TIME Egypt

Egypt State Prosecutor Dies After Cairo Bomb Attack

Hisham Barakat
Anadolu Agency — Getty Images Members of the Egyptian security services inspect the scene of a bombing targeting the convoy of the Egyptian Prosecutor General Hisham Barakat, in a northern suburb of Heliopolis, Cairo, on June 29, 2015.

Hisham Barakat is first top official to be assassinated since President Morsi's ouster in 2013

CAIRO (AP) — Egypt’s official news agency says the country’s state prosecutor has died of wounds sustained in a bomb attack on his convoy in a Cairo suburb.

MENA says the 65-year-old Hisham Barakat died in a Cairo hospital on Monday after undergoing a critical surgery.

He is the first top Egyptian official to be assassinated since the ouster of Islamist President Mohammed Morsi two years ago.

Hours earlier, a strong explosion had ripped through Barakat’s convoy in the busy upscale eastern suburb of Heliopolis as he was driving to his office in the downtown.

The attack came as Egyptian security forces were already on high alert on the eve of the second anniversary of massive anti-Islamist demonstrations that paved the way, days later, for the military’s ouster of Morsi.

TIME

Joseph Stiglitz to Greece’s Creditors: Abandon Austerity Or Face Global Fallout

Nobel laureate tells TIME that the institutions and countries that have enforced cost-cutting on Greece "have criminal responsibility"

A few years ago, when Greece was still at the start of its slide into an economic depression, the Nobel prize-winning economist Joseph Stiglitz remembers discussing the crisis with Greek officials. What they wanted was a stimulus package to boost growth and create jobs, and Stiglitz, who had just produced an influential report for the United Nations on how to deal with the global financial crisis, agreed that this would be the best way forward. Instead, Greece’s foreign creditors imposed a strict program of austerity. The Greek economy has shrunk by about 25% since 2010. The cost-cutting was an enormous mistake, Stiglitz says, and it’s time for the creditors to admit it.

“They have criminal responsibility,” he says of the so-called troika of financial institutions that bailed out the Greek economy in 2010, namely the International Monetary Fund, the European Commission and the European Central Bank. “It’s a kind of criminal responsibility for causing a major recession,” Stiglitz tells TIME in a phone interview.

Along with a growing number of the world’s most influential economists, Stiglitz has begun to urge the troika to forgive Greece’s debt – estimated to be worth close to $300 billion in bailouts – and to offer the stimulus money that two successive Greek governments have been requesting.

Failure to do so, Stiglitz argues, would not only worsen the recession in Greece – already deeper and more prolonged than the Great Depression in the U.S. – it would also wreck the credibility of Europe’s common currency, the euro, and put the global economy at risk of contagion.

So far Greece’s creditors have downplayed those risks. In recent years they have repeatedly insisted that European banks and global markets do not face any serious fallout from Greece abandoning the euro, as they have had plenty of time to insulate themselves from such an outcome. But Stiglitz, who served as the chief economist of the World Bank from 1997 to 2000, says no such firewall of protection can exist in a globalized economy, where the connections between events and institutions are often impossible to predict. “We don’t know all the linkings,” he says.

Many countries in Eastern Europe, for instance, are still heavily reliant on Greek banks, and if those banks collapse the European Union faces the risk of a chain reaction of financial turmoil that could easily spread to the rest of the global economy. “There is a lack of transparency in financial markets that makes it impossible to know exactly what the consequences are,” says Stiglitz. “Anybody who says they do obviously doesn’t know what they’re talking about.”

Over the weekend the prospect of Greece abandoning the euro drew closer than ever, as talks between the Greek government and its creditors broke down. Prime Minister Alexis Tsipras, who was elected in January on a promise to end austerity, announced on Saturday that he could not accept the troika’s “insulting” demands for more tax hikes and pension cuts, and he called a referendum for July 5 to let voters decide how the government should handle the negotiations going forward. If a majority of Greeks vote to reject the troika’s terms for continued assistance, Greece could be forced to default on its debt and pull out of the currency union.

