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Quest Means Business
Crisis Talks on Greece Underway; Frustration Over Lack of Greek Proposals; Eurozone Divided; Greek Turmoil Weighs on European Stocks; Euro Falling; US Markets Stage Late-Session Comeback; Oil Rebounding; 700 Companies Halt Trading on Chinese Markets; Clinton Calls for Allowing Puerto Rico to Use US Bankruptcy Laws; Puerto Rican Debt Crisis
Aired July 07, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:50] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Extraordinary moves on the Dow Jones Industrials, the market goes through a 300-point range during the course of
the trading day. The Dow is up at the closing of business, a gain of more than 100 points, shrugging off what's happening in Greece and elsewhere in
the world on Tuesday, July the 7th.
Tonight, thrashing out a new Greek bailout. Eurozone leaders are due to speak in Brussels anytime now. You'll hear it on this program.
Save yourselves. Finland's finance minister tells me Greece's future is in its own hands.
And suspended in Shanghai. The very rum business of the Chinese companies rushing to escape stock market madness.
I'm Richard Quest, live in the Greek capital, where of course I mean business.
Good evening from Athens. With time short and patience wearing thin, Greece looks for breathing room and is coming up with a plan for, perhaps,
some short-term gain. But at this hour, EU leaders are meeting in the crisis talks where the stakes couldn't be higher.
The Greek government says it's to propose a plan in two parts. First, there's an interim solution that will keep it afloat until the end of the
month after major payment -- a loan repayment of several billion euros to the European Central Bank.
And then a second plan, a long-term plan, that would make the country's debt sustainable. The Greek government says that plan will take
into account the will of the Greek people and the position of the country's creditors.
The new Greek finance minister faced a difficult task of winning over the skeptical finance ministers who make up his creditors. And he stumbled
at the first hurdle: he arrived at the meeting of fin mins without concrete proposals in hand.
Earlier, President Obama had urged Greece and its creditors to find that deal that works for both sides. All the European leaders say the ball
is firmly in Greece's court.
(BEGIN VIDEO CLIP)
FRANCOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): What do we want? For Greece to stay in the eurozone, that's our goal. To reach
that goal, Greece must make some serious, credible proposals. They've already announced them. They must be fleshed out. That's the issue for
tonight.
MARK RUTTE, PRIME MINISTER OF THE NETHERLANDS (through translator): The fact is, if the Greeks don't come up with far-reaching proposals today
or very soon -- because really, time has already run out -- we are prepared to implement difficult measures. We won't be able to help them.
(END VIDEO CLIP)
QUEST: And that is just about where things stand. It is not a threat, it's a promise. Greece is on notice that if the Greek proposals do
not cut the mustard, then Greece is out.
Alex Stubb is the Finnish finance minister and the former prime minister. He's taken a hard line in the negotiations. You've heard him
say time and again it's up to Greece to save itself. So I asked him if he was disappointed that the Greek finance minister didn't reveal his
country's plans.
(BEGIN VIDEOTAPE)
ALEXANDER STUBB, FINNISH FINANCE MINISTER (via telephone): Well, I'm disappointed that nothing came our way, but I'll be happy if we get one
within the next few hours. Because basically, in order for us to take the process forward, we need a proposal from the Greeks. Basically, it's going
to be a request for an additional money from the so-called European Stability Mechanism. We need that in order to get the process going.
QUEST: Getting the process going for a multi-year or medium-term agreement, that is not going to be quick. That requires a study to be done
by the Commission. It's not going to happen in the next week or two.
STUBB: No, you're right, it's a long-term process. Basically, what we need is a mid-term, long-term sustainable, credible, and believable
program. And what happens is that they make the proposal, then the institutions accept it, and then we have to discuss it politically. So, we
are far away from an agreement at this stage. That is absolutely clear.
QUEST: Do you believe that if a proposal is put and a process begins, however it may end, that will be sufficient for the ECB to restart
emergency assistance?
STUBB: Well, that is, of course, completely up to the ECB itself. What we are trying to take care of is basically two things. One is short-
term financing. In order to get that going, we need some kind of a request, then the member states might be able to help. But we're not going
to provide any kind of bridge financing. Time is running out, 20th of July is probably the deadline.
And then, the second issue we're dealing with with Greece is pro in the eurozone, and we're looking at these two things in parallel at the
moment, very much step-by-step.
[16:05:10] QUEST: Step-by-step, but when you went into that meeting, you said you were not in favor of further debt relief. We know that one of
the key demands or requests of the Greek government is some form of debt relief. How much support is there for your position?
STUBB: Very little support. I totally understand that there is a paradox here, and the paradox is that on one hand, the Greek government,
especially, has been talking about debt relief throughout. And on the other hand we, from the eurozone, the creditors, have been calling for
conditionality. And these two positions don't seem to be meeting.
I think if we were even to discuss any kind of debt relief, there has to be conditionality first. We have to be able to trust them.
