Photo: Some banks opened on Wednesday to allow pensioners to receive a small part of their benefits. (Reuters: Yannis Behrakis)
A defiant prime minister Alexis Tsipras has again urged Greeks to reject an international bailout deal, wrecking any prospect of repairing broken relations with EU partners before a referendum on Sunday that may decide Greece's future in Europe.
Less than 24 hours after he wrote a conciliatory letter to creditors asking for a new bailout that would accept many of their terms, Mr Tsipras abruptly switched back into combative mode in a television address.
Greece was being "blackmailed", he said, quashing talk that he might delay the vote, call it off or urge Greeks to vote yes.
The remarks added to the frantic and at times surreal atmosphere of recent days in which acrimonious messages from the leftist government have alternated with late-night offers of concessions to restart negotiations.
A day after Greece became the first advanced economy to default on debt to the IMF, long lines at cash machines provided a stark visual symbol of the pressure on Mr Tsipras, who came to power in January vowing to end austerity and protect the poor.
"A no vote is a decisive step towards a better agreement that we aim to sign right after Sunday's result," he said, rejecting repeated warnings from European partners that the referendum would effectively be a vote on whether Greece stayed in the euro or returns to the drachma.
European Council president Donald Tusk retorted in a tweet: "Europe wants to help Greece. But cannot help anyone against their own will. Let's wait for the results of the Greek referendum."
Eurozone finance ministers held an hour-long conference call to discuss the previous night's offer from Mr Tsipras, but were adamant that no further discussions would be held until after the Sunday vote.
The head of the currency zone ministers' Euro group, Jeroen Dijsselbloem, said he saw "little chance" of progress after Mr Tsipras's latest comments.
Analysis: Martin Cuddihy in Athens
It appears the new conditions are almost identical to the bailout offer that was placed on the table last week, so it doesn't appear that a lot has changed.
There are some sticking points which Greek prime minister Alexis Tsipras is hoping to have amended within this bailout.
Those are to do with with a 30 per cent VAT discount on the Greek islands. The islands are popular with tourists, so they want to ensure that the tourism industry continues to thrive.
Another condition is to do with pensions. The Greek government had offered to raise the pension age from 65 to 67. As part of the last bailout package, that was supposed to happen as soon as it was accepted by the Greek authorities. But Mr Tsipras is trying to have that pushed back to later this year.
Of course, these are conditions that Mr Tsipras is placing on the table. Germany in particular would have to agree to these given that it is owed so much money. German chancellor Angela Merkel has said that no decision will be made until after the referendum on the weekend.
There is a school of thought here in Greece that perhaps this latest move by the Greek authorities to accept a bailout, or accept most of the conditions attached to it, is politically motivated domestically.
That's because Mr Tsipras has almost staked his prime ministership on the referendum, urging citizens to vote "No" this weekend. Perhaps he's trying to get himself out of that position, so whichever way the vote goes he can hold onto power.
Global financial markets have reacted remarkably calmly to the widely anticipated Greek default, strengthening the hand of hardline Eurozone partners who say Athens cannot use the threat of contagion to weaker European sovereigns as a bargaining chip.
In his overnight letter to creditors, Mr Tsipras agreed to accept most of their demands for taxes and pension cuts and asked for a new 29 billion euro ($42 billion) loan to cover all debt service payments in the next two years.
However even if negotiations do restart after the referendum, Germany and others made clear that any talks on a new program would have to start from scratch with different conditions.
The exasperated tone to public comments of European leaders exhausted by the chaotic turnarounds of the past few days offered little hope of a breakthrough.
Mr Tsipras has suggested he would step aside if Greeks vote yes in Sunday's referendum, and many other Eurozone countries have made little secret that they see no point in negotiating with him before then.
"This government has done nothing since it came into office," German finance minister Wolfgang Schaeuble said in a speech in the lower house of parliament in which he accused Athens of repeatedly reneging on its commitments.
"You can't in all honesty expect us to talk with them in a situation like this," he said.
Capital controls starting to bite for ordinary Greeks
Greece shut its banks this week, imposed capital controls and limited teller machine withdrawals to prevent the public from emptying the banks.
On the third day of the closure, the costs were biting deeper for ordinary Greeks, with long lines forming at many ATMs and limited amounts of cash being doled out to pensioners.
Even with a withdrawal limit of only 60 euros a day, there were signs of banknote shortages, with bankers saying 50-euro and 20-euro notes were running low.
Greece's Sunday referendum on the bailout conditions will go ahead and the ruling party will campaign for a "No" vote, Greek finance minister Yanis Varoufakis tells Late Night Live.
Kiki Rizopoulou, a 79 year-old pensioner from Lamia in central Greece, had to travel to Athens to collect her pension, spending 20 euros of the 120 euros she was allowed to take out.
"I already have to pay back 50 euros that I owe. It's embarrassing," she said.
An opinion poll showed opposition to the bailout in the lead but also that the gap had narrowed significantly as the bank closure and capital controls began to bite.
Posters from the ruling Syriza party calling for a no vote started to appear in central Athens.
The centre-right opposition ran television spots mocking previous comments from the government that capital controls would never be imposed.
The Tsipras letter asking for a new bailout deal appeared to move closer to accepting creditor demands, but it contained only a single sketchy reference to labour market reform and no mention at all of frozen privatisations, both big priorities for the creditors.
He asked to keep a discount on value added tax for Greek islands, stretch out defence spending cuts and delay the phasing out of an income supplement to poorer pensioners.
From other news sites:
- Daily Mail: Greece defaults as country's last-ditch bailout proposal in an attempt to save itself from bankruptcy is rejected
- Australian Financial Review: Greek debt crisis: deadline passes but new reform plan gives hope
- BBC: Greece debt crisis: Tsipras in new bailout 'concessions'
- News.com.au: Eurozone refuses Greek bailout extension
- The Independent (UK): Greece crisis: Nation defaults despite extraordinary last-minute bid for new bailout deal from EU