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Quest Means Business
Eurogroup President Says No Extension for Greece; Greeks Rally in Support of Debt Deal; Obama Calls Greek Default "Substantial Concern"; US Stock Markets Edge Higher; European Markets Fall; Euro Falls After New Bailout Request; Greece Divided Over Referendum Vote; Greece Hours from Default on IMF Loan
Aired June 30, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: The market is up the best part of more than 50- odd points. It's been a very strange day with Europe being sharply down, New York is up. The ramifications of the day we will deal with on Tuesday,
it's June the 30th.
It's a case of no bailout extension. The head of the eurogroup tells me tonight Greece's fate is sealed.
(BEGIN VIDEO CLIP)
JEROEN DIJSSELBLOEM, PRESIDENT, EUROGROUP: Greece is in default or will be in default tomorrow morning on the IMF.
(END VIDEO CLIP)
QUEST: Tonight, you're going to hear from Jeroen Dijsselbloem, as well as the Italian finance minister. And the mayor of Athens will be here
live on the program.
Also, as thousands of people demonstrate in the Greek capital, we look at the growing divisions amongst the country's people.
Whichever way you look at it, we have comprehensive coverage tonight. I'm Richard Quest, live from Athens, where I mean business.
And a very good evening to you from Athens. Well, what a 24 hours since you and I were last talking together. Tonight, it's a case of no
extensions, no quick fixes. In less than two hours, Greece will have to defend for itself financially.
It is coming up to 11:00 here in Greece, 10:00 in the Central European Time, and the deadline is midnight, Central European Time, 1:00 AM in
Athens. In just a moment, you're going to hear from the president of the eurogroup. He says it's not within his power to extend the Greek bailout
past midnight.
The facts as they stand with two hours to go: the Greek government has appealed for a new two-year bailout program under the so-called ESM,
the European Stability Mechanism. Jeroen Dijsselbloem is warning that won't happen quickly. And anyway, even if and when it happens, it'll have
harsher conditions than the Greek government has been willing to accept.
Greece is less than two hours away from missing a $1.7 billion payment to the IMF. That takes place also 6:00 PM Washington time, and Greece will
have become the first developed economy to default on a loan to the IMF, joining Sudan and Cuba and other such countries.
Speaking a short time ago, the head of the eurogroup told me how the talks, the new offers, the new decisions, and all the day's events played
out.
(BEGIN VIDEOTAPE)
DIJSSELBLOEM: Well, Richard, we received this afternoon a letter from the Greek prime minister, Prime Minister Tsipras, basically requesting for
a new ESM program for financial support and requesting an extension of the old program. And we discussed that this evening in the eurogroup meeting
by phone.
The political circumstances and the political stance of the Greek government doesn't seem to have changed. We are still, of course, awaiting
the referendum in which the Greek government is still campaigning "no." So the political context hasn't changed.
The practical circumstances is that the old program expires tonight at 12:00, and practically and legally, there's little we can do. But as I
said also, the political circumstances, the political stance of the Greek government hasn't changed.
QUEST: Right.
DIJSSELBLOEM: So, unfortunately, the old program will expire tonight.
QUEST: So, you are refusing the request for an extension, a short- term extension of the existing bailout, and that will expire tonight, is what you're saying?
DIJSSELBLOEM: Yes. The part of the request which is about the extension of the old program is practically impossible, and the political
context and the political stance of the Greek government hasn't changed. So the old program will expire.
The second part of the letter refer to a new program, and we will start procedures on that. But of course we still have to await the
referendum.
QUEST: We'll come to the referendum in one second. I want to take this bit by bit. The new -- as I know and as I understand the rules for
the European Stability Mechanism, a process begins now with a process of analysis, and a report has to be completed looking into the request, the
systemic nature of it and the like. How quickly do you think that can be completed?
[16:05:02] DIJSSELBLOEM: This first step has to be done by the Commission, closely cooperating with the ESM, the ECB, and the IMF. They
will look at the urgency, in other words, the financial stability, which is, of course, at risk, the financial needs, and the debt issues.
Then they will come back to the eurogroup and advise on that. That is the first, basically, procedural step that will have to take place, and the
Commission has said they will start that process.
QUEST: We're talking some days if not weeks before that process would be completed. Do you expect the ECB to consider restarting emergency
liquidity to Greece in the meantime? Because they're out of bailout, they will be defaulted to the IMF, the ESM is going to take several weeks, so
somebody has to fund Greece in the meantime.
DIJSSELBLOEM: Well, I'm afraid I can't answer that. Of course, the ECB will take its decisions in full independence, and I think the fact of
the matter is that Greece is in default or will be in default tomorrow morning on the IMF and also, I believe, on a loan to their own central
bank. But they will be in default. I don't think I can alter that in the short term.