QUEST: And was the mood in the room better with the new finance minister?
STUBB: Yes, I mean, very amicable, actually. We had a good overview, good Oxford economist, very pleasant and a good overview of what was going
on. So, there was nothing sort of problematic on that front. But what we now need are concrete proposals. That's the key.
QUEST: Finally, are you more optimistic tonight that this can be salvaged, or do you still think the balance is very much on the downside?
STUBB: Well, I'm an eternal optimist, but I'm pretty much putting things at 50-50 at this particular moment. It's very difficult to see
where we take this, but I think we're now approaching a deadline. Things simply need to be solved, and I think they need to be solved by the 20th of
July.
(END VIDEOTAPE)
QUEST: Now, 20th of July, that is the date when money has to be paid to the ECB. If defaulting to the IMF was tricky, defaulting on a loan to
the ECB would be the nuclear equivalent of an option.
Getting a deal won't be easy. The eurogroup is divided into two camps. Alex Stubb represents the side that seems to be unwilling to give
ground, and Greece doesn't have many friends on its own side of the negotiating table.
Who's on which side? France says it will do whatever it takes to keep Greece in the eurozone. Now, the French side is joined by Italy and
Cyprus. They would suffer if Greece exits the eurozone.
Of course, on the other side of the table, Germany's leading with Angela Merkel, and she warned there was no clear basis for negotiation
after the weekend referendum. The chancellor is backed by hardliners: the Netherlands, Finland, and Austria. They are all adamant on this question
of debt relief and conditionality.
Spain, which is seeing growth after years of austerity, warned Greece must keep its commitments. As for the Eastern European countries, Central
European countries, if you like -- Estonia, Latvia, Lithuania -- they say they can't afford to save Greece from a crisis that the country created for
itself.
You start to get an idea, now, of the grave complexities. Gillian Tett is the US managing editor for the "Financial Times." Gillian's with
us from New York. Is it your feeling, Gillian, tonight, that -- I can't get the feeling here whether they're actually really wanting to do a deal
or they're going through the motions before turning the lights off a week or two down the road.
GILLIAN TETT, US MANAGING EDITOR, "FINANCIAL TIMES": Well, I think Alex Stubb said it very well in that right now it does look as if it's 50-
50, and the eurozone countries are very divided.
What's very interesting is that the countries which are most opposed to really cutting Greece any favors are the countries which have been
through tremendous austerity and pain themselves.
Finland feels very strongly about this, because it really underwent tremendous austerity when it suffered its own recession, and it feels that
it emerged more strongly as a result. But it's going to be a very nasty set of negotiations, because there is no easy answer to this right now.
QUEST: Right.
TETT: And what makes it particularly problematic for the ECB and the other eurozone leaders is that if you look at the front page of the FT
tomorrow, we're actually leading not with Greece, but with China. China on eSpark share sharp rise in companies suspending shares.
The world leaders right now are dealing with not just one crisis in Greece, but a second crisis on the other side of the world, too. And that
makes for some very volatile trading.
QUEST: What do you think it takes -- we'll come to China in a second, because it's interesting that the FT's going with China tonight and not
Greece -- but what do you think it takes for Draghi to have the political fig leaf to start lending again emergency liquidity. What will he require?
[16:09:56] TETT: Essentially, three things. Firstly, we have to see Greece make some concessions and indicate that it will actually embrace
some of the austerity measures that have been called for by the rest of the eurozone countries -- not all of them, but some of them.
Secondly, the European leaders need to believe they actually have a government they can work with that has sufficient political support inside
the country to actually go ahead and implement what they promise to do, which has not been the case until now.
But thirdly, I think Draghi would need to know that he actually has the Germans and French behind him, because right now, he's walking a very
difficult high wire act of his own, and unless he feels that he has the Germans and the French behind him, it's going to be very hard for him to
press forward.
QUEST: To China and your lead story tomorrow, Gillian. We're -- in our program this evening, we're going to be talking about this
extraordinary business where so many companies on the exchanges in China are asking for the shares to be suspended. It's not quite the rules of the
game as you and I might understand it.
TETT: Absolutely not. And in some ways, what's happening in Greece, this kind of will they, won't they moment with the world on tender hooks
there is incredibly important. But I fear that actually what's happening in China right now may end up being even more important.
Because we're saying tonight, and I'll show you, is that China on eSpark share, sharp rise in companies suspending shares, 940 -- almost a
thousand companies, now -- have asked for their shares to be suspended. That's a lot of companies.
And what that calls into question is not simply the issue of whether the stock market can continue to rise as it has so dramatically in the last
few months, it really calls into question the whole issue of China's economic miracle and whether it's really founded on an appreciation of
capitalism and the rules of the law as Western investors know, or whether, quite frankly, the whole thing has been some kind of Ponzi scheme.
(LAUGHTER)
QUEST: Gillian Tett putting it as only you can.