Stiglitz sees two possible outcomes to that scenario – neither of them pleasant for the European Union. If the Greek economy recovers after abandoning the euro, it would “certainly increase the impetus for anti-euro politics,” encouraging other struggling economies to drop the common currency and go it alone. If the Greek economy collapses without the euro, “you have on the edge of Europe a failed state,” Stiglitz says. “That’s when the geopolitics become very ugly.”

By providing financial aid, Russia and China would then be able to undermine Greece’s allegiance to the E.U. and its foreign policy decisions, creating what Stiglitz calls “an enemy within.” There is no way to predict the long-term consequences of such a break in the E.U.’s political cohesion, but it would likely be more costly than offering Greece a break on its loans, he says.

“The creditors should admit that the policies that they put forward over the last five years are flawed,” says Stiglitz, a professor at Columbia University.What they asked for caused a deep depression with long-standing effects, and I don’t think there is any way that Europe’s and Germany’s hands are clean. My own view is that they ought to recognize their complicity and say, ‘Look, the past is the past. We made mistakes. How do we go on from here?’”

The most reasonable solution Stiglitz sees is a write-off of Greece’s debt, or at least a deal that would not require any payments for the next ten or 15 years. In that time, Greece should be given additional aid to jumpstart its economy and return to growth. But the first step would be for the troika to make a painful yet obvious admission: “Austerity hasn’t worked,” Stiglitz says.

TIME Greece

Everything to Know About Greece’s Economic Crisis

How Greece and the eurozone ended up in this mess, and where they go from here

Q. How did we get here?

A. Long story. Greece’s economy was never strong enough to share a currency with Germany’s, but both sides pretended it was, as it satisfied Greek pride and Germany’s ambitions (suffused with war guilt) of building an ‘Ever Closer Union’ in a new, democratic Europe. Reckless lending by French and German banks allowed the Greeks to finance widening budget and current account deficits for six years, but private capital flows dried up sharply after the 2008 crisis, forcing Greece to seek help from Eurozone governments and the International Monetary Fund in 2010.

Q. But all that was 5 years ago. How has Greece not managed to turn the corner since then, when every other Eurozone country that took a bailout has?

A. Greece was the first country to ask for help, and the Eurozone was totally unprepared for it on all levels–political, technological, emotional, whatever. The IMF, too, had no experience of dealing with a country in a monetary union. Consequently, the bailout was badly conceived (a point admitted at the weekend by Dominique Strauss-Kahn, who was head of the IMF at the time), focusing too much on the budget balance and not enough on fixing Greece’s uniquely dysfunctional state apparatus. In a normal recession, government spending can offset the negative effects of private demand contracting, but in this case, the budgetary austerity drove Greece into a vicious spiral. The economy contracted by 25% between 2010 and 2014, fatally weakening Greece’s ability ever to repay its debts.

Q. But didn’t Greece already get a load of debt relief?

A. Yes, €107 billion of it in a 2012 debt restructuring, the biggest in history. But it was only private creditors–i.e., bondholders–who took the hit. The Eurozone and IMF refused to write down their claims (although they did soften the repayment terms), and the new bailout agreement was based on more assumptions (since exposed as too rose-tinted) that Greece could grow itself out of its troubles. The economy continued to shrink in absolute terms and unemployment shot over 25%, forcing an ever bigger burden of taxation onto fewer and fewer shoulders. That created the political environment for this year’s crisis.

Q. You make it sound like this year is different from the previous four…

A. Victory for the radical left-wing Syriza party at elections in January completely changed the political dynamic. Previous governments had come from the political mainstream, and reluctantly played along with rules dictated in Brussels and, indirectly, Berlin. Syriza didn’t have any truck with that. It has campaigned for a 50% write-off of its debts and a relaxation of its budget targets. It has been openly confrontational and reversed key reforms made by the previous governments, despite promising the creditors in February that it wouldn’t. Syriza’s tactics–embodied by Finance Minister Yanis Varoufakis, an economics professor specializing in Game Theory–have been a gamble that the Eurozone would rather make concessions than risk the economic havoc caused by a Greek exit.

