The German Minister of the Economy and Deputy Foreign Minister Sigmar Gabriel said today that it is essential that the Greek government presents "proposals beyond" those already presented. Only then will Germany be willing to resume a dialogue.
Germany’s stance, that if Greece wants to remain in the eurozone it will have to go further in its proposals to international creditors, excludes the possibility of writing off any of Greece’s debt because, according to the German, the same treatment would have to be given to Portugal, Spain and Ireland.
Sigmar Gabriel explained that Greece faces a "serious risk of insolvency" and added that the European Union must be prepared to send humanitarian aid.
"The Greek referendum is a rejection of the monetary union rules. It is up to Athens to decide whether or not to stay in the single currency area," said Gabriel as his boss, Angela Merkel is away discussing the same topic with France’s President Hollande in Paris prior to an emergency meeting of eurozone country leaders in Brussels on Tuesday.
Gabriel insisted that the outcome of the referendum in Athens was an absolute rejection of the monetary union rules.
Portugal’s Paulo Portas said today that "it is up to the Greek government to propose solutions, and workable fair alternatives," followed by a policital rant against Portugal's socialist leader which was not useful or clever considering the delicate nature of the current Greek problem.
Valdis Dombrovskis, the Vice President of the European Commission said that the ‘no’ voters' victory complicated the negotiations of what could be a third bailout for Greece and said that the stability of the eurozone, and countries such as Portugal, is assured.
Dombrovskis said this morning that "Greece’s place is and remains in the euro area" and that, despite victory for the ‘no’ voters in Sunday’s referendum it is still possible to find a solution if "all parties work responsibly." "There is no easy way out of this crisis. Too many opportunities and too much time have been wasted."
"We are in talks with the Greek authorities. It is for the eurogroup to decide the next steps," said Dombrovskis, referring to the extraordinary summit tomorrow and the meeting of Ministers of Finance of the euro which will precede you.
The Vice-President of the European Commission also said that the eurozone currently is prepared for a possible Grexit.
The "stability of the eurozone is not in question," said Dombrovskis, claiming that the "necessary tools" now exist to prevent any financial instability from spreading and to protect the most vulnerable economies. This can be seen by the limited reaction of markets in Portugal and Ireland.
The usually hard-line director of the International Monetary Fund, Christine Lagarde said today that she is watching the situation in Greece and that the IMF may proceed with help if the Greek government requests support.
"The IMF took note of the referendum that took place yesterday in Greece. We are monitoring the situation closely and stand ready to help Greece if requested," Lagarde said in a short statement sent to the media.
The banks are still closed in Greece, and will remain so until the end of Wednesday at least, with cash machine withdrawals limited to €60 per day per customer.
One immediate problem to be overcome is the stance of the European Central Bank which announced late on Monday that it will not increase the amount of financial aid to Greece as, unsurprisingly, the country 'lacks collateral.'
The Tsipras government has asked for immediate help to enable the Greek banks to function but the financial aid limit from the ECB will stay at the current level of €89 billion as the government cannot present sufficient guarantees.
Greece's banks already are struggling to refill ATMs and some are only giving out €50 notes as supplies of 5, 10 and 20 euro notes are exhausted. Without liquidity from the Greek central bank, the country’s banks estimate that the money will run out in two or three days.
Tsipras will need to keep his cool and, alongside his new Finance Minister the thoughtful economist Euclid Tsakalotos, needs to bring a huffy Germany around to a resolution where both sides get a deal they can sell to their electorate as a victory, or at least not a climb down.