TETT: Thank you.
QUEST: Thank you very much for joining us from New York tonight.
What a busy day, and you can get an idea of the turmoil in Brussels that's now reverberating across European stock markets. Germany, France,
and Italy suffering heavy selling. It added to the day's losses of yesterday, down 2 percent, 2.25 in Paris, 1 and -- nearly 2 percent.
Even London, which has managed to robustly put it to one side, 1.5 percent. Resilient in the early sessions, fell later, and the eurogroup
ended.
Now, as for the euro reaction, we're tracking the euro throughout the crisis, and the currency is down significantly over the past ten years, and
it fell after the results of Sunday's referendum was announced.
Climbing back, it's now falling again, but we will keep looking at this. You need to see not only the euro. Look at the results, look at the
movement, and look at the factors that moved the currency.
In China, shareholders are feeling queasy -- Gillian was talking about this -- because of the volatility. Companies are saying no more, and in a
bizarre way that seems quite unusual. They are suspending their shares from the Chinese stock market. We will talk more about this in a moment.
(COMMERCIAL BREAK)
[16:14:58] QUEST: US markets made a last-minute comeback. They shrugged off the economic malaise and uncertainty. Look at the way the day
went, down very sharply and then up 100 points at the end. It's about a 300-point movement throughout the course of the day as it closed, and
that's despite shedding as much 200 earlier.
Oil is also rebounding. Brent Crude is back in the green after suffering its worst one-day fall in some three months, and the oil market,
which saw Brent coming down -- it's in the high 50s, but now it's back up, a gain of 1.25 percent.
The oil rout was fueled by fears that a nuclear deal with Iran could add to the global supply glut. If sanctions are removed, Iran's production
of oil, once again, goes back into the markets.
Alison's with us for more. She joins me from New York. Which -- I'm guessing in the battle between importance of Greece and China, China is
what the market is concerned about.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It is, but we did, however, see the market really move on the headlines about Greece. I think the
twists turns in the red that we saw had everything to do with China, and then it was Greece that helped this comeback at the very end of the trading
day.
I mean, we saw that -- Greece playing a role, just the market swinging, depending on which headline came out about Greece. But then,
yes, even with the rally at the end of the day, China is really front and center. We know that its stock market is in free fall. That's making
investors here nervous. That will continue making investors here nervous until things are buttoned up there. Richard?
QUEST: Alison Kosik at the New York Stock Exchange watching the events.
It is an effort in self preservation. A quarter of all the companies in the Chinese stock market -- a quarter -- have halted trading, saying the
volatility is just too much to stomach. The total losses in China are now 12 times greater than the size of Greece's entire economy, $3.25 trillion
have been wiped off the books since mid-June.
Now, look at the Shanghai Composite, it's fallen more than 25 percent, a quarter in value, in the time period. Andrew Stevens is our Asia-Pacific
editor. He has more on the fall in China and the companies suspending themselves from Hong Kong.
(BEGIN VIDEOTAPE)
ANDREW STEVENS, CNN ASIA-PACIFIC EDITOR: It's an old saying -- if you can't stand the heat, get out of the kitchen. Well, that may be now
applying to a growing number of Chinese companies listed on the Shanghai and Shenzhen stock markets.
According to China's state-owned "Securities Times," more and more companies are asking to have their shares suspended from trading,
apparently, some market analysts say, to protect themselves for the three- week stock market rout that has slashed share prices by an average 30 percent.
At last count, 27 percent of the 2,800 listed companies in Shanghai and Shenzhen, more than one in four, is now suspended from trading. On
Monday night alone, the "Securities Times" said, 100 Chinese companies applied for a trading suspension.
Now, in most mature markets, there has to be a very good reason to suspend a stock -- an imminent takeover, a restructuring, even a criminal
investigation. They're usually the ones given for reasons when trading is halted.
But the reasons given by the Chinese companies are a little different. The "Securities Times" says many companies are asking for their shares to
be suspended because they are, quote, "planning for important matters." As one senior economist said, you just didn't see a surge in trading
suspensions when the markets in the US and Europe were slumping in 2008.
There is an ugly downside to all this. All shareholders are locked in. They can't sell their shares, even if they want to or, more important,
they need to. And in a market where more than 80 percent of all stockholders are small retail investors, falling prices are bad enough, but
without the choice to get out, it's much worse.
Andrew Stevens, CNN, Hong Kong.
(END VIDEOTAPE)
QUEST: Our Asia-Pacific editor, there. At least one analyst predicted all this was going to happen, the bubble would burst. Jamie
Metzl is a senior fellow at the Atlantic Council. Speaking to CNN a few weeks ago, he said a slide in the Chinese markets was absolutely
inevitable. He joins me now from New York.
What has predicated this sudden rush to the door? This sudden -- I mean, bubbles burst when people lose confidence or when there's a shred of
news that shows the emperor's wearing no clothes. What is it in this case?
