ATHENS — Greeks faced shuttered banks and a closed stock market Monday at the beginning of a fateful week that may determine whether they will be able to hold on to the euro currency.
The blows from the breakdown in talks between Greece and its creditors also pummeled financial markets. Asian and European exchanges were down sharply, the euro slumped, and Wall Street plummeted, with Greece less than 24 hours away from being unable to pay its bills.
Greece’s creditors and its leaders were poised to keep talking about whether there was any way to pull back from the brink of economic collapse amid anger and recriminations on both sides.
Greece’s European partners and international lenders say further cutbacks are needed to maintain the financial lifeline that has kept the country afloat for years. Greece’s government — elected on its anti-austerity pledges — has stood firm in opposing politically sensitive measures such as further slashing pensions.
Now, there are growing global concerns that Greece’s five years of painful sacrifices to stay inside the 19-nation euro zone are coming to a rapid end, with uncertain consequences for the global financial system, as well as for Greeks.
The crisis atmosphere was reflected at every bank and cash machine. Banks were ordered shut for six business days, and regulators imposed strict limits on ATM withdrawals, in a bid to stem bank failures as an international bailout was set to expire Tuesday.
The Greek government on Monday shuttered its own stock and bond markets alongside its banks, with plans to reopen them next week.
Greek Prime Minister Alexis Tsipras stunned the world by announcing that he would hold a referendum this Sunday over whether his nation should accept the tough austerity terms of its creditors. He has been campaigning for a “no” vote, and on Monday his leftist Syriza party planned to rally anti-austerity supporters in front of the country’s parliament on the capital’s Syntagma Square.
But many other Greeks believe it’s better to accept the cutbacks ordered by Greece’s creditors and remain in the euro zone. A “yes’ vote would effectively be a rejection of Tsipras and could set off new elections.
“The decision not to prolong financial aid to Greece is offensive, and it’s a disgrace for Europe in general,” Tsipras said in a brief Sunday evening address broadcast across Greek television networks.
He said he was seeking an extended and enlarged bailout from European lenders that would carry the country past Tuesday, when it would otherwise face default.
There were signs that Greece’s creditors — the International Monetary Fund and euro-zone governments — had left the door open to negotiations. But one top official involved in Greek negotiations said Monday that the two sides were so far apart that he did not see a possibility for a deal ahead of the planned Sunday referendum.
And Greek leaders on Monday showed no signs of backing down.
“They are asking us to say YES to everything,” Minister of State Nikos Pappas wrote on Twitter, referring to Greece’s creditors.
Other European leaders said Monday that they were preparing for Greece’s exit — even as they pleaded with the country’s leaders and voters to reverse course.
“Vote yes to stay in the euro,” European Commission President Jean-Claude Juncker said in an emotional news conference on Monday, in which he said his life’s work building the European Union was at stake. “You should not commit suicide because you’re afraid of death.”
German Chancellor Angela Merkel held emergency meetings on Monday with the heads of Germany’s political parties, a rare step that comes only at moments of critical national importance.
“If the euro fails, Europe fails,” Merkel said ahead of the meeting.
Yet British Prime Minister David Cameron said crisis planning cannot wait. “We must make sure we are prepared for any eventuality.”
Not all European leaders were as categorical about Greece’s exit from the euro.
“We are just centimeters from an agreement. We need to keep discussing,” Pierre Moscovici, the European Union’s economy and finance chief, told French RTL radio. “I hope that everyone sets themselves on this path of compromise.”
In the wake of Sunday’s decision to declare a bank holiday, panicked citizens tried to pull their money from their accounts while they still could. ATMs in Athens were running out of money, and tensions were running high as Greeks stood in line for hours to scrape together cash for basic supplies. Lines grew long at gas stations as worried residents topped off their tanks for what could be a protracted period of time in a cashless nation.
If Greece leaves the euro — or even if it remains in a state of protracted limbo — it could soon face a humanitarian crisis, as money dries up for essential imports such as medicine.
“I was in the hospital last month, and I needed cash to pay the doctors,” said Georgia, 50, an unemployed secretary who was trying to take out money from an ATM on Monday and refused to give her last name. “We were hoping that we were on the right path, and then they called this referendum,” she said. She had little cash for the week’s essentials, she said.
“Everybody was taken by surprise, and people started panicking,” said John Tzamaloukas, 35, who waited 90 minutes to reach the front of an ATM line in central Athens, only to have the machine run out shortly before his turn.
He said he had a month-old daughter and needed cash to buy the basics.
“You need money to buy milk,” he said.
One Greek bank head said Monday that he had enough cash to supply ATMs for the next week. But he made no promises about the future. ATMs were set to reopen for Greek account-holders at midday, but only for withdrawals of $67 a day.
Tsipras said Sunday that the threat by European Union leaders to hold Greece to the deadline and not extend further assistance amounts to “blackmail.” But he gave no concrete indications that he had made any concessions that would change their minds.
In a measure of deepening U.S. concern about the consequences for global stability if Greece is kicked out of the euro zone, President Obama and Treasury Secretary Jack Lew worked the phones over the weekend to urge European leaders to take every possible measure to keep Greece within the currency union.
The White House said that Obama and Merkel spoke and “agreed that it was critically important to make every effort to return to a path that will allow Greece to resume reforms and growth within the euro zone.”
And the Treasury Department said Sunday that Lew had spoken a day earlier to key European officials, urging them to maintain financial stability in the coming days — and to consider “potential debt relief.”
The consequences of Greece’s troubles extend far beyond the realm of economics. Russia has been seeking to exploit the situation by dangling the prospect of aid to Greece while calling for a conciliatory approach toward its actions in the Ukrainian conflict.
Top Greek cabinet officials have expressed sympathy for Russian President Vladimir Putin, and in the European Union’s consensus-driven decision-making system, even a single dissenting nation’s vote is enough to put an end to sanctions against Russia.
Tsipras has been seeking a decision to unlock the final $8.1 billion installment of emergency funds to help pay for Greece’s short-term financial needs. Without the money, Greece will default on a Tuesday repayment of a $1.7 billion IMF loan. The international bailout program for Greece will expire Tuesday, removing a significant financial shield.
No nation has left the 19-member common currency system since it was started in 1999, and any exit would bring unpredictable consequences. But E.U. leaders say they are far better prepared to guard against Greece’s exit than they were in 2011 and 2012, when the possibility first arose.
The mechanics of a Greek exit from the euro zone also remained deeply unclear, because there are no procedures for doing so. Austrian Finance Minister Hans Jörg Schelling suggested in an interview with the Austrian daily Die Presse that Greece would have to leave the European Union altogether.