Greek Prime Minister Alexis Tsipras heads on Tuesday to Brussels, where he will try to use a bailout referendum victory to obtain a rescue deal with European leaders. Tsipras faces intense pressure from creditors abroad and banks at home who all demand what Greece lacks: money.
As the Greek leader readied proposals to restart bailout talks, the situation was complicated by the European Central Bank’s (ECB) refusal late Monday to increase assistance for Greek banks desperately needing cash and facing imminent collapse, unless a rescue deal is reached.
A hastily called meeting of eurozone finance ministers is slated for Tuesday afternoon, and a full summit of the leaders of the 19 euro countries was to be held that evening.
With Greece’s future in the European Union and its euro currency at stake, a Monday meeting between German Chancellor Angela Merkel and French President François Hollande in Paris set the tone for the Brussels talks.
“Time is of the essence,” Merkel said afterward. “[Greek] proposals have to be on the table this week.”
Tsipras scored a bigger-than- expected win in Sunday’s bailout referendum, with 61 percent of voters rejecting the economic measures creditors had proposed in exchange for loans Greece needs to remain afloat, including further cuts to pensions.
In a sign of compromise, Tsipras appointed a new finance minister to lead talks with creditors and replace Yanis Varoufakis, who clashed with his European counterparts.
Euclid Tsakalotos, a 55-year-old economist, has appeared more willing to engage with creditors. He will be tested as soon as Tuesday, in Brussels.
“I won’t hide from you that I am very nervous and very anxious. I am not taking over at the easiest moment in Greek history,” Tsakalotos said after being sworn in.
Greek banks are running out of cash, even after the government placed limits on how much depositors can withdraw. The ECB has been providing emergency credit to the banks, but on Monday said it could not increase the amount offered because the banks’ collateral was weaker now, after the “No” vote.
Normal commerce is now impossible in Greece. Small businesses, lacking use of credit cards or money from bank accounts, were left to rely on cash coming from diminishing purchases from customers. But Greeks are holding tightly onto what cash they have. And suppliers are demanding that businesses pay cash up-front.
In Paris Merkel and Hollande both expressed respect for Greek voters, but urged swift action from Athens.
“I stress that there is not lots of time left. There is urgency for Greece. There is urgency for Europe,” Hollande said.
Spanish Prime Minister Mariano Rajoy said that if Greece is to remain part of the euro zone, it needs to enact reforms that will spur economic growth and pay off its debt.
“We’re inclined to help Greece, but Greece must follow Europe’s rules,” he said in an interview on Spain’s Telecinco evening news program.
The ongoing Greek drama hurt stocks around the world, particularly in Europe.