5. That gamble has failed, hasn’t it?

As of today, yes. It’s Greece, yet again, which is bearing the burden of everything: the economy had shown signs of bottoming out before Syriza came to power, with business sentiment at its highest in seven years after a very good tourist season in 2014. But the brinkmanship has destroyed confidence, and caused a sharp rise in government arrears and deposit flight, capped now by capital controls and a week-long closure of the banking system. Eurozone financial markets aren’t taking it well, but the prospect of a ‘shock and awe’ intervention by the ECB is keeping the sell-off within limits Monday morning. A real “Grexit” may yet wreak havoc on the Eurozone too, but it’s unlikely that Prime Minister Alexis Tsipras will be around that long to reap the political rewards.

Q. Aren’t the creditors to blame too?

A. For sure, there’s plenty of blame to go round. Most people now recognize that the banks that had lent to Greece pre-crisis should have been forced to take more losses in 2009/2010. Now the Eurozone has effectively swapped the private loans for public ones, any debt write-offs have enormous political costs at home. But governments in Germany and elsewhere have made a rod for their own back by being so stubborn. When Greece defaults, they’re going to lose billions anyway, and the cost of their posturing will become clear to taxpayers who have only been told half the story. They have squandered a host of opportunities to manage that loss in a more orderly way. By failing to accommodate more willing (if still inadequate) Greek governments with debt relief earlier, they prepared the ground for Syriza’s rise.

Q. What happens next?

A. Greece will miss a payment to the IMF Tuesday, and its bailout will expire the same day. The ECB seems likely to ignore the default at least until the planned referendum on Sunday, anxious to avoid responsibility for precipitating the total collapse of the financial system. The creditors are hoping the Greek government will capitulate under the pressure, and be replaced by a new ‘government of national unity’. There’s no sign of that happening yet.

Q. But how long can the current situation go on?

A. The banks are closed until July 7, after the referendum. As long as they still have the lifeline of the ECB’s emergency credit facility (over €85 billion), the banks and the government can continue to operate, albeit in a very restricted fashion. But the government is due to repay €3.5 billion in debts to the ECB on July 20, and if it can’t do that, then the ECB will have to accept that the Greek state is bankrupt, and cancel that credit line. At that point, the banks will be insolvent, and it will only be possible to restore their solvency by re-denominating the rest of their liabilities (i.e. deposits) in a new Greek currency.

Q. How, legally, does Greece leave the Eurozone?

A. Nobody knows. Like Cortes burning his boats after arriving in Mexico, the E.U. deliberately chose not to draft rules for that eventuality when it formed its currency union. There are rules for leaving the E.U., but even Syriza doesn’t want to do that. We will be, as Irish Finance Minister Michael Noonan said at the weekend, “in completely uncharted waters.”

They’ll be damned choppy waters, too.

This article was originally published in Fortune.com

TIME Puerto Rico

Puerto Rico Can’t Pay $72 Billion Debt, Governor Warns

Governor of Puerto Rico Alejandro Garcia Padilla
Ramon Tonito Zayas—GFR Media/AP Governor of Puerto Rico Alejandro Garcia Padilla in San Juan, Puerto Rico on May 12, 2015.

"I would love to have an easier option. This is not politics, this is math"

SAN JUAN, Puerto Rico (AP) — The governor is warning that Puerto Rico can’t pay its $72 billion public debt, delivering another jolt to the recession-gripped U.S. island as well as a world financial system already worrying over Greece’s collapsing finances.

Gov. Alejandro Garcia Padilla is hoping to defer debt payments while negotiating with creditors, spokesman Jesus Manuel Ortiz said Sunday night.