Any talks about a future program will have to be discussed in the eurogroup, will have to be assessed by the institutions. I can't say much
about that either, except for the fact that also in a new program, there will be strict conditionalities.
And the problems in Greece's economy and finance and in the banks have deepened, and that requires even more difficult conditionalities than,
perhaps, the ones we've been talking about so far. So, this is not an easy road to go down.
(END VIDEOTAPE)
QUEST: That's Jeroen Dijsselbloem, the head of the eurogroup, and he -- as he said, he will hold another phone conference on Wednesday morning.
One of the officials who'll be on that conference is the Italian finance minister, Pier Carlo Padoan, who joins me now on the line. Minister, thank
you for talking to us, Minister Padoan, from Rome this evening.
PIER CARLO PADOAN, ITALIAN FINANCE MINISTER (via telephone): Good evening, Richard.
QUEST: What do you want to know now, Minister. Good evening. What do you want to know now from the Greeks before you will do anything, let
alone agree to another ESM loan?
PADOAN: Well, I'd like to hear about two topics. The first topic is to what extent are the Greek authorities willing to embark in a program of
structural reforms in taxation, labor markets, and pensions. Not because others ask this of them, but because this is what your Greek economy needs
to go back to sustainable growth path.
The other piece of information I'd like to hear from Greek authorities is what they intend to do about the referendum. They have called the
referendum, and the Greek government has officially suggested to the citizens to vote "no," which is to reject the proposal coming from the
European institutions. So, what do they feel about that?
QUEST: When we look at the situation tonight, in just two hours, they're in default to the IMF. In two hours, the bailout plan expires. Do
you see this new application to the ESM, do you see it as a negotiating ploy? Do you see it as a clever trick? How do you regard this idea of
asking the ESM -- bearing in mind it'll take weeks before they get an answer?
PADOAN: Well, let me just note one thing. Everyone knows, including the Greek authorities, that to request an ESM is perfectly fine, but of
course, that takes some time, as you just said, weeks, because the ESM requires agreeing not just on resources, financial resources, but also on a
program.
Let me say one thing. It is sad to note that we have wasted almost four months in dialogues with the Greek authorities that have turned out to
be inconclusive.
QUEST: When you look at the situation tonight, and you'd -- what was the mood of the eurogroup?
PADOAN: Well, the mood of the eurogroup was, apart from the individual points of view of colleague ministers, was that exactly what I
said, that time has been lost and, unfortunately, we may be running out of time at the crucial moment.
It is a fact, as Jeroen Dijsselbloem just mentioned, that in a few -- in a couple of hours, the program will expire, and we are now facing a new
situation. All of this could have been avoided if we had started serious talks earlier than just now.
[16:10:02] QUEST: I asked the president of the eurogroup this question. I ask it to you. Where does Greece get the money to continue?
Bearing in mind the ECB has withdrawn ELA, would you support the ECB from reopening the financial taps while the ESM negotiations continue?
PADOAN: Well, I'm afraid I'd have to provide the same answer that Jeroen just made. It is up to the ECB governing council to decide, and
according to the rules governing ECB policy.
QUEST: If we -- your prime minister yesterday said -- Matteo Renzi said that this referendum on Sunday is, effectively, euro versus drachma.
Well, since there's no longer an agreement and since there's no longer -- they're in default, and now there's an ESM application, do you think,
firstly, the referendum should go ahead because it is on that question of euro versus drachma? Get it over and done with once and for all?
PADOAN: Well, I think Matteo Renzi's definition is a good definition. Having said that, it's up to the Greek people to decide first of all if
they want to hold the referendum after all, and second, what they should vote for. I just noticed that the authorities have decided to call a
referendum and the prime minister has recommended voting now. So, it's up to them to decide.
QUEST: Minister, thank you for talking to us, and hopefully we can talk again after the next eurogroup meeting, which of course is tomorrow,
and hopefully we'll talk in the days ahead. Thank you for joining us tonight.
Here in Athens, thousands of demonstrators were out today on the square behind me. It's now -- it absolutely bucketed down with rain. It
soon dispersed them from the square. But the calls were for the Greek people to vote in favor of the reform proposals set out by Brussels over
the weekend. The organizers expected 35,000 people to fill the square.
Now, last night, this square was full of protesters calling on the Greek people to reject the offer. At this point, both sides are fighting
over a deal that's unlikely to be on the table by the weekend.
The mayor of Athens predicts the Greek people will vote in favor of a deal with Brussels. He says if that happens, the Greek government may well
need to resign. Giorgos Kaminis joins me now. Mr. Mayor, thank you, sir.
