Germany all but buried negotiations on June 27 to keep Greece from default, saying a surprise decision by Greek Prime Minister Alexis Tsipras to call a referendum had left nothing to discuss but how to cope with failure.
Worried the country could default and even leave the euro zone, some Greeks queued up at cash machines to withdraw funds, though there were no signs of panic in Athens. Many sounded defiant, saying Tsipras had offered them an important chance to determine their own fate.
Euro zone finance ministers met in Brussels for what had been intended as a final negotiation for a deal to rescue Greece from defaulting on a big debt payment on Tuesday, when an international bailout expires.
But after they were blindsided by Tsipras’s surprise middle-of-the-night announcement that he rejected their offer and would put it to voters only after Tuesday’s deadline, one after another said all that remained to discuss was “Plan B” – how to limit the damage of default.
“We have no basis for further negotiations,” German Finance Minister Wolfgang Schaeuble said. “Clearly we can never rule out surprises with Greece, so there can always be hope. But none of my colleagues with whom I’ve already spoken see any possibilities for what we can now do.”
Finland’s Alexander Stubb called it “potentially a very sad day, specifically for the Greek people. I think with the announcement of this referendum we’re basically closing the door for any further negotiations.”
“There is pretty much a consensus inside the Eurogroup that we cannot extend the program as it stands and consequently I would argue that Plan B becomes Plan A.”
Greek Finance Minister Yannis Varoufakis said he would press for an extension of the bailout to give time to hold the referendum.
“We are going to suggest to them that under these circumstances we should have an extension for a few weeks to ensure that the people are heard,” he told Reuters.
But several of his euro zone counterparts appeared to rule out any such grace period. Germany’s Schaeuble said: “Greece has left the negotiating table and so we are in a situation where on Tuesday the program ends, because there are no more negotiations.”
With most Greek banks closed for the weekend, there was no sign of panic on the streets of Athens. Government officials said there was no plan to impose capital controls that would limit withdrawals.
But police tightened security around bank teller machines as lines formed at some in the darkness almost as soon as Tsipras’s early hours televised speech was finished.
The Bank of Greece said it was making “huge efforts” to ensure the machines remained stocked.
One branch of Piraeus bank that is normally open on Saturdays was shut, with around 100 people queued outside. A senior executive said the plan was to open the branch but staff were weighing security concerns because of the queue.
After months of wrangling with the lenders, Tsipras announced that he would put the terms of the creditors’ “humiliating” offer to a popular vote on July 5.
Interior Minister Nikos Voutsis called for calm, telling lawmakers: “The game is not over for the country, its people, this parliament.”
Without a clear agreement on bailout cash, Athens is set to default on 1.6 billion euros of debt to the International Monetary Fund on Tuesday.
Its stricken banks depend on emergency liquidity from the European Central Bank to stay open, and the banking system faces at the very least a further flood of withdrawals after billions have left in recent weeks.
Long lines were reported in some supermarkets in Athens as people stocked up with supplies.
However, along with the worry, there were also signs of defiance and almost relief after years of relentless austerity and seemingly endless rounds of crisis meetings with lenders.