The comments came as legislators debate a $9.8 billion budget that calls for $674 million in cuts and sets aside $1.5 billion to help pay off the debt. The budget has to be approved by Tuesday.

Ortiz confirmed comments by Padilla that appeared in a report in The New York Times published late Sunday, less than a day before Garcia planned to meet with legislators and then go on television to deliver a public address.

“There is no other option. I would love to have an easier option. This is not politics, this is math,” Garcia is quoted as saying in the Times.

Puerto Rico’s bonds were popular with U.S. mutual funds because they were tax-free, but hedge funds and distressed-debt buyers began stepping in to buy up debt as the island’s economy worsened and its credit rating dropped.

Some legislators were taken aback by Garcia’s comments, including Rep. Jenniffer Gonzalez, spokeswoman for the main opposition party.

“I think it’s irresponsible,” Gonzalez said. “He met privately with The New York Times last week, but he hasn’t met with the leaders of this island.”

Puerto Rico’s constitution dictates that the debt has to be paid before any other financial obligation is met. If Garcia seeks to not pay the debt at all, it will require a referendum and a vote on a constitutional amendment, she said in a phone interview.

Puerto Rico’s situation has drawn comparisons to Greece, where the government decreed this weekend that banks would be shuttered for six business days and restrictions imposed on cash withdrawals. The country’s five-year financial crisis has sparked questions about its continued membership in the 19-nation shared euro currency and the European Union.

Puerto Rico’s governor recently confirmed that he had considered having his government seek permission from the U.S. Congress to declare bankruptcy amid a nearly decade-long economic slump. His administration is currently pushing for the right for Puerto Rico’s public agencies to file for bankruptcy under Chapter 9. Neither the agencies nor the island’s government can file for bankruptcy under current U.S. rules.

Puerto Rico’s public agencies owe a large portion of the debt, with the power company alone owing some $9 billion. The company is facing a restructuring as the government continues to negotiate with creditors as the deadline for a roughly $400 million payment nears.

Garcia has taken several measures to help generate more government revenue, including signing legislation raising the sales tax to 11.5 percent and creating a 4 percent tax on professional services. The sales tax increase goes into effect Wednesday and the new services tax on Oct. 1, to be followed by a transition to a value-added tax by April 1.

TIME Middle East

Israeli Navy Intercepts ‘Freedom Flotilla’ Bound for Gaza

Israel Gaza Boat
Majdi Fathi—NurPhoto/Corbis Palestinians wave their national flag as they ride boats during a rally in support of activists aboard a Pro-Gaza flotilla made up of four boats aimed at defying Israel's blockade of Gaza, at the seaport of Gaza City on June 28, 2015.

The "Freedom Flotilla" was boarded without force

JERUSALEM (AP) — Israel’s navy intercepted a Swedish vessel attempting to breach a naval blockade of Gaza early Monday and was redirecting it to an Israeli port, the military and the activists said.

The military said that after exhausting all diplomatic efforts, the government ordered it to block the vessel. Israeli naval forces boarded the Marianne ship and searched it in international waters without needing to use any force, the military said.

The ship was carrying about 20 activists, including Israeli Arab lawmaker Basel Ghattas and former Tunisian President Moncef Marzouki. Three other ships that were part of the original flotilla reversed course before encountering the Israeli navy.

The Freedom Flotilla group posted a photo on Twitter apparently showing a group of its activists onboard a ship. It said in the post that Israeli forces intercepted the Marianne and it was currently en route to Ashdod port. The ship was expected to arrive in Ashdod in 12 to 24 hours.

Petros Stergiou, a member of flotilla’s media team in Athens, said the group would continue its acts of protest until the blockade of Gaza was lifted.

“Once again, the Israeli state commits an act of state piracy in the Mediterranean Sea,” he said. “The government continues this policy of non-tolerance, which means that it will continue to enforce the collective punishment against the 1.8 million people in Gaza.”