JAMIE METZL, : Well, I don't know exactly what was the precipitating factor, but it was absolutely clear, as I said on CNN a few weeks ago, that
trees don't grow to the sky.
[16:19:59] At that time, the value -- average valuation of a Chinese company was three times the average valuations of any other stock market in
the world. So, at some point, there was going to be a correction.
What I see as the big problem here isn't that there is a correction. That's quite normal. It went up about 150 percent, it's down 30 percent.
And if the Chinese government hadn't gone nuclear in response, then we'd be saying, well, it's just a correction, and stocks go up and stocks go down.
But what's happening here is the Chinese government is betting its entire -- or, not its entire, but a huge amount of its credibility, on a
certain level of the stock markets, and on valuations that are insane. And so, there's so much government credibility --
QUEST: Right.
METZL: -- that's going into these obviously inflation equity values. And that, I think, is the biggest cause of concern.
QUEST: There's two aspects to this, Jamie, and I think you're right, but there's two aspects to this which prove your point. Firstly, the
allowing of Chinese stock -- companies to suspend. Could you imagine that happening in London or in New York or anywhere like that?
And the second thing is the mere fact that the government is trying to massage the market. I don't remember in -- you know, the normal bromide
from Western political leaders is the market goes up, the market goes down.
METZL: Yes. Forget massage, the government is trying to control the markets. This is a society created by and run by engineers, and they put
an engineering mentality -- they use an engineering mentality to address many of their problems.
And remember, Xi Jinping, a couple of years ago, his big pronouncement was that they were going to use market forces to help reallocate resources
in China --
QUEST: All right.
METZL: -- and China's biggest challenge is the misallocation of resources based on the ultimate misallocation, which is of political power.
And so, rather than allowing the market to correct itself, when the market began to correct, then they jumped in and they said this correction, which
in many cases started out as natural --
QUEST: All right, but --
METZL: -- can't happen.
QUEST: Where's fair value in this market?
METZL: It's hard to know what fair value is, because part of fair value in China is based on a collective faith in the ability of the Chinese
government to live up to what it says it will do, and whether it's future plans or other things.
I don't think there's a natural bottom, but at the end of the day, it seems that the Chinese government is fighting against laws of nature and
laws of gravity. And certainly there is much longer --
QUEST: Right.
METZL: -- to fall than has already happened. And these people, these mom and pops, these 80 percent of retail investors who've been mentioned --
QUEST: Jamie?
METZL: Yes? I'm sorry, Richard.
QUEST: Forgive me, I do need to interrupt you. I would never normally wish to interrupt you, but I do need to say thank you, because
we're just hearing now -- so thank you for joining us, Jamie --
METZL: Yes.
QUEST: -- and forgive me. We are just hearing that the EU summit has ended. The euro summit has ended, a press conference will start soon.
There's no word on whether or not that summit -- what the conclusion is. We're going to be watching very closely in the next 10, 15, 20 minutes.
This is QUEST MEANS BUSINESS, we're live, we're in Athens.
(COMMERCIAL BREAK)
[16:25:02] QUEST: Hillary Clinton is calling on the US government to change the law and allow Puerto Rico to go bankrupt. The territory is an
island, US territory, in the Caribbean. It has more than $70 billion in debt which it can't pay.
It's not a state of the union, although Mrs. Clinton is suggesting the same bankruptcy protection that allows the states to restructure their debt
should be applied there. Puerto Rico narrowly avoided default last week. CNN's Samuel Burke has more from New York, where anger among Puerto Rican
immigrants is high.
(BEGIN VIDEOTAPE)
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT (voice-over): On the streets of upper Manhattan, in the neighborhood called Spanish Harlem, there's
anger in the air over the crisis in Puerto Rico.
CARLOS TRUJILLO, STREET VENDOR: It's not the same situation, lie what's going on in Greece. This is American territory. We're American
citizens. We're not Greece.
BURKE: Puerto Ricans are well-established here. They've been settling in New York for generations, seeking new opportunities. Notable
transplants have included singer Ricky Martin, actors Benicio Del Toro --
(MUSIC - "AMERICA" FROM "WEST SIDE STORY" BY RITA MORENO)
BURKE: -- and Rita Moreno. But few migrations have been as large as this one, so great that in Spanish, they call it "el exodo," the exodus.
More Puerto Ricans now live in the mainland US than in Puerto Rica itself, with central Florida becoming a prime destination.
EDWIN MELENDEZ, DIRECTOR, CENTER FOR PUERTO RICAN STUDIES, HUNTER COLLEGE: We have about 5.1 million Puerto Ricans in the state and less
than 3.5 million in Puerto Rico. It's a huge swim.
BURKE: Larissa and Vanessa Santiago have moved to the mainland from Puerto Rico. Their brother, Kevin, may follow soon. They feared for their
futures in Puerto Rico as unemployment soars to 12.5 percent.