GIORGOS KAMINIS, MAYOR OF ATHENS: Hello. How are you?
QUEST: Let's first of all talk about the situation tonight. Greece is asking for a third bailout from the Europeans, but the other bailout
comes to an end tonight. How serious is it?
KAMINIS: Well, it is very serious, as anyone can understand. And that is why I think, now, that the Greek leaders have started realizing the
problem -- the impasse where they have drawn themselves.
QUEST: But do you think that the referendum should still take place, bearing in mind there's no deal on the table and things are unwinding?
Should that referendum take place?
KAMINIS: Even though the "yes" will win -- I'm totally persuaded on that -- I spoke today to those people here, and you can understand the
feeling. Things are changing radically in Greece now. Even though the "yes" would win, this referendum should not take place. We are waiting
until the last hour that they sit again --
QUEST: Well --
KAMINIS: -- at the negotiating table with the European institutions.
QUEST: So, if the referendum doesn't take place, even though the ESM, what do -- you want the government to resign?
KAMINIS: No, no. I don't want the governing to resign. I -- what I said is that the government must think very seriously what it has to do.
Because if the referendum takes place and if we have a vote of yes, that I'm sure is going to happen, then the government will truly -- will find
itself in a very, very delicate situation.
QUEST: Sure, because they will have asked for a "no" vote and they'll have got the exact opposite.
KAMINIS: Of course.
QUEST: No confidence.
KAMINIS: So, one could say that constitutionally, they should resign. I hope that doesn't happen. Why? Because first of all, the news that we
have is that the prime minister has asked to meet the president of the republic together with the other leaders of the political parties.
So, that is very important news. It seems that Tsipras now wants to have a compromise with the rest of the political parties, and that will --
QUEST: Ah.
KAMINIS: -- open the way to a consensus and to hopeful solution.
[16:14:57] QUEST: Is it your understanding -- this is new stuff -- is it your understanding that some form of ecumenical government,
coalition, grand coalition -- you're shaking your head -- but some form of wider government will be formed or could be formed?
KAMINIS: No, no, that's not my feeling, even though --
(CROSSTALK)
QUEST: Then why meet?
KAMINIS: -- that could happen.
QUEST: Then why meet?
KAMINIS: In order to have an agreement of everyone, even though the government --
QUEST: But agreement about what?
KAMINIS: An agreement of what should be done in the near future. Because for the time being, you see what has happened. We have a profound
division in the people. So, it's the first time --
QUEST: Isn't that too -- I'm sorry to bang on about this, but isn't that too little, too late? You've gone over the cliff. You will have
defaulted in an hour. There's no bailout on the table. The ECB's not giving any loan assistance. What use is it talking amongst yourselves
about what you might or might not do next?
KAMINIS: If I'm not wrong, legally, the default of Greece concerning its debt to the SMF, --
QUEST: IMF.
KAMINIS: To the IMF, could take place a month after, legally.
QUEST: Right.
KAMINIS: So, for the time being, even though the debt is not paid tonight, that doesn't mean necessarily that tomorrow --
QUEST: All right.
KAMINIS: -- we will be in a default situation. So, that is very important that the political leaders meet together with the president of
the republic, and that we will have an agreement on what should be done. It's very, very important that we have the consensus amid such a division.
QUEST: Well, Mr. Mayor, I'm very sorry that I had to arrive in your beautiful, magnificent city under such difficult circumstances, but sir, I
look forward to coming back on happier times.
KAMINIS: I hope. And you will receive the traditional Greek hospitality.
QUEST: I'm looking forward to that already. Thank you very much, sir. Thank you.
KAMINIS: You're welcome.
QUEST: Traditional Greek hospitality, which doesn't mean getting teargas on the balcony, as it has happened in previous visits here. But it
has been a splendid trip.
Now, US stocks closed slightly higher. We'll take more on that in a moment. We'll show you exactly how the markets performed. Europe was
down, the big board was up, some very strange goings-on. It's QUEST MEANS BUSINESS, live from Athens. Good evening to you.
(COMMERCIAL BREAK)
QUEST: So, the ramifications around the world of the crisis in Greece. President Obama says he's watching the situation in Greece
closely. The president said a Greek default would not have a direct impact on the US economy, however, Mr. Obama said the US could feel the ripples
from across the Atlantic.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In layman's terms for the American people, this is not something that we believe will have a --
major shock to the system. But obviously, it's very painful for the Greek people, and it can have a significant effect on growth rates in Europe.
(END VIDEO CLIP)
QUEST: The Dow ended the day up less than a quarter of a percent. We saw some very big gains in the morning, which they all ebbed away towards
the afternoon.
