ATHENS—At an automated teller machine underneath the Acropolis,
Angeliki Andreaki clutched her debit card with both hands. She pays
her bills in cash, and €330 in rent and €39 in telephone bills were
due Wednesday.
"Tsipras has turned this country into North Korea," the
83-year-old Ms. Andreaki said Tuesday, shaking her head about
Greece's prime minister, Alexis Tsipras. "I can't believe at this
age I have to line up to get rationed cash."
She withdrew as much as she could—just €60 ($66)—and went
straight to pay the phone company. She said she would have to come
back for five more days to get enough cash for the rent.
This is everyday life in Greece since it shut down its banking
system and imposed controls to prevent money from flooding out of
the country.
The freezing of Greece's banking system is the most dramatic
moment of the country's five-year debt crisis—and perhaps its most
pivotal. Since Monday, Greeks can get only €60 a day at cash
machines and can't transfer money abroad.
As a result, Greece's battered economy is getting a final
squeeze. It might never be able to return fully to the euro it
adopted more than a decade ago, needing to print drachmas that
become the main means of buying and selling.
How long the remaining cash lasts and how unsettled Greeks
become will be big factors in Sunday's referendum on creditors'
demands for more austerity in exchange for more bailout funds. The
tighter the squeeze, the more Greeks might vote "yes" to reconcile
with creditors, analysts say.
As of Wednesday, Greece's banking system had about €1 billion in
cash left, according to a person familiar with the situation. Even
with the €60-a-day limit on ATM withdrawals from Greek's closed
banks, "it's a matter of a few days" until the money runs out, this
person said.
By Wednesday, many ATMs in central Athens had constant lines of
people waiting to withdraw their daily limit. The crunch has
suffused the economy. Merchants report lower spending. Wholesalers
can't pay for supplies. Importers' foreign counterparts won't
trade.
Airline Ryanair Holdings PLC, which flies to Athens,
Thessaloniki and other Greek cities said Tuesday it would accept
cash for tickets at airports because Greek customers have had
trouble paying with debit cards. Ryanair is based in Ireland, and
electronic payments abroad are prohibited.
"The worst nightmare as far as the business community is
concerned has come true," said Constantine Michalos, the president
of the Athens Chamber of Commerce and Industry.
Mr. Michalos also has a food wholesaling business, and 65% of
his product line is imported. As of this week, his foreign
suppliers aren't sending any more, leaving him with about 20 days
of remaining inventory. "I have the ability and necessary funds in
my bank account to import," he said. "I am not allowed to make an
electronic transfer."
Greece's cash crunch hit small merchants first. They are less
able to get credit from their suppliers, especially those dealing
in perishable products that are continually imported. Christos
Georgiopoulos owns a gourmet supermarket in Plaka, a picturesque
Athens neighborhood frequented by tourists. He sells Champagne and
Russian crab legs.
Nobody is buying. "I haven't had a single customer in two days,"
he said Wednesday. He is shutting down his shop and says he doesn't
know when he will reopen. He gave some crab legs to his workers and
is taking some home. "I haven't paid my staff and don't know if and
when I will," he added.
Marie Palandjian-Raxevsky, marketing director at Mini Raxevksy,
a Greek children's clothing brand, depends on Google Inc.
advertisements to generate sales from consumers in Greece and
elsewhere.
Late Tuesday night, she got an email saying her Greek corporate
credit card, which pays for the ads, was declined. "Now our
campaign has completely disappeared," she said.
Who has cash and who doesn't is often arbitrary. Aspasia
Kourana, an 80-year-old retiree, was shopping Tuesday at one of
Athens's many open-air fruit and vegetable markets, a staple in
neighborhood life here known as laiki.
She got her monthly pension of €600 last Thursday. Her daughter
withdrew it all the next day.
By Monday, Ms. Kourana's daughter and son-in-law couldn't get
more than €60 of their respective salaries out of the bank. "We'll
use my €600 pension for the next few days," Ms. Kourana said. "I
might even get some cherries for my grandson. He loves them."
With bank branches closed, retirees who don't have ATM cards
were frozen out entirely at the start of this week. On Wednesday,
the government let them into some banks. In the morning, pensioners
filed in to the National Bank of Greece's neoclassical building in
central Athens. A man at the entrance handed out tickets and turned
away other customers. A sign said retirees could take no more than
€120.
Next door at a branch of Alpha Bank, retirees were split into
three groups by the first letter of their last names. The first
group was told it could withdraw money Wednesday. Those whose last
names start with Greek letters nu to omega will have to wait until
Friday.
The capital controls don't restrict transactions inside Greece,
so salaries are mostly being paid as usual. Except for the
€60-a-day cash withdrawal limit, though, workers can only spend
their paychecks electronically, shuffling the money around the
paralyzed banking system like a hot potato.
Cash is king. "Now you have almost every cardholder going to the
ATM every day," said Stefanos Kotronakis of payment-processing
provider ACI Worldwide in Athens, which operates systems that drive
ATMs. "Cash has a higher value now."
Ellie Tzortzi, a partner at a Vienna-based digital-design and
market research firm, is flying to Athens this weekend to pay her
employees here in cash. "The last time I traveled with a wad of
cash to pay someone's salary was 10 years ago in Kosovo," she
said.
Back at the market, Anna Diamantidi was putting a few eggplants
on the scales. Ms. Diamantidi, 50, has been selling her vegetables
and eggs at the same spot for the last 20 years. "My stuff is
fresh. If I don't sell, it will rot," she said. "It would be a
sin."
If Greek banks stay closed next week, she'll just give her
produce away, she says.
That is almost a certainty. Greece's banks are in dire straits.
Their cash cushion is minimal, and they have been unable for months
to borrow money on international markets. When depositors want to
withdraw cash,--as they have in droves since the beginning of the
year, --Greek banks have to turn to the European Central Bank for
emergency lending.
Last Sunday, the ECB froze that lifeline. The central bank is
highly unlikely to restart it without a comprehensive agreement
between Greece and its European creditors. Germany has made plain
it wouldn't even talk about such a deal until after Sunday's
referendum.
If the referendum goes in favor of a deal, Mr. Tsipras, who has
campaigned for a "no" vote, would almost certainly resign as prime
minister. Forming a new government and negotiating a deal would
take time. A "no" vote would leave Greece and Europe even further
apart.
For now, the pain caused by capital controls is partly mitigated
by the large quantity of cash in circulation--in wallets and stowed
under mattresses.
Greeks have been draining deposits from their banks for months.
The Bank of Greece had issued around €45 billion in bank notes, or
€18 billion more than its normal allocation, according to
central-bank data as of the end of May.
It isn't clear how much of that money remains in the country. It
is only a temporary balm because Greece's goods are steadily being
consumed, said Mr. Michalos, president of the Athens Chamber of
Commerce and Industry.
"You cannot renew the stocks," he said. "In one week, two weeks,
three weeks, it will be finished."
Costas Paris and Robert Wall contributed to this article.
Write to Matina Stevis at matina.stevis@wsj.com and Charles
Forelle at charles.forelle@wsj.com
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