LARISSA SANTIAGO, MOVED TO MAINLAND US FROM PUERTO RICO: I would probably be living with my mother or my parents for support. I want to
grow professionally, economically, and that's not going to happen until the economic status works better.
BURKE: But the decisions have been gut-wrenching.
VANESSA SANTIAGO, MOVED TO MAINLAND US FROM PUERTO RICO:It's hard to leave your country, you have to leave your country, to another different
place, a different language, different culture, to what you really want. But I have to do it. But then, I have all these feelings inside that I'm
definitely coming back.
BURKE: Some Puerto Ricans are already moving back to the island, lured by cheap rent and a spirit of entrepreneurship. Artist Sophia
Maldonado lived in New York for years, and now she sees new opportunity in her homeland.
SOFIA MALDONADO, MOVED BACK TO PUERTO RICO: You are kind of like a freelancer, creative, and are willing to reinvent yourself, there's
definitely a big movement of my generation. The people that are coming back or that are staying see the possibilities of, in a way, rescuing the
country.
BURKE: For the short term, experts predict new waves of Puerto Ricans coming to the mainland, seeking shelter from this Caribbean island's
economic crisis.
Samuel Burke, CNN, New York.
(END VIDEOTAPE)
QUEST: The euro summit is over. Matteo Renzi, the Italian prime minister, has tweeted that there will be another euro summit meeting this
forthcoming Sunday, and he says he hopes it to be the last meeting on Greece. We'll wait and see. We'll talk about that, we're waiting for the
press conference from Brussels. It's QUEST MEANS BUSINESS, we're live in Athens.
[16:28:34] (COMMERCIAL BREAK)
[16:30:54] QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment.
We'll be talking to Athens entrepreneurs who fear for the future of their country and their business. The anti-austerity icon Metve Garinge (ph)
will tell us what Greece's situations means for Italy and the rest of Europe.
But before all of that, this is CNN. And on this network, the news always comes first.
The euro zone summit on Greece has ended in Brussels. We're expecting to hear from the European Commission president Jean-Claude Juncker and the
council president Donald Tusk. Greece has future proposed a temporary solution to get through the month of July as they negotiate with its
European creditors. We understand there will be another European summit this time of all 28 members on Sunday.
Finland's finance minister says there's now only 50-50 chance of solving the Greek crisis. Alex Stubb said today's meetings were amicable, but
there could not be progress without concrete proposals from Greece.
Speaking to the QUEST MEANS BUSINESS, the minister said things were half from certain.
(BEGIN VIDEO CLIP)
ALEXANDER STUBB, FINLAND FINANCE MINISTER: I'm not a certain optimist but I'm pretty much putting things at risk to see if they have this, but it's
taking a moment (ph). It's very difficult to see where we take this, but I think we are now approaching a deadline. Things simply need to be solved
and I think they need to be solve by the 20th of July.
(END VIDEO CLIP)
QUEST: Negotiators in Vienna have extended the deadline for talks on Iran's nuclear program. U.S. State Department says its officials have made
substantial progress in every area. The talks will continue until Friday. A few obstacles remain before a final deal. They came up with ease
sanctions on Iran in exchange for curves on its nuclear program.
So let me remind you of the news so far this evening. The euro summit in Brussels is over. We are waiting news conferences from Chancellor
Angela Merkel; Donald Tusk, the president of the council and Jean-Claude Juncker, of course, is the president of the commission.
All we've heard so far is from Matteo Renzi, the Italian prime minister. He says that there will be a full European summit. This is of
all 28th-member countries including those, for example, like the United Kingdom. David Cameron is expected to be there. That will take place on
Sunday.
Meanwhile, here in Greece, the race is to save the banks. Local economist are warning there's just around $300 million left in the banking
system if that lenders are expected to remain close for the rest of this week. Small businesses are struggling to stay afloat.
CNN's Phil Black spoke to one Greek entrepreneur about her growing desperation.
(BEGIN VIDEOTAPE)
PHIL BLACK, CNN CORRESPONDENT (voice-over): It is a quiet day in the kitchen of the Diasimos Taverna. Lately there have been too many quiet
days. Maria Kourouniotis runs the place like her father before her. The plan has always been for her son to take over.
But now nothing in this family's future is certain. It's not hard to see why. A beautiful location, fresh seafood and so many empty tables.
"What happened with the banks is a catastrophe for us," Maria says.
With banks closed and ATM withdrawals limited to just 60 euros a day, eating out is suddenly an indulgence few can afford.
"Business is down 40 to 50 percent," Maria says. "But our morale is down 100 percent because we don't know what tomorrow will bring."
Maria says those who do come to eat now are ordering much less. Some customers still pay cash but not enough to meet overhead. She's getting by
making IOU arrangements with suppliers. Maria knows it can't last. Everything rests on the Greek government --
(END VIDEOTAPE)
(CROSSTALK)
[16:35:00] QUEST: We're leaving Phil Black for the moment. Let's go to Angela Merkel speaking in Brussels.