[16:20:01] Alison Kosik's at the New York Stock Exchange. How much of what -- we know yesterday, Alison, because you were with me, but
yesterday was very heavily down because of Greece. Well, today was a very disruptive day for Greece, so why did the Dow rally?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: OK. Well, you're seeing a little optimism here on the floor of the New York Stock Exchange, as we saw
today, Richard. The market really looking to stabilize. Actually, a pretty solid U-turn for stocks after the biggest sell-off for the year for
the Dow. And we saw this bounce hold pretty much throughout the entire day.
But even the market knows the Greek drama's not over by a long shot, especially with it being defaulting for Greece. Volatility, though, fell
dramatically compared with yesterday.
What gave some optimism to investors was what German chancellor Angela Merkel said. She said that the door is still open to dialogue. So, many
traders actually are telling us that they think some sort of deal will be worked out, Richard.
QUEST: Alison Kosik at the New York Stock Exchange, and there'll be many more days between now and the weekend of volatility and turmoil.
There were new details coming in. Fitch, the rating agency, has downgraded Greece one notch to CC from CCC. Now, it cited the breakdown in
the negotiations with the creditors and, of course, the uncertainty over Greece's future. It's all pushing the markets down for another day.
The European indices were off one percent or more. Take a look at the numbers and you'll put it into perspective. The FTSE finished the quarter
at a loss of 4 percent. Now, that's the quarter -- its worst quarterly performance since 2011.
All week, we are watching the euro, we're tracking the currency as the crisis in Greece has unfolded. So, the euro, down today after the
government called for a new bailout. But it's been spared the huge losses we saw over the weekend when the referendum and the capital controls were
announced.
And if you take a look overall, you can see exactly how the euro continues to perform over the course of the week. And we're going to go
right the way through the euro all the way through until Friday. There, you have the bailout, the debt deadline, the referendum.
Coming up, it's the end of the second quarter, and despite the turmoil, the euro's notched its first quarterly gain since the beginning of
2014. In a moment, Mohamed El-Erian will join us to talk about the two hours when Greece will find itself in a very different and difficult
situation.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The Greek people, and now they're trying to play the future of Greece in cards. We do not want to have our future played in
cards.
UNIDENTIFIED MALE: I am in Europe. I want to stay in Europe. And I think the only future for my country, for me, for my family, my children,
my grandchildren, is to cooperate with the other Europeans and go ahead. There's no other way.
UNIDENTIFIED FEMALE (through translator): Nobody can tell us to leave Europe. The euro is the way for us to maintain a sustainable and strong
Europe, and it is not only about economy. It is about the European culture. The economy is the way to maintain a strong Europe.
(END VIDEO CLIP)
[16:24:59] QUEST: Whether or not Greece gets a new bailout, it's less than two hours away from missing a payment deadline to the IMF, the
International Monetary Fund. At that point, Greece becomes the first developed economy to default on an IMF loan.
Now, Greek officials have said quite clearly there's no way they can come up with the $1.7 billion that the country owes. And they've already
said that they've already asked again the IMF, will it extend the deadline? But as the IMF's managing director warned earlier this month, when the
clock strikes 6:00 in Washington, it's over.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: The 30th of June is the day when the lump sum payment is due to the IMF,
and there is no grace period or two months' delay, as I have seen here and there. On July the 1st, payment's not been made.
(END VIDEO CLIP)
QUEST: Joining me now is Mohamed El-Erian, the chief economic advisor for German insurer Allianz. He says Greece is headed for a massive
economic contraction. Mohamed, the question, of course, is from the events that you've seen tonight and what you've heard about today, do you think
that there is a realistic chance, first of all, of a new ESM? A new bailout, bailout number three?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: So, the probability of an ESM is very low. They -- the ESM will not go forward
without the IMF, without the other partners. And as you've pointed out, negotiations are stuck.
The second element that worries me -- and you're on the ground, Richard, thank you for that. The second element that worries me is that
Greece is in the midst of what's called an economic sudden stop.
When you close the banks, there are massive consequences. There are a serious of cascading failures. Default. Things start to grind to a halt.
So, the second question for Greece is how will it manage this very difficult period, having had this economic heart attack? It is in the ICU
right now, and various parts of its economy are going to grind to a halt.
QUEST: So, what needs to happen, bearing in mind no deal, default, no negotiations, and an ESM that could take months? Talk me through the next
week, please.
EL-ERIAN: So, if that is the conditions, that they cannot reengage the European creditors and the IMF in a cooperative fashion, the following
will happen. Greece will fall into payments arrears, not just to the IMF, but to suppliers and to its own people: pensions, civil servant salaries.
