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A Financial Tragedy Plays Out In Greece: No Money And Debt Is Due

LINDA WERTHEIMER, HOST:

A financial tragedy is playing out in Greece this morning. The Greek government is effectively broke. The bailout money it received from the rest of Europe has run out, and Greece will miss a payment to the International Monetary Fund today. Greece has submitted a new two-year aid proposal to creditors, and unless Greek leaders, led by Prime Minister Alexis Tsipras, can negotiate a new deal with their European partners, they will have to abandon the euro as their currency. To learn more about the consequences of all this, we're joined once again this morning by reporter Joanna Kakissis in Athens, and we also have Financial Times reporter Peter Spiegel in Brussels. Joanna, yesterday, when we reached you, the banks had been enclosed and many ATMs had run out of cash. What does it feel like on the streets today?

JOANNA KAKISSIS, BYLINE: Things are a little bit calmer today because more people have sort of wrapped their minds around what's happening. So there are some lines and people are there, but they're less scared than they were this weekend and yesterday. And there has been talk that some banks will open later this week for pensioners who have never actually used an ATM, and that's relaxed some people, too. Now, in my neighborhood, and I live in a working-class neighborhood with a lot of pensioners, people are really nervous. They're saying should we go to the supermarket and buy, you know, tons of toilet paper on somebody's credit card or, you know, tons of spaghetti or something to tide us over just in case supermarket shelves - that they're emptied out later this week?

WERTHEIMER: Now, in Brussels, European leaders are sorting out their next step. Peter Spiegel, the European Commission president was very upset with the Greeks yesterday, and he had some harsh comments about Greek leadership.

PETER SPIEGEL: Yeah, I mean, it's gotten very personal here, which is part of the problem. You know, I think these guys have been locked in meetings for, literally, overnight, hours on end, over the course of the last two or three weeks, so very little sleep, and trust is gone. Both sides now believe they have been lied to. There has been double-dealing. There have been U-turns. And so here in Brussels, even if Alexis Tsipras, the prime minister, turns around and says OK, I give up, I want to accept a deal on the terms that the creditors are offering, the leaders here in Brussels and other European national capitals have basically decided they cannot do business with this man. And so this is part of the problem now with this referendum. If the Greek people vote yes in which they say OK, we accept the terms of the deal, will the European leaders turn around and say OK, we'll now strike a deal with Tsipras or are they going to push for a new government in Athens, which they - frankly they've done before. And that is that the core of what Juncker said, the president of the commission, Jean-Claude Juncker. I mean, just really personal, lack of trust, feels he's been betrayed. I mean, he used the word I've been personally betrayed. Trust has just broken down between the 19 countries thatare in this eurozone.

WERTHEIMER: Joanna Kakissis, from your vantage point in Athens, that is a harsh characterization of the Greek government. Does it seem to you fair?

KAKISSIS: That is fair in a sense because Tsipras's party is a protest party. They're used to protesting and tearing things down rather than governing. They don't have any experience. But as Peter mentioned, there was a technocratic government that eurozone leaders liked that wanted - that they could work with and they were non-elected, and the Greeks reacted very badly to that. They felt that that government has served the interest of the European Union and the eurozone, but not the interest of Greeks, so it's dangerous territory to say let's put a government in place that we want and not respect the democratically-elected government in place.

WERTHEIMER: So, Peter, do you think Greece's European partners are willing to negotiate yet another financial rescue or do they think now that it just makes more sense to let Greece go?

SPIEGEL: I think the window for a deal to be struck is becoming increasingly narrow, but there still is a window. And I think it goes something like this - there is the vote of yes by the Greek people this Sunday in the referendum. And Tsipras either decides to reshuffle his coalition to bring in some more pro-European parties into it, into the government. Or, again, he resigns and we have some sort of caretaker government who sues for peace, turns around to the Europeans and say OK, we agree, we'll sign onto this. And I think that has to happen very, very quickly because as - you know, the banks are closed. They are weakening financially by the day, and the minute the banking sector collapses, that basically means you have to start printing new money and that means turning to the drachma. So I think this has to happen very, very quickly after Sunday, and I think most eurozone leaders say they're willing to do that, but they think the chances of that happening are very slim.

WERTHEIMER: Joanna Kakissis in Athens, do you think the Greeks will vote yes on Sunday?

KAKISSIS: Well, early polls show that Greeks are leaning towards yes, but it's unclear. Greeks are very confused about what they're supposed to be voting on. That's the problem at this point. Are they voting on a deal? Are they voting on the euro? And public opinion polls show most Greeks support the euro, so if they believe they're voting on eurozone membership, they will vote yes.

WERTHEIMER: Peter, what about your perspective in Brussels? Does this feel like the beginning of Grexit - Greece exiting the European monetary union?

SPIEGEL: It really does. I've got to say, I've been covering this now for five years and I never thought we'd get to this point. There was always seemed to be, you know, a rabbit to be pulled out of the hat in the last minute. But at this point, trust is so broken and, as you said, today is the day when the bailout runs out. For the first time in five years, Greece will be without an EU safety net, and there's basically no turning back from there unless a series of things happen that a likelihood of happening are very slim. And I see the way out to be incredibly difficult, and I think, literally, we have till July 20. July 20 is the day where Greece has to pay the ECB 3.5 billion euros on a bond. If they miss that payment, I think it's over. So we basically have three weeks for Greece to make a U-turn, accept the deal and sue for peace. Otherwise I'm afraid - I think we're going from a 19-member eurozone to an 18-member eurozone.

WERTHEIMER: Obviously, this is a disaster for Greece, but what about the union? What about the euro?

SPIEGEL: I mean, this is why you saw Jean-Claude Juncker give such an impassioned speech. For many of these guys, I mean, this has been their life's work, particularly that generation. These guys who are in their late 50s, early 60s now, who grew up sort of as children in the wake of the - of World War II who saw the EU as the guarantor of peace on this continent. And that has been their life's work as politicians, and some of these guys feel very, very passionately about it. This would be the first major reversal in what they all call the European project. You're losing a member of what is supposed to be the crown jewel of this project - the common currency. Once that starts, where does it end? Where is that - once you pull that string in that sweater, where does that start to end? And you already have Britain talking about leaving the EU. You have Italy very angry about the lack of solidarity on all these migrants showing up on its shores. Where's the help coming from other EU members? I mean, you're really at a point now where the whole project is being questioned by a raft of political parties on the left, on the right. And so to lose a member of the eurozone, to lose a member of the crown jewel of this project - boy, it's a real blow to a lot of these guys. It's a real blow to the project, I think.

WERTHEIMER: Peter Spiegel of the Financial Times - we reached him in Brussels - and reporter Joanna Kakissis, who is in Athens. Thank you both very much.

KAKISSIS: You're welcome.

SPIEGEL: My pleasure. Transcript provided by NPR, Copyright NPR.