(BEGIN VIDEOTAPE)
ANGELA MERKEL, GERMAN CHANCELLOR (via translator): We should protect the euro as a whole. (INAUDIBLE) that the Greek prime minister committed
himself to putting on the table a new motion on receiving money from the ESM. This is to be tomorrow that we will put this in writing on the table.
And we'll then have to -- we'll then have to be discussed whether this constitutes a sufficient basis in order to support the resumption of
negotiations. We expect the Greek government at the very latest to table proposals up by Thursday.
How such an ESM proposal to be carried out? So we said the conditions that we have in place for the ESM program are no longer. This prolonged has
expired. What we now need is a multi-admiral program that goes far beyond the program that we discussed only 10 days ago. This was supposed to run
only until November this year. Then the said program was supposed to take over.
So this basically we now deliberate or discussed the possibility of the third program which will then have open up the option of helping Greece to
go into long sentence sustainable program. The situation, unfortunately, has worsened in the meantime for a significantly (INAUDIBLE) discussions
today.
We from the German side can only take this matter to the German from the stock and table in motion on voting for such a program. Once we have
detailed proposals of the Greek government and on the table, on the medium term and long term program. And this, as these matters, what we expect
from today's Euro group meeting, this wait is expected as we said at the very latest until Thursday.
We said that the heads of state and government will meet again on Sunday. Not only the heads of state and government of the euro zone, but also those
of all the 28 members of the European Union, because this is after all a matter that is of relevance to those states that are not or are not yet
members of the euro zone. Obviously, a euro zone meeting would be possible, but before that the main thing is holding a summit of the 28th on
Sunday.
This shows that there will be -- there are only a few days left for a discussion on what's going to happen in the future. Today, we had a very
serious discussion. A very clear and hands on discussion which basically said that on the one hand, obviously we respect the (INAUDIBLE) of one
country, but that we have 18 other countries where also political decisions are discussed. And that the decision on the euro is a discussion of 19
member states.
So as regards to the euro, we don't have the sovereignty of just one state to contend with but that of 19 states. So we all have only a shared
sovereignty and we all have a shared responsibility. That basically set the tone of today's discussion. It was a very long discussion. One that
is very intensive and I think it very much reflected the seriousness of the situation at hand.
Ms. Hollande (ph), please.
UNIDENTIFIED FEMALE: Madam Chancellor, you said that you have -- you expect a very detailed proposal from Athens until Thursday. In the past,
quite often, there have been papers, there have been proposals, table by essence. Can you give us one or two criteria, what has to be on a paper so
that it fulfils the preconditions as it regards to the structure of the paper that you expect from it.
MERKEL: I don't want to get bogged down into the details of this chance. I just wanted to say that it needs to be more than what is included in the
memo issued. This was a program proposal that would take us until November. Each and everyone was clear. And this was a very generous
proposal which have not, however, brought Greece to a comprehensive part of yet so we need to think a program to take up from that one. And this was
not accepted by Greece.
It was supposed to be such a third program. And the proposals that we now -- after the expiration of the second program that we now expect under the
ESM comprised of admin memo proposals, plus proposals that go further than that. It has to go further than that. So we will not expect a very, very
detailed program in the sense of South Left agreement.
[16:40:00] But we have to put down the necessary cornerstones and we also have to insist on prior actions so as to pave the way for negotiations, on
opening up these negotiations for new ESM program. And the overall opinion was that further Greek referendum, the prime minister's hand -- the Greek
prime minister's hand for negotiation may have been strengthen, but the freedom of maneuver of the 18 others has not been enhanced, rather it has
been limited. So our expectations, as a consequence, are now much more clear cut.
Mr. Dobbs (ph), please.
(END VIDEOTAPE)
QUEST: Chancellor Angela Merkel continuing to take questions in Brussels this evening. But looking at what she said, she has described
today's talks, the Euro group meeting, the Euro summit, the talks as candid and intense.
She said that Athens had said it will bring forward its full proposals and she said this must happened, must be brought forward by Thursday.
But, and this is the big one, the chancellor made it clear that the terms that were on offer just two weeks ago are no longer there. That deal
expired. And she said any new terms that Greece brings forward must go much further, as the word she put it. There needs to be a long,
sustainable program. She reminded people that we're just a few days left.
And then on this issue that the Greek referendum has somehow involve -- and/or given the Greek prime minister a mandate, the chancellor reminded to
actually -- it said, limited the other 18 in the freedom of movement that they had. And she said we have to respect the fact that although Athens
has come to it with one particular point of view, there are 18 other countries, also democratic countries, that have their views.
Finally, there is to be a full European Summit on Sunday. Not just of the euro zone countries. The whole lot. All 28 will be meeting on Sunday,
which proves to be an extraordinary development. They're going to decide what to do. But the ball remains in Athens' courts tonight, according to
the German chancellor. It is up to Athens to produce the document with the proposals by Thursday.
