Europe Clings To Hope Greece Will Stay With Euro

(RTTNews) - Even as disheartened Greeks queued up in front of ATMs over the weekend in an attempt to extract their cash, European leaders on Monday urged them to vote 'yes' in the upcoming referendum on the bailout, stressing that it was in the country's interest that it remains in the euro area.

"I would like the Greek people to vote 'yes'" irrespective of the question asked, European Commission President Jean-Claude Juncker said at a press conference in Brussels.

A 'yes' vote would mean Greeks want to stay in the euro area, while a 'no' would imply they are rejecting Europe itself, he added.

"You mustn't commit suicide because you are afraid of death," Juncker said, reiterating his wish that Eurozone remains a group of 19 countries.

"For me Greece's exit of the eurozone has never been and will never be an option," Juncker said. However, he said he will not be able to favor Greece against others for what is essentially a 'Greek problem'.

"There has never been an 'ultimatum or take-it-or-leave-it-approach'. Our sole concern has always been and still is to help make a fair and balanced deal," Juncker added.

Bailout negotiations between Greece and its creditors broke down over the weekend and the country faces a crucial 1.6 billion euro payment to the International Monetary Fund on June 30th. Without external aid, Greece is almost certain to default on that payment.

Greek Prime Minister Alexis Tsipras called a July 5th referendum on the country's bailout on Friday, taking its creditors by surprise. The government is backing a 'no' vote. Just hours ahead of that, there were talks of a five-month bailout extension proposal from creditors.

The European Commission Chief said that he was 'particularly sad' about the events on Saturday, which he described as a 'blow to Europe'. He also said that he 'felt betrayed' by the Greek government's rejection of proposals.

"Playing one democracy against 18 others is not an attitude worthy of the great Greek nation," Juncker said. He also said the EU does not deserve the criticism that is being leveled against it.

A Eurogroup meeting on Saturday, where Greece was not present, rejected any bailout extension for the country, making the risk of an exit from the euro or 'Grexit' more real.

Events snow-balled fast, prompting the European Central Bank to decide not to raise the emergency funding it was providing the Greek banks following a conference call on Sunday. The current cap of the emergency liquidity assistance, a crucial life-line for cash-strapped Greek banks, is 89 billion euros.

Greece was forced to close its banks and imposed capital controls on Monday in order to avoid a financial collapse as the failure of debt talks with the EU makes it difficult to honor the payment due on June 30th.

The banks will remain closed until July 6th and a daily limit of 60 euros on cash withdrawals from ATMs is in place. The Greek stock market is set to remain closed this week as well as next, reports said.

German Chancellor Angela Merkel and French President Francois Hollande also expressed hopes of a solution to the Greek problem even as they placed the ball entirely in the Greek court.

Urging a compromise, Merkel warned, "If the euro fails, Europe fails". At the same time, she also stressed the importance of safeguarding EU principles as she headed for a crisis meeting with German lawmakers in Berlin.

In Paris, Hollande said there were still hours left before the scope for negotiations is over.

During a press conference, Juncker mentioned some measures of the package that was offered to Greece for five-month bailout extension. There are no wage and pension cuts in the package, he said, describing it as "a package which creates more social fairness, more growth and a more modern and transparent public administration."

He also said that creditors' were right to ask for deeper cuts in the defense budget. The package also allowed the government to substitute measures with alternatives as long as the numbers add up, Juncker said.

"And a deal could also have ensured that we, the Commission, could go ahead with a package for a "new start for jobs and growth" package of 35 billion euro to help the Greek economy getting back on tracks," Juncker said. "We really moved mountains until the very last minute when Greek authorities closed the door. All elements of a credible and comprehensive deal were on the table."

Juncker also said that Tsipras was told the Eurogroup is ready to discuss debt measures, in line with the Eurogroup statement of November 2012, to secure a third bailout for the country.

"On our side - the door is still open," Juncker said.

EU Economic Affairs Commissioner Pierre Moscovici also said the same earlier in the day. A deal between Greece and its creditors is still possible and the referendum called by the Greek government must be respected, he said in an interview to French radio RTL.

"We are just centimeters away from an agreement," Moscovici said. "We must find a compromise." Wishing that a reformed Greece will remain in Eurozone, Moscovici also urged Greeks to vote "yes" on the referendum.

Elsewhere today, EU Commissioner for Financial Services Jonathan Hill said capital controls imposed by Greece are justified on grounds of public policy, but they should be applied only for the shortest period possible in the interest of the economy.