Secondly, Greece will be very tempted to introduce IOUs as a way to make payments, because they don't have the euros, they're going to try to
introduce IOUs. Those IOUs are going to start developing into an alternative currency. They're going to trade as a discount to euros.
And then finally, someone's going to say, you know what, we can use these IOUs to reopen the banks. And what is going to happen is Greece is
going to stumble into an alternative currency, not by choice, but by necessity in order to keep its economy functioning. Otherwise, the economy
will come to a complete halt.
QUEST: Right. I need you to explain or to at least give us your seasoned, experienced view, now. How much of what you've just said is
likely, and how much is inevitable? Do you think Greece is effectively out of the euro?
EL-ERIAN: I think there's an 85 percent chance that Greece will be forced out of the euro. So, that's very high. Now, they can change that,
and the European partners can change that, but right now, on the current path, it's about an 85 percent probability that Greece will be forced out
of the eurozone.
QUEST: Mohamed El-Erian joining us with his 85 percent. And we'll talk more about this, Mohamed, in the days ahead. Stay close, sir. We
need your guidance, and we need your assistance.
Coming up, we will talk to the Greek opposition and an MP who says there's a silent majority ready to vote "yes."
[16:29:27] (COMMERCIAL BREAK)
[16:30:00] (COMMERCIALS)
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Hello, I'm Richard Quest. I'm live in Athens
tonight and there's more "Quest Means Business" in a (AUDIO GAP) (COUGHS) - Excuse me. In a moment we're going to hear from a key member of the
opposition party New Democracy on the government's final attempt to resolve the crisis.
And lessons from Argentina on why default may not be the worst outcome but it's certainly one of the most difficult and painful.
Before all of that, this is CNN and on this network the news always comes first.
In an hour and a half Greece's bailout will come to an end and the country will be in IMF default. The president of the Eurogroup says
Greece's request for a new bailout will not be decided quickly. The Eurogroup also rejected Greece's request for an extension of its current
program.
Speaking to me, the head of the Eurogroup explained why he couldn't and wouldn't give Greece more time.
(BEGIN VIDEOCLIP)
JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: Unfortunately, the last chance to get a solid extension of the old program has gone by. The ECB
has had to take measures to mainstay - maintain - stability of the banks and we are now in a difficult situation.
(END VIDEOCLIP)
QUEST: At least 86 people have been killed after a military plane crashed in Indonesia. It happened close to residential neighborhoods in
Medan on the island of Sumatra. It's unclear how many were onboard the aircraft. There were 113 when it took off, but the plane did make two
stops along the way.
Tunisian authorities say the gunman at the beach resort massacre had ties to a Libyan terror organization and they say he trained at the same
terror camp as the man who attached the Bardo Museum in Tunis earlier this year. ISIS is claiming responsibility for both attacks.
Nuclear talks with Iran have been extended for another week to July the 7th. Today had been the deadline by which negotiators had set
themselves to arrive at a deal. Iran wants sanctions lifted in exchange for curbs on its nuclear program (AUDIO GAP) by a group of six nations.
The Iranian foreign minister returns to negotiations in Vienna after getting instructions from Tehran.
(BEGIN VIDEOCLIP)
MOHAMMAD ZARIF, IRANIAN FOREIGN MINISTER: I didn't go to get mandate. I already had a mandate to negotiate, and I am here to get a final deal and
I think we can.
BARACK OBAMA, UNITED STATES PRESIDENT: As I've said before, there are deep-seated disagreements and divisions between the United States and Iran.
And those aren't going to go away overnight. The goal of the nuclear negotiations is not to rely on trust but to set up a verifiable mechanism
where we are cutting off the pathways for Iran to attain a nuclear weapon.
(END VIDEOCLIP)
[16:35:01] QUEST: Lufthansa is offering a little under $28,000 to the families of those killed in the Germanwings crash. The company's to set up
an education fund for the children of the crash victims. A lawyer representing some of the families says Lufthansa's offer is completely
inadequate. A hundred and fifty people died when the Germanwings flight crashed into the French Alps back in March.
And a very good evening from Athens where it is just coming up to 11:35. There is 90 minutes before Greece goes into default with the
International Monetary Fund. Any new deal will need to wait until after this weekend's vote. In Greece the referendum - and we're still not
entirely sure whether that's going to take place.
There's no bailout on the table, the default is imminent, so I asked the Eurogroup's president, Jeroen Dijsselbloem, what a referendum this
weekend could possibly achieve.
(BEGIN VIDEOCLIP)
DIJSSELBLOEM: I think the Greek government is, after its riskful (ph) steps it took on Friday night, is now trying to reassure everyone. But
that is very difficult in the current circumstance. As I said, the old program expires, the ECB had to take some decisions and will take further
decisions fully independent.