It's QUEST MEANS BUSINESS and we're live in Athens.
(COMMERCIAL BREAK)
QUEST: Greek finance minister Euclid Tsakalotos has given us accidentally a small window into his negotiating plan in Brussels. Take a look at this.
It seems an innocuous picture of him posing with the Eurogroup president Jeroen Dijsselbloem. It was a snap before they entered the high-stakes
meeting of prime ministers.
But you can see the note on his left hand are visible and some phrases like "No triumphalism" and message to the people. This is not the first time a
prime minister has been quote out by their note, but you won't mistake that mistake again.
Now to the business scope of what's happening. I'm joined by Leonidas Pounikas. He's the owner of the Rockwell Homeware store.
A hundred and fifty years, your company has been in business and now there is trouble.
Tell me what's happening with your business.
LEONIDAS POUNIKAS, OWNER, ROCKWELL HOMEWARE: The biggest problem that we fight at the moment is that we don't have access in our account in the
banks. This means that we are a company, we import most of the products of the Europe especially, and we don't have access on our money to make
imports and to support customers for the limited products that we are asking now.
QUEST: So people are coming and they are buying your products.
POUNIKAS: Not so much. We've done that one week before or two weeks before.
QUEST: Really?
POUNIKAS: Yes, because there is limited withdraw possibilities of them with 60 or 50 Euros so you save with 60 Euros or with less money that you
save.
QUEST: Are you still able to take credit cards? Or debit cards?
POUNIKAS: We are obliged from the law to get credit cards. But this is also problem for us, because, as I told you before, we don't have access on
our accounts. We can get credit cards, but we can't get our money from the accounts to pay for input or for their --
QUEST: Right. So if somebody pay for something with a credit card, you don't get the money because the bank accounts are all closed.
POUNIKAS: Yes. Yes. They are really close and we can't have the access. This is really a problem, not only for imports even for their running cost.
This is unbelievable. It's strangled us, everyday. We have employees.
QUEST: How many employees do you have?
POUNIKAS: Two employees. Just two.
QUEST: So you have, what -- you say just two but that's -- you still got to pay them.
POUNIKAS: Yes. In my mind, it's -- during next week, to see how we can manage with employees. The new hours of running our shops.
QUEST: I must interrupt you, sir. We have the president of the European commissioner speaking now.
(BEGIN VIDEOTAPE)
DONALD TUSK, PRESIDENT, EUROPEAN COUNCIL: Good evening. I will now read what we agreed after tonight's Euro Summit.
Point one, we met tonight to discuss the serious situation in Greece. We noted that the euro zone authorities stand ready to do whatever is
necessary to ensure the financial stability of the euro area as a whole.
Point two, following the Greek referendum, Prime Minister Tsipras committed to present a new request for a program within the framework set by the ESM
Treaty, including strict policy conditionality
Point three, we agreed to urgently examine whether it is possible to establish a basis for finding an agreement that respects existing
commitments and our common rules.
Point four, the Greek government will on Thursday 9th of July at the latest set out in detail its proposals for a comprehensive and specific reform
agenda for assessment by the three Institutions to be presented to the Euro Group.
And point five, the Heads of State or Government will meet on Sunday, 12th of July.
And let me add a few words from my own perspective.
All sides of the negotiations share the responsibility for the current status quo. That is why today I called on all leaders to try to find
consensus, which will be our common success, with no losers or winners. If this does not happen it will mean the end of the negotiations with all the
possible consequences, including the worst-case scenario, where all of us will lose.
Our inability to find agreement may lead to the bankruptcy of Greece and the insolvency of its banking system. And for sure, it will be most
painful for the Greek people.
I have no doubt that this will affect all Europe also in the geopolitical sense. If someone has any illusion that it will not be so, they are naive.
[16:50:03] The stark reality is that we have only five days left to find the ultimate agreement. Until now, I have avoided talking about deadlines.
But tonight I have to say loud and clear that the final deadline ends this week. All of us are responsible for the crisis and all of us have a
responsibility to resolve it.
UNIDENTIFIED MALE: Thank you.
Now to the president of the European Commission, Jean-Claude Juncker.
JEAN-CLAUDE JUNCKER, PRESIDENT, EUROPEAN COMMISSION (via translator): Ladies and gentleman, good evening.
(CROSSTALK)
Today, we've had a meeting (INAUDIBLE) in council had said.
I would like the Greeks to present by Friday morning the latest, a full comprehensive solution. They are not in the position to do that today
before and after referendum. We were told on the basis of a Greek and European proposal to conclude an agreement this evening. This evening, we
have not had an agreement.
I think it was on Friday that I said we agreed no to a question, which was no longer on the table. Which means that the Greek negotiating position
would be weakened a bit, would very much weakened this evening. And so I hope the latest by Friday morning, Greek friends will present conclusive
proposals. And then by Sunday with this interim step on Friday what's going to happen, I will exclude no hypothesis.
