Greece in shock as banks shut

Greeks struggled to adjust to shuttered banks, closed cash machines and a climate of rumours and conspiracy theories on Monday as a breakdown in talks between Athens and its creditors plunged the country deep into crisis.

Prime Minister Alexis Tsipras, who blindsided creditors by calling a referendum on the austerity cuts in the aid package proposed by the creditors, appeared on television on Sunday night to announce capital controls to prevent banks from collapsing.

Their imposition capped a dramatic weekend for Greece that has pushed the country towards a likely default on 1.6 billion euros ($1.77 billion) of International Monetary Fund loans on Tuesday and closer to an exit from the euro currency bloc. French President Francois Hollande appealed to Mr Tsipras to return to the negotiating table and German Chancel-lor Angela Merkel said she was willing to talk to the 40-year-old Greek leader if he wanted. “There are a few hours before the negotiation is closed for good,” Mr Hollande said.

But with Greece’s bailout programme expiring in less than 48 hours, hopes of a last-minute breakthrough were fading fast. Greeks — used to lengthy talks with creditors before a eleventh-hour deal materialises — were left stunned. “I can’t believe it,” said Athens resident Evgenia Gekou, 50, on her way to work. “I keep thinking we will wake up tomorrow and everything will be OK. I’m trying hard not to worry.”

European officials sent confusing signals about their next move. A spokesman for the European Commission told French radio that Brussels would not make any new proposals on Monday, appearing to contradict comments by EU economics commissioner Pierre Moscovici.

The Greek government will keep banks shut at least until after July 5, the date of the referendum, and withdrawals from automated teller machines were limited to 60 euros a day when they reopened at midday. The stock exchange will also stay shut.

The conservative-leaning Eleftheros Typos newspaper accused Mr Tsipras of announcing the referendum as a ruse to tip the country into early elections in the hopes of winning them. “Mr Tsipras’ decision to call a referendum and a possible euro exit constitutes a premeditated crime,” it said in an editorial. A rally called by Mr Tsipras’ Syriza party to protest against austerity measures and urge voters to say “No” in the referendum on bailout terms is expected later on Monday. Officials around Europe and the United States made a frantic round of calls and organised meetings to try to salvage the situation.

US President Barack Obama called Ms Merkel, and senior US officials, including treasury secretary Jack Lew, who spoke to Mr Tsipras, urged Europe and the IMF to come up with a plan to hold the single currency together and keep Greece in the eurozone.

EU chief executive Jean-Claude Juncker urged Greeks on Monday to back a cash-for-reform package rejected by their government, saying a “no” vote in Sunday’s referendum would mean Greece was turning its back on the European Union.

Following a breakdown of talks between Athens and its creditors, Mr Juncker delivered a withering criticism of the Greek government which called the referendum and which advised Greeks to vote against creditor proposals. “The whole planet would consider a Greek ‘no’ to the question posed... as meaning that Greece wants to distance itself from the eurozone and from Europe,” he said.

“I will say to the Greeks who I love deeply: you mustn’t commit suicide because you are afraid of death... You must vote yes, independently of the question asked,” Mr Juncker added.