The country arguably finds itself in its worst position ever in modern history, or since the fall of the military dictatorship in 1974, following last night’s failure by Greece to make an IMF payment that makes the country eligible for bankruptcy if the fund’s officials refuse to offer any leniency.
The capital controls imposed a day earlier, on Monday, have, in very little time, generated a whirlwind of devastating developments, stunning the government, which appears blatantly unprepared to handle the rapidly snowballing crisis.
Late maneuverings by the Greek side, as the IMF payment deadline approached last night, cannot be expected to yield any real results for as long as the government’s call for a referendum this Sunday – which has sharply intensified the drama and led to futher uncertainty – remains on the cards. The country’s lenders appear determined to wait for Sunday’s referendum to take place before entering any further bailout talks with Greek officials.
The drastic surge of consequences prompted by capital controls has fully exposed citizens to an alarming level of insecurity as they scramble, forming queues for cash at ATMs, within capital controls limits, fuel, even food.
The country is now at the mercy of the IMF as to whether it will be officially declared bankrupt. The ESM (European Stability Mechanism) support for Greece has prematurely ended, affecting liquidity supply from the European Central Bank, and also depriving the country of a further 12.7 billion euros from the mechanism.
The devastation felt and experienced by citizens appears to have persuaded masses to vote “Yes” in the referendum, expressing endorsement of the bailout procedures that were disrupted by the government last week, when it called a referendum on the issue, citing it could not accept the conditions of a bailout deal offered by lenders. In fact, the alarming developments over the last few days have reportedly prompted the government to either consider cancelling the referendum or go against its initial standing and support the “Yes” campaign. A series of emergency meetings will take place today, both at a local and European level.
With banks closed and uncertainty at a peak, market activity has frozen. As a result of the lack of liquidity, many firms are currently unable to make orders and pay employees, who, in a number of cases, are being forced to take time off, at best. A new wave of unemployment may strike if no solution is swiftly found. The current course towards an exit from the eurozone will also damage tax revenue collections.
Like all else in the country, the energy sector is feeling the effects of the wider mayhem.
As for the tourism industry, a pivotal part of the local economy, bookings for flights to Greece dropped by 40 percent over the past week, according to sector officials, while hotels are experiencing a first round of cancellations.
Highlighting the widespread unease, panick-stricken citizens have rushed to stock up on survival basics such as beans and lentils. For the time being, supermarkets are able to continue offering supplies, but the credit controls imposed are making transactions and imports more challenging. Following panick-driven purchases by consumers on Saturday and Monday, some sense of calm returned yesterday, but, amid the volatile overall situation, consumer behavior is changing by the hour.