Read more The Greek economy is dying, dying before the eyes of its people. A credit squeeze that began with the imposition of capital controls has, eight days on, assumed the terrifying spectre of cash reserves drying up. In less than a week, banknotes of €5, €10 and €20 have become almost extinct; so, too, have €1 coins. “There are a lot of us out there now walking the streets in tears,” said Papaconstantinou. “We just can’t believe that at this stage of our lives this is what we have come to.”
The restrictions, enforced to prevent a collapse of the banking system, were meant to end along with the closure of Greek banks on Tuesday. But at 7pm on Monday, barely 24 hours after the nation rebuffed the idea of further austerity in a referendum that has sent shockwaves through Europe, the Greek Bank Association announced that neither would happen. The cap on ATM withdrawals – a €60 limit reduced to €50 because of smaller denominations running out – would also remain.
0:00/ 0:00Embed Facebook Twitter Pinterest People line up at an ATM machine outside a bank in Athens today. Photograph: Milos Bicanski/Getty Images “Our economy is slowly dying, it is in intensive care,” the economist Dimitris Athanasopoulos told SKAI TV amid fears that Greece was now heading for a fully fledged banking crisis. “On every level it is sub-functioning.”
AdvertisementFrom the flower markets of Thessaloniki to the beach bars of Crete, the effects, are being felt. “We’ve seen a huge drop [in trade] and because money is so scarce, credit cards are almost always being used,” said Dimitris Vgengopoulos, cap on head, smile to the ready as he served customers in Meliartos, a pie shop within view of the Acropolis. “The bill might be €1 in total but they still use their cards.”
The dramatic drop in consumption has brought production to a halt. An inability to source supplies because of the ban on bank transfers has had a devastating effect on imports. Factories have shut, shops have closed and companies are increasingly electing to put staff on enforced leave.
Issuing a dramatic cri de coeur, the head of the National Confederation of Hellenic Commerce implored the prime minister, Alexis Tsipras, to “save Greece”. As the umbrella organisation representing some 280,000 small- and medium-sized businesses, the confederation has been especially hard hit by the controls.
Greece debt crisis: ECB tightens screw ahead of emergency eurozone summit - as it happened The leaders of France and Germany say the door is still open to Greece, as banks are shuttered for two more days and a new finance minister sworn in
Read more “The damage that has occurred with the closure of banks is incalculable,” wrote Vasilis Korkidis in a letter released on Monday.
He appealed for the leftist-led government to agree to a solution that would stave off insolvency in the form of a financial lifeline from the European Union and the International Monetary Fund.
“The economy is sinking, as one Greek to another, I am sending you a heartfelt message of anguish,” he wrote. “Ignore the voices in your party … respect the sacrifices of the Greek people … and at all costs save the country from bankruptcy.”
Time is now of the essence. If banks collapse, the economy goes with them. On Friday, three days before his resignation, the country’s flamboyant finance minister, Yanis Varoufakis, acknowledged that “paper money” would start to be a problem as of this week. Many worry that with credit card overload, the system could crash.
“A preliminary agreement really needs to be signed in the next two to three days,” said Nikos Vettas, general director of the Foundation of Economic and Industrial Research. “If it is not signed, the cash will run out because the ECB [European Central Bank] won’t be able to keep up emergency liquidity assistance. People have been very calm, very civilised, but if they go to the supermarket and cannot find food to put on the table for their families the likelihood is they will become less so.”
Panic buying has already caused shortages in drugs and foodstuffs nationwide, prompting Greeks to rush to buy up staple products.
“I’ve stocked up on coffee and pulses and rice, batteries and soap,” said Papaconstantinou. “After the no vote everyone I know is fearful of the worst; euro exit now looks so possible.”
Pharmacies in central Athens on Monday reported shortages in drugs, including cancer medication.
Growing numbers now speak of survival instincts creating a “siege mentality”.
The tourist industry – Greece’s biggest foreign exchange earner, bringing in more than €30bn a year – has experienced cancellations and a large drop in last-minute bookings. In a country suffering from record levels of unemployment, the sector is vital for jobs, employing one in five over the summer months.
“This time last year we had around 120,000 last-minute bookings a day. Now, with all this, we are down to around 70,000,” said Xenophon Petropoulos at the Greek Tourism Confederation. “As soon as there is an agreement it will turn around but right now there’s concern.”
Hoteliers are not taking any chances, with many of them stockpiling too.
“It is like being in a war without weapons,” sighed Alex Aggelopoulos, who runs the Aldemar resort, a chain of hotels in Crete, Rhodes and the Peloponnese. “We’ve stocked up on meat in particular as 70% of it comes from abroad, and food and beverages,” he said. “We’re keeping our suppliers happy with cash. We’re not taking any chances.”