A 2010 Israeli raid against a Gaza-bound flotilla left nine Turkish pro-Palestinian activists dead. It sparked international criticism of Israel and delivered a serious blow to its previously close ties with Turkey.

Israel has maintained a blockade of Gaza since Hamas militants took power in 2007. Islamic militants in the coastal strip have fired thousands of rockets toward Israel and have repeatedly tried to smuggle in arms through the sea.

While Israel insists there is no siege, there are severe restrictions on Palestinian movement and trade, with virtually no exports. The international community, including the United Nations, has repeatedly called for an end to the blockade.

Prime Minister Benjamin Netanyahu said the naval blockade of Gaza is in accordance with international law and has been endorsed by a United Nations committee.

“This flotilla is nothing but a demonstration of hypocrisy and lies that is only assisting the Hamas terrorist organization and ignores all of the horrors in our region,” he said. “We are not prepared to accept the entry of war material to the terrorist organizations in Gaza as has been done by sea in the past.”

Israel says it transfers about 800 trucks a day into Gaza and recently brought in more than 1.6 million tons of goods. It says it assists in hundreds of humanitarian projects, through international organizations, including the building of clinics and hospitals.

TIME Taiwan

Cigarettes or Spark Suspected in Taiwan Fire That Burned 500

Taiwan Fire
AP—AP Police investigators inspect the stage area after an accidental explosion during a music concert at the Formosa Water Park in New Taipei City, Taiwan, June 28, 2015

"It's still not clear what happened, but there were a number of people smoking."

(TAIPEI, Taiwan) — Investigators in Taiwan were focusing Monday on the possibility that a cigarette butt or spark caused the blaze that burned more than 500 people at a weekend water park party when colored powder sprayed from the stage caught fire.

More than 400 people remained hospitalized, 200 in serious condition, city officials said. Taiwan’s Central News Agency reported one death: a 20-year-old with burns to 90 percent of her body who was taken off life support with her family’s consent.

Police recommended criminal charges against the organizer of Saturday’s party, as well as two technicians, at the Formosa Fun Coast theme park in suburban Taipei.

“It’s still not clear what happened, but there were a number of people smoking and the weather was warm,” New Taipei City news department head Lin Chieh-yu said. Temperatures around greater Taipei topped 36 degrees Celsius (96.8F) before the party.

The three tons of colored starch-based powder bought by the organizers from Tai Won, a seller in the island’s southern county of Yunlin, were flammable, said Chou Hui-fang, a representative of the seller. She said the buyer was informed about the risk of fire.

“Whether it’s corn starch or flour starch, this kind of stuff, no matter how long it’s been around, if it’s in dense quantities and if it’s hot, it can catch fire,” Chou said. She said her 4-year-old company has been questioned by police and health officials but was not considered at fault.

“We didn’t know what the buyers were going to do with it or how much they would use,” she said. “It might have been supplies for a whole year.”

Taiwan Premier Mao Chi-kuo on Sunday banned use of the powder at future private events. Colored powder is often thrown on revelers during the annual Holi celebrations in India and Nepal, a Hindu festival. The powder at Saturday’s party was made in Taiwan, Chou said.

The water park was ordered to close after the fire.

Taiwan police recommended charges of professional neglect and public endangerment for party organizer Lu Chung-chi, who was arrested but released on bail of 1 million Taiwan dollars (US$32,000) bail and restricted from leaving the island, a New Taipei City police spokesman said.

Local media photos showed Lu kneeling on the ground to apologize, pledging to take full responsibility.

Police also recommended charges for the stage hardware technician and the person responsible for shooting off the powder. Each was given bail of 300,000 Taiwan dollars. Officers questioned another two involved in the event but did not recommend charges, said Yan Bo-jen, news liaison with the Luzhou Precinct of New Taipei City Police Department.

Prosecutors have also seized the assets of the water park and of the party organizers, the city news official said.

The powder ignited along the ground, mainly burning people’s lower bodies, said Wang Wei-sheng, a liaison with the New Taipei City fire department command center.

