Athens.- Greek News/AMNA/Reuters

Greece’s European partners have reacted negatively to the announcement of the referendum. On Saturday, Eurogroup President Jeroen Dijsselbloem announced that the eurozone Finance ministers decided not to give an extension to the Greek programme after June 30, as it was requested by Greek Finance Minister Yianis Varoufakis, in order to cover the period leading up to the referendum.

Jeroen Dijsselbloem told reporters that Varoufakis had requested a one-month extension. With “no comprehensive package agreed” to by ministers, Dijsselbloem said the Greek government faces the expiry of its aid program on Tuesday night without any future financing in place.

The rejection means Athens is likely not to make a key payment to the International Monetary Fund on Tuesday.

The head of the International Monetary Fund Christine Lagarde has said that if it is missed, “Greece no longer has access to funding.”

Lagarde also said the Greek government’s planned referendum on the terms of any new bailout plan will be invalid after Tuesday, when the current programme expires.

Christine Lagarde told the BBC that people would be voting on proposals that were no longer in place.

But she said that if there was a resounding vote in favour of staying in the euro and restoring the economy then Greece’s creditors would be willing to try.

Speaking to the BBC’s Gavin Lee, she said there was still time for the Greek government to change its mind and accept the eurozone proposals.

The rejection by eurozone’s finance ministers of a proposal to extend Greece’s aid programme beyond June 30 until the country holds a referendum does permanent damage to the credibility of the Eurogroup as an institution, Finance Minister Yanis Varoufakis told journalists after the meeting in Brussels was interrupted earlier on Saturday.

“The refusal of the Eurogroup today to endorse our request for an extension of this agreement for a few days, a couple of weeks, so as to allow the Greek people to deliver their verdict on the institutions’ proposal … will certainly damage the credibility of the Eurogroup as a democratic union of partner member-states and I’m very much afraid that this damage will be permanent,” he said during a press conference.

Varoufakis also said that if there was an agreement and a deal by Tuesday, the Greek government would accept the deal adding that the creditors’ proposal would not pass in the Parliament adding that the government does not have a mandate to take recessionary measures.

The minister also criticized the decision by Eurogroup chied Jeroen Dijsselbloem not to invite Greece to the second round of deliberations. “The decision not to be invited at the second round of the Eurogroup [meeting] is not a decision by Europe or our partners; it’s a personal decision by Jeroen Dijssebloem,” he noted.

Speaking to the press, he also explained the three reasons for which Greece rejected the institutions’ proposal for a 5-month extension of the agreement. The first is that the package would redistribute the tax weights from the “haves” to the “have nots”. The second is that the funding gap “was suffering from internal contradictions and the figures are not verified.” The third problem was that it didn’t offer any prospect for the Greek economy and didn’t ensure the crisis would be overcome, both for the economy and the relations between Greece and its partners.

Varoufakis also said that he told the 18 finance ministers that the Greek government resorted to a referendum because it didn’t have a mandate to accept the proposal with those measures, or to reject it. “Because the government has a percentage a little over 40 pct and such a decision requires a minimum of 50+1.”

Asked what will be the question on which Greeks will be called to decide upon, the minister said it would be “if you agree or disagree with the Greek government signing the agreement of the institutions.” He added that the question could never be a “yes” or “No” to the euro, because there’s no such provision in any Treaty.

Varoufakis also said the government is still fighting for an agreement.

EUROGROUP STATEMENT

The 18 eurozone finance ministers requested on Saturday measures to safeguard the integrity of the Eurozone and the Greek financial system, following their second meeting in Brussels which didn’t include the Greek finance minister.

The full statement of the Eurogroup is the following:

“Ministers from eighteen euro area Member States and the institutions held an informal meeting to discuss the forthcoming expiration of the current EFSF financial arrangement with Greece, after the break-up of the negotiations with the Greek authorities.

The strengthening of EMU has been instrumental in helping the euro area to overcome the legacy of the financial crisis. We have notably advanced fiscal consolidation, implemented ambitious structural reforms, improved our fiscal and economic governance, deepened financial integration and established efficient firewalls. We are in a much stronger position than during the crisis.

Euro area Member States intend to make full use of all the instruments available to preserve the integrity and stability of the euro area. This will complement any actions the European Central Bank may take in full independence and in line with its mandate. EFSF and ESM remain the strong instruments with our full backing that they have always been.