There is no quick fix at the moment. The only thing we can do - but that would require a different stance from the government - is to start
talks on the future. But as the political stance hasn't changed and we're still going for a referendum and the government is still campaigning for a
no vote, that seems to be a very difficult base to have serious and constructive talks upon.
QUEST: Do you see the point of the referendum this weekend? I know you're not the prime minister of Greece but the existing bailout has gone,
there's a new ESM (ph) request. I'm not sure I know what the Greek people would be voting upon. Would you agree?
DIJSSELBLOEM: I think that is a question you'll have to ask the Greek government. I'm not opposed to referenda, they can be a very useful
instrument. The big question is always what is actually the question you put to the people and what's the alternative?
But I think it's up to the Greek government and the political parties that are now campaigning for or against to answer those questions. So I
won't interfere with that. What I do know is that unfortunately, the last chance to get a solid extension of the old program has gone by. The ECB
had had to take measures to mainstay - maintain - stability of the banks. And we are now in a difficult situation.
The only thing I can say, Richard, is that tomorrow morning the Eurogroup will again have a conference call and the Greek government has
announced it will send a second letter, perhaps explaining their ideas on the next steps in the process. But we'll have to see that second letter
first and then we'll have another call by the Eurogroup to see whether the political situation and the political stance has altered.
(END VIDEOCLIP)
QUEST: That's Jeroen Dijsselbloem, the president of the Eurogroup. Now joining me is Kyriakos Mitsotakis, the parliamentary speaker from the
New Democracy opposition party in Greece. The situation couldn't be more serious. In this scenario, sir, do you think the referendum should take
place?
KYRIAKOS MITSOTAKIS, NEW DEMOCRACY PARLIAMENTARY SPEAKER: I think to the extent that no deal was found today, the referendum will take place and
obviously the real factions of the Greeks are going to answer on Sunday whether they want to be part of the Eurozone or not - that was always the
real issue.
This is the first referendum taking place in Greece in the past 40 years and it could only involve a truly existential faction about the
country.
QUEST: Now you're obviously campaigning for a yes vote in that regard. The prime minister has put his political future basically on the
line. He says he can't be prime minister in all circumstances. So if there's a yet vote, he's gone?
MITSOTAKIS: Well that's what he implied and I do think that we will have a yes vote on Sunday judging from a massive rally we had there today.
QUEST: Well, well sad news - there was a bigger - a similar-sized - rally yesterday actually here.
MITSOTAKIS: Well I'm campaigning for the yes vote, what do you expect me to say? It was indeed a big rally. So to the extent of the yes vote,
we'll win, I do expect Mr. Tsipras to resign. That's at least what he implied and obviously it would be impossible for him to implement a policy
he doesn't believe.
QUEST: Now the mayor of Athens says that the political leaders are being called by the prime minister and others to go to the president
tomorrow. Is that your understanding of a meeting?
[16:40:08] MITSOTAKIS: I'm not aware of this meeting taking place. We have asked for such a meeting for a long time. Mr. Tsipras has insisted
on negotiating by himself, he has not enlisted any advice from the opposition parties.
QUEST: What do you think could come from such a meeting if they did - if all - I mean, is this an idea of some - as I hear the phrase used in
Athens - `an ecumenical spirit,' an `ecumenical agreement' of some sort - a consensus? Is that even possible at this stage between the political
parties?
MITSOTAKIS: Well I, you know I hope - I hope - it could be possible because, you know, any referendum eventually is going to be divisive. But
Mr. Tsipras first has to acknowledge the fact that he got us into a tremendous mess, whether he's been able to present an alternative proposal,
I'm not sure he can.
So my assumption as of today is that the referendum is going to take place on Sunday .
QUEST: Now, Mohamed El-Erian just a short while ago - you may not have heard - but he says he now puts it at 85 percent the chance of Greece
leaving the Euro. He's not a man who is prone to hyperbole but he's extremely experienced.
If he's right, then you're on your way out - I don't mean you personally, I mean Greece in the Eurozone - you're on your way out. Can
you stay in the E.U. if you lose the Eurozone?
MITSOTAKIS: We could but I wouldn't, you know, place my bets on Greece staying with Eurozone just yet. I think everyone is going to be
waiting for the referendum and I think that if the referendum is a resounding yes, a door will be opened to negotiate Greece's position within
the Eurozone.
And this is only what I'm hoping for. This is at least what all the people who showed up today are hoping for and this is what I'll be
campaigning for until Sunday.
