June 2015 – ATHENS – Greece’s long-running standoff with its European creditors appeared headed on Saturday for an abrupt — and potentially cataclysmic — ending as the continent’s finance ministers rejected an emergency Greek request to help the cash-starved country meet a Tuesday deadline for paying back its debts. The development, just hours after Greece’s prime minister stunned the continent with plans to hold a nationwide referendum on Europe’s latest proposals, makes it increasingly likely that Greece will default — and could soon crash out of the euro zone altogether.
Reflecting the newly dire outlook, people formed lines at ATMs across Greece, seizing on perhaps their last chance to withdraw their savings. Some went away empty-handed after the machines ran dry. With speculation mounting that the banks may lack the funds to reopen Monday morning, European officials huddled behind closed doors to plot out how to contain the damage of a Greek financial meltdown. The Greek finance minister was pointedly excluded from those talks, which ended with a statement from the other 18 euro-zone countries urging Greek authorities to implement capital controls.
The statement also highlighted the safeguards that have been implemented to keep debt contagion from spreading to other vulnerable economies, suggesting that if Greece is forced to abandon the euro, the collateral damage may be limited. But because no country has left the euro zone in its 16-year history, no one knows just how extensive the impact may be. The collapse of negotiations on Saturday was the most ominous turn in a process that has been poisoned from the start by bitter mistrust between Greece’s radical leftist government and the austerity-minded heavyweights who set policy in Europe.
Although both sides have repeatedly expressed a determination to keep Greece inside the common currency — and to avoid at all costs an uncontrollable and potentially disastrous default — that shared aspiration has not been enough to bridge the substantial divide. As has become customary, each on Saturday blamed the other for the breakdown. But with Greece sliding toward default and a possible break with the euro zone, there is no guarantee that the offer will remain viable by the time of the referendum, even if Greece does vote “yes.” The European Central Bank, the European Commission and the IMF have together provided Greece with $264 billion in bailouts over the past five years as the country has reckoned with sky-high debts. After years of withering austerity policies imposed by European paymasters as a condition of those deals, Greece in January rejected the medicine and elected Syriza, a radical leftist party that promised to tear up the old agreements and start anew. –Washington Post