The Greek Saga Continues
- Jun 30, 2015 | Gail Cole
Update, 7.13.15: After Greek voters rejected a bailout package that included continued austerity measures and increased taxes, many feared Greece would leave the eurozone. Yet after lengthy and reportedly violent negotiations this weekend, European and Greek leaders have reached accord. Greece will stay in the eurozone and have continued financial support from the EU. In the coming days, Prime Minister Tsipras must secure Parliamentary support of increased sales taxes and pension reforms.
Update 7.1.15: Greece has defaulted on its loan payment and can no longer receive IMF financing until the arrears are paid. In a letter to the European Commission, Prime Minister Tsipras said his country is "prepared to accept" many terms of a bailout package it had previously rejected and outlined amendments to the plan. Meanwhile, most banks remain closed and people are limited to withdrawing $60 euros per day ($67)—that is, if they can find an ATM with money.
Greece needs more money. European Union lenders are willing to provide it, but not without guarantees that they’ll be repaid. Seems reasonable, especially considering that on the morning of June 30, Greek Finance Minister Yanis Varoufakis revealed that his country would not pay the 1.6 billion-euro installment due to the IMF later that day.
It has been strongly suggested that Greece increase taxes on the tourism industry and numerous staples. The Greek government has repeatedly and firmly rejected the idea, and representatives from the tourism industry have labeled such proposals catastrophic. In early April, the Finance Minister and the Alternate Finance Minister signed a document that read as follows: “The government does not intend to raise VAT in economic activities such as tourism or stable goods (food, medicine, etc). However, a few weeks later there was talk of increasing the VAT on restaurants and hotels in order to appease Brussels.
On Tuesday morning, Varoufakis told reporters the creditors have not presented a viable solution. “In order to say ‘yes’ to the Euro,” he said, “we need a viable solution. The problem with the creditor’s proposal was that it was not sustainable.” Then on Tuesday afternoon, the Greek government proposed a two-year deal to the European Stability Mechanism. Politico reports that at the last minute, "Prime Minister Alexis Tsipras asked Europe for an emergency package of debt relief and fresh loans." It is, the Prime Minister says, “a livable solution within the Euro until the end.”
It is also “the message of No to a bad deal, during Sunday’s referendum.” On July 5th, Greek citizens will vote on terms of the economic bailout. The government has to date encouraged the people to vote 'no.' Leaders in the European Union “have united to warn the Greek people that a ‘no’ vote in Sunday’s referendum would be ‘suicide’” and would necessitate Greece’s departure from the Eurozone and Europe.
German Chancellor Angela Merkel opposes reopening talks with Greece until after the Sunday referendum.
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