TUSK: I'm now on the floor for your question. Please state your name and the media. We will present before asking the question. I see a few hands.
Let's start there.
Mr. Gentleman in the middle.
TOM NUTTALL, "THE ECONOMIST": Thank you. Tom Nuttall from "The Economist."
The summit on Sunday, Chancellor Merkel said this will involve the 28 heads of government from across the European Union. Why would this be a EU
summit rather than a Euro Summit?
TUSK: In fact, we decided that we need two formats on Sunday's summit. I mean, the whole group, the 28 members, so maybe one hour for
members from the Euro zone.
And the situation is really critical. And, unfortunately, we can't exclude black scenario. I mean no agreement until Sunday. And it means, of
course, that we need to discuss also the consequences for the whole European Union. Not only for the euro zone.
And, of course, for us, it's also very important to know the European, for example, about possible humanitarian actions for Greece if it is
necessary. I have no doubt that this might be the most critical moment in our history. I mean, EU zero zone. And this is why I have no doubt that
this format, I mean, the 28 member states on Sunday, on the table, is absolutely justified.
JUNCKER: And to think that the question we are talking about is concerning the 28-member states. You have to know, you know it or you
don't know it that the situation is affecting Bulgaria, Romania and others. So it will be unfair to those who are not member, in a few areas, to
exclude them from the debate that we are having amongst member states of the EU area.
The Commission is prepared for everything. We have a Grexit scenario prepared in detail. We have a scenario as far as humanitarian aid is
concerned. And we have -- and that's a scenario I most prefer -- a scenario on how to deal with the problem now, keeping Greece as a member of
the euro area. I'm strongly against Grexit, but I can't prevent it if the Greek government is not doing what we are expecting the Greek government to
do; respecting the dignity of the Greek people.
I'm strongly rejecting all these accusations which were thrown to the public during the referendum campaign; that we are not respecting the
dignity of the Greek people, that we are terrorists -- I don't like this word.
Who are they? And who do they think I am? I am strongly in favour of keeping Greece in the Euro area, but now the Greek government, and the
Greek government was not capable of doing this tonight, has to tell us where they are heading at. The last moment will be Friday morning.
TUSK: Thank you. We'll take one more question. I see the gentleman there, on your left, the back seat.
UNIDENTIFIED MALE: (INAUDIBLE) for the Espana's El Economista.
I have two questions. First, given that the Greek government have to pay 3.5 billion on the 20th of July. What options are you considering? Do you
think that all legislative process will conclude by then or are you considering some more option like a bridge loan?
And the second question, will it be part of the deal in any mentioned possible renegotiation of the Greek public debt or this is totally out of
the table as far as part of this package.
JUNCKER: I was telling the Greek government, (INAUDIBLE) although he was not telling his people that he knew it that we are ready to come back to
debt-related issues in October, after having heard the commitments for the next, coming months and years. So this is not an issue for now it could be
and I hope it will be an issue in October.
As far as the commitment of Greece concerning this and others, there is concern it will depend on the proposals that we governed. We'll make a
claim this Friday morning.
TUSK: That's it. Enlighten us on the earliest time for both questions tomorrow morning in the European parliament. We'll conclude the press
conference here. I thank you very much for your attendance. Good night.
JUNCKER: Good night.
(END VIDEOTAPE)
QUEST: An extraordinary press conference. Late night press conference in Brussels. You just heard that Donald Tusk, the president of the European
Council saying that this is a critical moment. He said, he's not a man given to deadlines but now he says, for the first time, there is a real
deadline. A real, live deadline and it is this weekend, when Greece has to come with proposals for a full proposal by Friday.
And then you had Jean-Claude Juncker, the president of the commission. He is testy, he is annoyed and he is clearly offended at the way Mr.
Varoufakis called them terrorist for the way they had behave.
Juncker saying, who does he think he is? Calling us a terrorist and saying that the commission is ready for a "Grexit."
Listen to the serious tone of Donald Tusk.
(BEGIN VIDEO CLIP)
TUSK: The stark reality is that we have only five days left to find the ultimate agreement. Until now, I have avoided talking about deadlines.
But tonight I have to say loud and clear that the final deadline ends this week. All of us are responsible for the crisis and all of us have a
responsibility to resolve it.
(END VIDEO CLIP)
QUEST: Donald Tusk of the Council. Jean-Claude Juncker of the Commission.
To recap, a full summit of all 28 members of the European Union will be held this forthcoming Sunday in Brussels.
By Friday morning, the last deadline, Greece has to provide full proposals. It's been made clear to Greece that there are no more
deadlines. The time has run out. The end is this weekend.
And that's QUEST MEANS BUSINESS. I'm Richard quest in Athens. I wish you all a better good evening.
END