Taiwan university student Liang Sheng-kai said flaming powder hit his legs, apparently catching fire after it was sprayed from a concert stage into the front row where he was standing.

With the park’s water features several hundred meters (yards) away, too far to douse the fire or ease burns, people screamed and panicked to find exits as balls of fire surged from the ground, he said. He said the right and left sides of the stage were blocked.

“It was very messy and a lot of people fell over or got knocked down,” said Liang, 20, who is staying in a Taipei hospital for burn treatment.

Four victims were from Hong Kong, two from mainland China and one each from Japan, Malaysia, Singapore, a New Taipei City news official said. Authorities are still checking on the nationalities of three other foreigners. More than 200 were students, Central News Agency said.

A total of 519 people were injured by the fire, according to a statement from the city government’s health bureau.

___

AP writer Louise Watt in Beijing contributed to this report.

TIME Greece

Pensioners Queue Outside Banks on 1st Day of Capital Controls

The accelerating crisis has thrown into question Greece's financial future

(ATHENS, Greece) — Banks and ATM machines were shut throughout Greece Monday on the first day of capital controls, a dramatic twist in the country’s five-year financial saga.

Despite the closures, pensioners lined up just after dawn at bank branches hoping they would have access to their pensions, which were due to be paid Monday.

The bank closures came after Greeks rushed to ATMs over the weekend to withdraw money following Prime Minister Alexis Tsipras’ surprise call for a referendum on creditor proposals for the reforms Greece should take to gain access to blocked bailout funds.

The referendum has been set for Sunday, and the government has been advocating Greeks vote against the proposals.

The capital controls are meant to staunch the flow of money out of Greek banks and spur the country’s creditors to offer concessions before Greece’s international bailout program expires Tuesday.

Once that happens, Greece loses access to the remaining 7.2 billion euros of rescue loans, and is unlikely to be able to meet a 1.6 billion-euro debt repayment to the International Monetary Fund due the same day.

The accelerating crisis has thrown into question Greece’s financial future and continued membership in the 19-nation shared euro currency — and even the European Union.

Asian stock markets sank with indexes in Tokyo, Hong Kong and Sydney down more than 2 percent. Oil prices and the euro also fell. The Athens Stock Exchange remained closed.

Overnight, massive queues formed at gas stations, with worried motorists seeking to fill up their tanks and pay with credit cards while they were still being accepted.

The government announced bank transaction restrictions late Sunday night, limiting daily withdrawals to 60 euros ($67) per person per ATM card. Automatic teller machines were expected to reopen later Monday, while banks would remain shut for at least six days.

Although credit and cash card transactions have not been restricted, in practice most retailers were not accepting card transactions Monday morning.

Many of Greece’s retirees don’t have bank cards and collect their pensions directly from the bank tellers. Long lines of elderly Greeks formed at neighborhood bank branches, despite them being told the banks would not open for the day.

Deputy Minister of State Terence Quick said special arrangements would be made for pensions. Speaking on private Antenna television, he said retirees would be allowed to access their full pensions in cash due to the fact that many don’t have bank cards.

Under the bank transaction restrictions, electronic transfers and bill payments are allowed, but only within the country. The government also stressed the controls would not affect foreign tourists, who would have no limits on cash withdrawals with foreign bank cards.

For emergency needs, such as importing medicines or sending remittances abroad, the Greek Treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.

The decision to impose capital controls came after a Bank of Greece recommendation, Tsipras said during a televised address Sunday night.

Tsipras blamed the Eurogroup, the gathering of the eurozone’s finance ministers, and its decision to reject a request for the bailout program, which expires June 30. He again asked for it to be extended by a few days to allow for a referendum.

The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours of Sunday, shocked and angered Greece’s European partners. The country’s negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.

Tsipras also blamed the European Central Bank’s Sunday decision not to increase the amount of emergency liquidity the lenders could access from the central bank — meaning Greece has no way to replenish fast-diminishing deposits.

