister Alexis Tsipras flew to Brussels on Wednesday morning to try to salvage a bailout deal amid increasing signs of unease among his nation’s creditors over the compromise offer he presented on Monday. Eurozone finance ministers held a meeting on Wednesday evening but without an agreement in place after a day of tense negotiations, it was expected that talks would have to continue on Thursday, the first day of a planned EU summit of national leaders.
By John Aglionby, Ferdinando Giugliano and Mark Odell
By Gideon Rachman
As EU leaders head into this week’s emergency talks , they face a choice of three hazardous routes out of the Greek crisis. Route one involves making concessions to Greece. Route two involves standing firm and allowing Greece to leave the euro. Route three involves Athens largely accepting the demands of its creditors.
Eurozone leaders are scheduled to hold an emergency summit on Monday evening to try to reach a last-ditch deal with Greece on a new bailout and to prevent it from defaulting on debts that are due at the end of next week. Athens submitted new reform proposals overnight but eurozone finance ministers said after a meeting there would not be a deal today. Markets, which rallied early on Monday on the cautious optimism, remain upbeat despite the politicians delaying the deadline.
By John Aglionby, Ferdinando Giugliano and Mark Odell
What happens if Greece defaults?
Is Greece about to default on its debts and if so, what happens next? Gideon Rachman and his guests Tony Barber and Martin Sandbu discuss what has gone wrong between Greece and its eurozone creditors and whether the political rifts can be repaired.
David Cameron says that Britain’s relationship with the rest of the European Union is deeply unsatisfactory and must change. He is pressing ahead with his plans to demand reforms in Europe and to put the results to an “in-out” referendum in Britain – probably next year. But if you look at current events in Europe, Britain’s deal does not look at all bad – in fact, it is strikingly good. There are two major crises currently underway – involving Greece’s debts and refugees arriving in Italy. And yet because of opt-outs negotiated by previous British governments, the UK has been able largely to avoid the painful choices facing the other Europeans. Read more
A man pushes a trolley with recyclable materials past graffiti in central Athens
Spectators of the debt drama starring Greece and its eurozone creditors are shuffling uncomfortably in their seats. They do not know the ending, but every twist in the plot suggests that it is extremely unlikely to be happy.
The Greek state is slipping closer to official default on its loans, and even exit from the eurozone. This creates an impression that the drama, which began in 2001 with the fatal decision to admit Greece into Europe’s monetary union, is approaching a sort of Act V dénouement. But real life is not a play, when the curtains come down after a fixed period of action.
Some high-level eurozone politicians – by which I mean prime ministers and finance ministers – have made it clear for at least five weeks that they are ready to let Greece default and, if necessary, drop out of the 19-nation currency area. Yet not all have thought hard enough about what might follow. To say “good riddance to the Greeks, they’ve been unreliable and irresponsible, we’ll be better off without them” does not amount to a serious policy. Read more
By Gideon Rachman
When the radical left won power in Greece in January much was made of the fact that Yanis Varoufakis, the new finance minister, is an academic economist. Many expected that Greece’s negotiating strategy would display a new subtlety and brilliance, now that it was guided by the co-author of Game Theory — A Critical Introduction.