Germany has dismissed a last-ditch compromise plan from Greece that bowed to some key demands of its creditors.

In an address to the Bundestag, the German chancellor, Angela Merkel, reiterated her stance that there was no point in having talks with the government of Alexis Tsipras before a referendum in Greece on an EU bailout plan.

“The door to talks with the Greek government has always been, and remains, open,” she said, but added that talks could not take place before Sunday’s poll.

Her finance minister, Wolfgang Schäuble, was fiercely critical of Tsipras, saying: “Greece is in a difficult situation, but purely because of the behaviour of the Greek government … Seeking the blame outside Greece might be helpful in Greece, but it has nothing to do with reality.

“The Greek government is not doing its people any favours at all if it keeps making completely false statements. Nobody else is to blame for their situation.”

He added: “It’s all very sad. We’re in a much harder situation than before. It was always difficult. But it has just kept getting more and more difficult since January [when Tsipras took over].”

The intervention closed the door on the latest 11th-hour attempt from Tsipras to extend Greece’s bailout, which expired on Tuesday, leaving the country unable to pay its debts.

As the Pope urged the faithful to pray for the Greek people, doubts about the legitimacy of Sunday’s referendum came to the fore. The Council of Europe, the human rights body independent of the EU, warned the vote could fall short of international standards if it went ahead on Sunday.

The decision to hold a vote at short notice with less than two weeks to debate the issues was “a major problem” and the question was not “very clear” the secretary-general of the Council of Europe Thorbjorn Jagland told the Associated Press.

The jargon-heavy question inviting Greeks to decide whether to support texts on “reforms for the completion of the current programme and beyond” and the “preliminary debt sustainability analysis for Greece” has been widely criticised. Speculation mounted that the Tsipras government would be forced to call off the referendum. “We don’t know if the Greek government is going to hold a referendum or not and whether it is for or against it,” said Schäuble.

But speaking live on Greek television Tsipras said the referendum would go ahead: “They say I have a supposed plan that if you vote no I will take you out of Europe, they are wrong.”

Greece is insolvent and almost bankrupt after five years of €240bn (£170bn) in European bailouts dried up at the stroke of midnight and it became the first EU member to default on its creditors. On Tuesday, Greece missed a deadline to make a €1.5bn (£1.1bn) payment to the International Monetary Fund, dealing a blow to a Europe committed to the irreversibility of its 16-year-old single currency.

Shortly before it slid into default, Greece wrote to its creditors to elaborate on an earlier request for a two-year €29bn loan from the eurozone’s €500bn crisis fund. The Tsipras government indicated it was ready to accept a large part of its creditors’ demands, but asked for concessions on VAT reform and pensions.

Pensioners queue outside Greece’s national bank in Athens on Wednesday to collect their retirement cheques Guardian

Specifically, Tsipras asked for a 30% discount on VAT for Greek islands, as well as a slower phase out of the “solidarity grant” for poorer pensioners. But he was ready to sign up to long-sought reforms of Greece’s product markets – effectively tearing up hundreds of rules that hinder competition in the tourism and retail industries.

“Our amendments are concrete and they fully respect the the robustness and the credibility of the design of the overall programme,” said the letter, addressed to the heads of the European commission, the International Monetary Fund and the European Central Bank.

Eurozone finance ministers will discuss the proposals at 5.30pm (4.30pm BST/6.30pm Athens), but had not been expected to re-open talks with Greek government.

As pensioners across Greece queued outside banks, the Greek government was forced to deny it had raised the white flag to its creditors. “Reports that say the Greek government has fully accepted the institutions’ proposal do not stand,” the government said.

“The new proposal was an attempt to find a mutually beneficial agreement that not only gave emphasis to growth but making the country’s monumental debt load viable,” it added.

Greece is still waiting to hear whether it will be granted emergency aid from the European Central Bank, as the country scrambles to pay wages and pensions without the financial lifeline of an EU bailout.

The ECB has poured €89bn into the Greek financial system in recent months to keep banks afloat. The Greek government will be waiting to hear whether the credit line will be extended when the ECB’s decision-making governing council meets later on Wednesday in Frankfurt, Germany.



A weekend request from Athens to extend emergency liquidity funding by €6bn was turned down by the ECB. Some analysts think the central bank may prefer to do nothing rather than risk charges of political interference.

A pro-EU rally in front of the parliament building in Athens. Photograph: Nicolas Koutsokostas/Demotix/Corbis

In the hastily organised referendum that triggered the breakdown of talks, Greeks are being asked to vote on creditors’ bailout terms that are no longer on the table. Athens is campaigning for a no vote, while eurozone leaders have insisted the choice is between staying in the euro or reverting to the drachma.



A poll published on Wednesday showed the lead for the no side narrowed after capital controls were introduced at the weekend.

The ProRata Institute poll, published in the Efimerida ton Syntatkton newspaper, and reported by Reuters, showed 54% of those planning to vote would oppose the bailout against 33% in favour. But among those polled after the introduction of capital controls, only 46% planned to vote no.

The strongest support for a no vote comes from voters for the ruling hard-left Syriza party (77%), the far-right Golden Dawn (80%) and the communists (57%). In contrast, 65% of people who support the the traditional parties of the centre-right and centre-left, New Democracy and Pasok, plan to vote yes, as do 68% of voters supporting the centrist To Potami faction.

Pope Francis has urged the Catholic faithful to pray for the Greek people. Photograph: G Ciccia/Pacific/Barcroft

As Pope Francis on Wednesday urged the faithful to pray for the Greek people, doubts about the legitimacy of referendum came to the fore. The Council of Europe, the human rights body independent of the EU, warned the vote could fall short of international standards if it went ahead on Sunday.



The decision to hold a vote at short notice with less than two weeks’ to debate the issues was “a major problem” and the questions were not “very clear”, its secretary-general, Thorbjørn Jagland, told the Associated Press.

The wordy question inviting Greeks to decide whether to support “reforms for the completion of the current programme and beyond” and the “preliminary debt sustainability analysis for Greece” have been widely criticised. Speculation mounted that the Tsipras government would be forced to call off the referendum.

“We don’t know if the Greek government is going to hold a referendum or not and whether it is for or against it,” said Schäuble.

On a day of feverish rumours and hectic telephone diplomacy, eurozone finance ministers decided that a last-ditch offer from Athens was too little, too late. With less than nine hours to go before Greece’s financial lifeline vanished, the Tispras government called for a two-year loan from the eurozone totalling €29.1bn, debt relief, as well as a temporary extension of its bailout to avoid missing the IMF payment.

At a last-minute meeting of eurozone finance ministers, the Greek finance minister, Yanis Varoufakis, offered to cancel Sunday’s referendum if the eurogroup agreed to the terms.

During Tuesday evening’s conference call, eurozone ministers decided there was not enough time to ratify the Greek plan in the Athens parliament or the German Bundestag. They also felt that the numbers no longer made sense because the Greek economy had deteriorated further since the imposition of capital controls.

The collapse of talks means Greece has lost not only a €7.2bn tranche of bailout funds, but €10.9bn that could have been used to recapitalise its cash-starved banks.



Being on the IMF’s list of countries “in arrears” – along with Sudan, Somalia and Zimbabwe – means Greece also loses the €16.6bn it could have got from the fund by March 2016 if it completed its bailout.

Greece needs to find about €9.3bn to pay debts falling due to the IMF, the ECB and private creditors over the summer, but this sum does not include the bill for public sector wages and pensions. The next big milestone is a €3.5bn debt repayment to the ECB on 20 July.