Summer weekends in Greece aren’t usually known for tense, high-stakes drama. But in the last two days, a breakdown in negotiations between the country and its European creditors indicated that the country’s long-simmering economic crisis is approaching a breaking point.
The circus began on Saturday, when Prime Minister Alexis Tsipras announced plans for a July 5 popular referendum on whether Greece would accept the bailout terms imposed by the Europeans. Stunned by the unexpected decision, the European “troika”—referring to the IMF, European Central Bank, and European Commission—withdrew from negotiations and said that they would not release any more bailout funds to Greek banks. In response, many Greek people spent the weekend withdrawing their money, accelerating a process that, since last November, has reduced private sector deposits in the country by €30 billion. According to Reuters, bank withdrawals were so severe that one-third of all Greek ATM machines ran out of cash at one point or another during the weekend. In an attempt to halt the problem, Tsipras announced on Sunday that all banks would be closed the following day and established capital controls to limit how much money Greeks can take out of the country.
Meanwhile, on Tuesday the Greek government is due to pay the IMF €1.7 billion as part of its debt repayment package. This is a payment Greece can’t afford to make—except, of course, if it can borrow money from a European Central Bank that doesn’t want to lend it. Absent an agreement between Tsipras and Greece’s European creditors in the next 48 hours, Athens will be facing a painful Argentinian-style bailout.