QUEST: And finally, just give me a feeling because the viewers who are watching will want to know. Give us the feeling for how difficult it
is for people in Greece at the moment. The banks are closed, the markets are closed, pensions haven't been paid and there's very great possibility
that incomes won't be paid either.
MITSOTAKIS: Well it's pretty bad. The real economy has come to a - to a halt as you can imagine and pensioners don't have access to their
money. A lot of them don't even have ATM cards so it's a pretty desperate situation. Interestingly enough that the first government of the left is
doing most damage to the weakest in Greek society.
QUEST: Sir, thank you for joining us.
MITSOTAKIS: Thank you. Thank you very much.
QUEST: We really appreciate it. Now, that's the view from the yes vote. Earlier we heard from Syriza's MPs - Costas Lapavitsas as to why he
believes Greeks should vote no. He spoke to Christiane Amanpour, putting both sides of the points of view.
(BEGIN VIDEOCLIP)
COSTAS LAPAVITSAS, SYRIZA MEMBER OF PARLIAMENT: Greece has come under enormous pressure during the last several months to accept essentially
bailout conditions which are very similar to the conditions that we'd been through over the last five years that they've destroyed the economy.
We said no, the lenders have insisted. They have not retreated at all and we put the question to the Greek people. The question is do they want
to go to back to policies that have ruined the economy?
(END VIDEOCLIP)
QUEST: Both points of view. Well we need to go further afield to get an idea of what Greece is going to face in the days and weeks ahead and
certainly if there's any idea of trying to start a new currency. The only other country ever to go through something similar is Argentina in 2001.
We'll look at the history and you'll hear from the man who managed Argentina's default. It's comprehensive coverage on "Quest Means Business"
in Athens.
(COMMERCIAL BREAK)
[16:45:36] QUEST: When Greece fails to make its loan payment to the IMF in just - just an hour and 15 minute from now - it could trigger an
eventual default on its entire debt load of $360 billion - that's the ESFS, the IMF, other bilateral country loans.
Now when that - or if that - happens, it will be the biggest ever default by a country in history. Behind that, Argentina. It was in 2002
when Argentina defaulted on $95 billion of debt. It almost seems small beer (ph) by comparison. The Greek default is four times - or would be -
four times larger. And Greece economy is about half the size.
It gives you some idea, some perspective. A month before Argentina defaulted, the government imposed a series of capital controls,
restrictions on cash withdrawals, they closed the banks. It's all sounding eerily familiar. The cajoles couldn't work, they couldn't save Argentina's
economy which then shrank by 2/3rds in a year. Confidence in the government faded, there was chaos in Buenos Aires.
Rioting, a presidential resignation and let us never forget violence which killed nearly 30 people. Guillermo Nielsen was the secretary of
finance and chief negotiator for Argentina when the country was attempting to restructure its debt. He joined me on the line from Buenos Aires and I
asked him what he's heard and what he's learned, what advice he has for the Greeks.
(BEGIN VIDEOCLIP)
GUILLERMO NIELSEN, FORMER ARGENTINE UNDERSECRETARY OF FINANCE: I think, I think that for capital control, they are a bit late. They should
have done it at least eight months ago. I think that February is the turning point in terms of capital flyright (ph). It intensified a great
deal I understand.
So I'm afraid they are late - they are late for that. And it's going to be quite messy, let me tell you, because we in Argentina we had
convertibility, but we had a peso. We didn't have euros that are similar to the euros in other Eurozone countries.
So it's going to be extremely complicated but I think it's feasible, it's feasible.
QUEST: And this idea that events are going to get much tougher before they get better . Reading something that you said, "Life goes on. Greece
will have to get ready to cross the desert for about a year." What do you mean by that?
NIELSEN: I mean that you have to put together a new currency in, you know, three weeks or something like that. And that will require
deliberation and the beneficial effects of deliberation will start showing up only six months later. So you are going to be getting a better, an
improved situation by year end - (inaudible) - at the end of 12 months.
So you know. But they have to be extremely careful on the fiscal side. I think that they should implement - they should prepare themselves
to implement a program that is not going to be that different from what the Troika had requested them.
But this is it. This is it. They should have taken different steps some time ago. Now it's too late. I'm very worried about the level of
populism that the Tsipras government has shown up until now and what Minister Varoufakis has shown. I'm afraid that that's not going to be any
help for the Greek people in the very difficult years - months - ahead.
QUEST: When you look at this, people talk about, `Oh, leave the Euro, get a new currency.' From what you're saying, it is harder, more painful,
more difficult than anyone really believes it's going to be. Is that right?
NIELSEN: It's going to be very painful, it's going to be quite shaky politically, I'm afraid that they will have to be extremely, extremely
careful in the steps they are going to be taking because they are entering an uncharted territory with many, many dangers.