We commit to take all necessary measures to further improve the resilience of our economies. We stand ready to take decisive steps to strengthen the Economic and Monetary Union.

We stress that the expiry of the EFSF financial arrangement with Greece, without immediate prospects of a follow-up arrangement, will require measures by the Greek authorities, with the technical assistance of the institutions, to safeguard the stability of the Greek financial system. The Eurogroup will monitor very closely the economic and financial situation in Greece and the Eurogroup stands ready to reconvene to take appropriate decisions where needed, in the interest of Greece as euro area member.

We stand ready to assist and support Greece and the Greek people as required, following the expiration of the EFSF financial arrangement.

[The statement is adopted by ministers from the euro area Member States, except Greece].”

STATEMENTS

In Brussels, recriminations were replaced by wistfulness among the policy makers.

Greece will remain in the euro zone despite the collapse of talks with creditors to avert default, France’s Finance Minister Michel Sapin said on Saturday, saying that Paris was always ready to restart talks.

“France is available at any time to resume dialogue with Greece … we are available today, tomorrow, the day after tomorrow … to try to find a solution that is solid and stable for Greece,” Sapin said

“This is not a Greek exit from the euro zone,” he told reporters following a meeting of euro zone ministers.

“The 18 countries, apart from Greece, all said clearly that Greece was in the euro and should remain in the euro whatever the difficulties of the moment,” he added.

“We will do everything to fight against any possible danger of contagion,” German Finance Minister Wolfgang Schaeuble said after eurozone finance ministers met without their Greek counterpart for emergency talks in Brussels. Even if that happens, the other 18 euro countries are in a better position to contain the damage than when the crisis initially spread from Greece in 2011 and 2012, several ministers said.

Greece will “enter acute difficulties in the coming days,” he added.

Donald Tusk, a former Polish prime minister who chairs meetings of the 28 EU leaders, made clear at two summits in the past week that heads of government must nonetheless take their responsibilities in a crisis that affects the Union as a whole.

Early on Sunday, he was in contact with leaders again: “Greece is and should remain euro area member,” Tusk tweeted.

Donald Tusk added that he was “in contact with leaders to ensure integrity of euro area of 19 countries,” he added after the other 18 finance ministers met without their Greek counterpart in Brussels.

“Plan B is fast unraveling and becoming Plan A,” said Finland’s Alexander Stubb. The upshot is “potentially a very sad day.”

Tsipras told the parliament in Athens that the referendum isn’t intended to mark a “rupture” with Europe, and said that extreme voices had prevailed among the country’s creditors. He said a sustainable agreement is still “on the table.”

The premier also invoked Franklin Delano Roosevelt, telling lawmakers that “the only thing the people of Greece have to fear, after so many years of pillaging, is fear itself.”

Public opinion is at odds with Tsipras, according to a survey published Saturday. Two-thirds say Greece should remain in the euro area and 57.5 percent say the government should back down to reach a deal with creditors, the Kapa Research poll for To Vima newspaper showed.

They were playing poker,” said Austrian Finance Minister Hans Joerg Schelling after the Eurogroup that runs the currency met on Saturday without their Greek counterpart to discuss how to limit the fallout. “But in poker, you can always lose.”

Tsipras messed up,” one EU official said. “We did everything possible. They chose to blow up when we were so close to settling this in a way that would allow them to sell it.”

Few EU leaders now trust this Greek government, whose calls for debt relief and criticisms of the bailout’s deadening effect on growth have been echoed by some leading economists.

When representatives of the three creditor institutions – euro zone governments, the ECB and IMF – met after Greek Finance Minister Yanis Varoufakis had left, participants quoted one senior official as joking that at least they could refer again to the lenders as the “Troika,” a term Varoufakis had insisted be dropped because Greeks associated it with external diktats.

Dutch Finance Minister Jeroen Dijsselbloem, the Eurogroup chairman, repeatedly referred to the possibility that the Greek parliament might reject Tsipras’s call for a referendum. But lawmakers dashed any prospect of a quick shift in Greek politics before markets open on Monday by voting for it to go ahead.

Still, Dijsselbloem insisted: “The process has not ended. It will never end probably. We will continue to work with Greece. Many things could happen, many scenarios are conceivable.”

Some experts speculate that Greece could formally remain in the euro zone but issue its own IOUs to pay immediate bills.