Missed Payment

Frustration Builds in Athens

greece photo 2 july 1 dpa
An employee of a Greek National Bank branch on Wednesday was mobbed by retirees grabbing for "priority'' tickets enabling them to withdraw up to €120 from their monthly pensions.
  • Why it matters

    Why it matters

    Greece’s failure at midnight to make a payment to the IMF could exacerbate the country’s financial woes and accelerate its exit from the euro zone.

  • Facts

    Facts

    • Greece missed a €1.6 billion payment at midnight to the IMF, falling into arrears.
    • Other countries in arrears to the IMF include Zimbabwe, Cuba, Sudan and Somalia.
    • The ECB is working on a plan to divert funds to stave off a Greek euro exit.
  • Audio

    Audio

  • Pdf

Four days before Greeks go to the polls to determine their future in the euro and in Europe, the nation crossed a financial rubicon at midnight, missing a €1.6 billion ($1.7 billion) payment to one of its creditors, the International Monetary Fund.

Hours later, elderly Greeks stormed offices of the Greek National Bank, mobbing employees in an effort to get priority places in line to withdraw up to €120 against their monthly pensions.

The country’s non-payment, the first by a developed nation to the IMF, increased the sense of urgency in Athens, where the Syriza-led government under Prime Minister Alexis Tsipras tried and failed again late Tuesday to appease creditors.

The missed payment put Greece in a dubious club of failed nation states such as Zimbabwe, Sudan and Cuba, which also are in arrears to the IMF. Holger Schmieding, the chief economist at Berenberg Bank in Germany, said the Greek government’s decision to not pay the IMF put it on an ominous track.

“Anybody wanting to know more about the direction into which Syriza policies would be taking Greece in the long run, take that as your first hint,” Mr. Schmieding, referring to Cuba and Zimbabwe, wrote in a note to clients.

Despite rising frustration in the Greek capital, where consumers on Wednesday remained cut off for the third day from banks and limited to daily cash withdrawals of €60, financial markets continued to bet Greece and its lenders would reach a last-minute compromise.

And sure enough, the European Central Bank, one of Greece’s largest creditors, is working on a plan to divert money from another source to help the country avoid bankruptcy and stay in the euro, according to information obtained by Handelsblatt.

By midday in Berlin, financial markets were relatively unmoved by the escalating cycle of recrimination and rhetorical blame emanating from European capitals.

At 11:30 a.m. in Berlin, the German DAX Index was up 109.10 points, or 1 percent, at 11,054 points in Frankfurt, slightly above its level last Friday before Mr. Tsipras called a snap national referendum on the lenders’ offer for this Sunday.

The euro was trading in Europe at $1.11, little changed from its level of last week.

While financial experts were expecting both Greece and its lenders to step back from the financial abyss of their stalemate, there were few signs Wednesday in Athens or the rest of Europe that a compromise was imminent.

In Germany, the Bundestag was scheduled to debate the Greek emergency in an open session this afternoon. The Eurogroup gathering of euro zone finance ministers was scheduled to meet at 5.30 p.m. in Brussels, while Mr. Tsipras was also expected to address the public again this afternoon.

Polls show Germans overwhelmingly favor Greece leaving the 19-country currency bloc rather than lenders, including Germany, loan the country more money.

In Athens, a poll released by a newspaper, Efimerida ton Syntakton, suggested voters were prepared to support Syriza’s recommendation and vote on Sunday against the lenders’ bailout offer. But support for Syriza’s hard line appeared to be waning, the poll suggested, as the hardships endured by Greeks this week persisted.

According to results of the poll reported by Reuters, which was taken earlier this week after Mr. Tsipras called the upcoming referendum, 54 percent of Greeks are prepared to reject the lenders’ offer, and only 33 percent said they were ready to defy the government and take the offer. The gap has narrowed since the nation’s banks closed on Monday however – the newspaper said only 46 percent of those polled since banks were shut on Monday said they still supported the government, compared to 57 percent of Greeks who supported Syriza’s position in initial polling on Sunday.

By missing the payment to the IMF, Greece will miss out on a further €16 billion chunk of its existing bailout program which was to be provided by the IMF. The IMF, in a statement, said it would withhold more money until Greece repaid its obligations.

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