(END VIDEOCLIP)
[16:50:05] QUEST: Very strong words of warning, not advice from a man who's actually been through what Greece is about to face. The country
tonight divided within itself. The mood on the streets of Athens when we return. "Quest Means Business."
(COMMERCIAL BREAK)
(BEGIN VIDEOCLIP)
Female, VIA INTERPRETER: I'm a pensioner and I have a cash card because I need it. However, when they tell you you can only withdraw 60
euros and now we hear it will be 120 euros per week, I don't even want to think about it.
We will not be able to pay our bills and obligations in time because we Greeks have been through a lot. I hope everyone will say yes.
Male, VIA INTERPRETER: We could not go on with our daily business. These 60 euros are not enough to feed the family. The situation is very
bad. I see a glimmer of hope from what I heard this morning.
(END VIDEOCLIP)
QUEST: Now the Greek people continue to stand in line at the various cash machines and ATMs today. They did so in the knowledge that they could
make only minor withdrawals - 60 euros at best. There will be some banks open tomorrow, a 1,000 across the country to pensioners. And they'll be
able to withdraw up to 120 euros for the whole week as you were just hearing.
These are the very people - the pensioners of Greece -- who've faced years of hardship. Around 45 percent of Greek retirees are living below
the poverty line.
Put it into a wider context. The country's experiencing a six-year - six-year - economic depression. There was a brief pause, a moment, a
scintilla of growth. And since the global financial crisis in 2008, the economy has shrunk by a quarter.
The telling result is more than 25 percent is out of work and if you talk about youth unemployment, you're well over 50 percent.
Put all this together of the hardship that is fueling the explosion of tensions that we've seen here in Athens. On Sunday, at the moment it
seems, the referendum will take place on whether the Greeks' view on the new reforms of the country's creditors. This is a country divided as Isa
Soares now reports.
(BEGIN VIDEOCLIP)
ISA SOARES, CNN ANCHOR AND CORRESPONDENT: From high above the battle lines are hard to make out. But walk the streets of Athens, and the
ruptures are easy to spot. This is a city and a nation deeply divided, both politically and ideologically.
In the affluent district of Athens where coffees are sipped endlessly and where money speaks volumes, locals tell me they've never been this
nervous. I meet lawyer Elena in the local square. She tells me her concerns have grown in the last few days following the growing support of
the no campaign.
ELENA, LAWYER: Most of them they believe they want to - they are for Euro. They want to say yes the referendum. However, many young people,
they don't - they think that they don't have anything to lose. So in this - in this argument, with this thought, they might vote for a no.
SOARES: It's this very thought that has many on edge. With a rising number concerned, the rest of the country doesn't quite understand the risk
that a no vote would bring.
Male: Hopefully next Sunday we are going to vote yes because we want to remain in the European Union. That's where we belong.
[16:55:10] SOARES: What I've noticed is that Athenians are really not talking in one voice. So what we're doing, we're going to drive two
kilometers away from this affluent area of Athens and to hear from the people in Kaisariani who are defiantly pushing for a no vote.
Here in this populous neighborhood, the OXI! no campaign is in full swing with posters placed strategically in every corner.
ANNA, NO VOTER INTERPRETED BY SOARES: Anna tells me, "We in this historical area of Kaisariani, we are fighting to get our lives and our
dignity back. So we are finding hope in the fact the public will make their mark on Sunday."
SOARES: This defiance is palpable and understandable. This is after all a symbolic neighborhood of the left. Alexis Tsipras made this his
first stop when he was elected and it seems his rhetoric has shaped this part of Athens.
ANGELOS, ATHENS RESIDENT INTERPRETED BY SOARES: Angelos tells me the best for him and for his country will be to leave the Eurozone for good,
"because we have seen the size of solidarity inside the Eurozone and it's nonexistent," he says.
SOARES: Fighting talk from a deeply-divided country, one that now stands at the edge of an economic precipice. Isa Soares, CNN Athens,
Greece.
(END VIDEOCLIP)
QUEST: And we'll have the "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." What to say when the Eurogroup president is so gravely serious and Mohamed El-Erian says an 85 percent
chance of Greece leaving the Eurozone, then you realize the gravity of the situation.
The precipice has come and gone, Greece goes over the cliff tonight. With no sign of money, no sign of bailout, no sign of support, this country
will be on its own.
There is the referendum still to come with the weekend, but frankly what are they voting upon? It's all one big mess. And that's "Quest Means
Business" tonight. Live from Athens, I'm Richard Quest.
As always, whatever you're up to in the hours ahead, with the markets on tenterhooks, I hope it's profitable.
END