“It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum,” Tsipras said. “They will not succeed.”

 

TIME Burundi

Burundians Vote In Parliamentary Elections Marred By Unrest

Burundi Political Tensions
Berthier Mugiraneza—AP Burundian police take positions as they chase opposition demonstrators on the main road in the capital Bujumbura, Burundi on June 4, 2015

There is heavy security across the city

(BUJUMBURA, Burundi) — Voting is underway in Burundi’s parliamentary elections despite an opposition boycott and the threat of violence as police battle anti-government protesters in the capital.

Gunfire could be heard in some parts of Bujumbura as voting started at 6 a.m., and there is heavy security across the city.

In the Musaga neighborhood, which has seen violent protests against President Pierre Nkurunziza’s bid for a third term, there were few civilians in sight Monday as mostly police and soldiers lined up to vote.

The voting is taking place despite calls by the international community for a postponement until there is a peaceful environment for credible elections.

Bujumbura has suffered unrest since the ruling party announced on April 26 that Nkurunziza would be its candidate in presidential elections scheduled for July 15.

TIME China

China-Backed Development Bank Holds Signing Ceremony in Beijing

China-led AIIB members ink accord for its inception by year's end
AP—Kyodo Delegates from more than 50 countries gathered to sign the articles of agreement that specifies the new lender's initial capital and other details of its structure.

Conspicuously absent from the ceremony was the U.S., which declined to join the bank

Delegates from 57 founding member states gathered in Beijing on Monday to finalize and ratify the terms of the Asian Infrastructure Investment Bank (AIIB), the China-backed multilateral development bank seen by some as a strategic rival to the World Bank and similar international financial institutions.

The signing ceremony comes eight months after Beijing officially launched AIIB, which intends to “focus on the development of infrastructure and other productive sectors in Asia” and “promote interconnectivity and economic integration in the region,” according to its mission statement. It will begin with a $50 billion capital base, the BBC reports.

Of its founding members — which include Australia, Russia and Germany — China will be the largest shareholder, with 25% to 30% of all votes. Conspicuously absent from the roster is the U.S., which in October expressed concern over the bank proposal’s “ambiguous nature.” While World Bank President Jim Yong Kim has praised the new institution, citing the “massive need” for fresh investments in Asia, some critics see its establishment as a self-serving exercise in Chinese soft power.

TIME Greece

Greece Imposes Capital Controls, Banks to Remain Shut

For the past two days, Greeks have been rushing to ATMs

(ATHENS, Greece) — Greece’s five-year financial crisis took its most dramatic turn yet, with the cabinet deciding after an 8-hour session that Greek banks would remain shut for six business days and restrictions would be imposed on cash withdrawals.

The Athens Stock Exchange would also not open Monday, financial sector officials confirmed.

The moves were meant to staunch the flow of money out of Greek banks and spur the country’s creditors to offer concessions before a bailout program expires Tuesday. The accelerating crisis has thrown into question Greece’s financial future and continued membership in the 19-nation shared euro currency — and even the European Union. Asian stock markets sank with indexes in Tokyo, Hong Kong and Sydney down more than 2 percent. Oil prices and the euro also fell.

For the past two days, Greeks have been rushing to ATMs to withdraw money across the country following Prime Minister Alexis Tsipras’ sudden weekend decision to call a referendum on creditor proposals for Greek reforms in return for vital bailout funds.

A decree published early Monday in the official Government Gazette stipulates banks will not open Monday morning and would remain closed through Monday, July 6. The finance minister could decide to shorten or extend that period.

Withdrawals from ATMs will be capped at 60 euros ($66) daily. The decree said ATMs would be working at the latest 12 hours from its publication, meaning cash machines should open by early afternoon.

Web banking transactions would be mostly free, allowing Greeks to pay bills online. However, they cannot move money to accounts abroad.

Credit and bank cards issued abroad can be used at ATMs with no restrictions, benefiting foreign visitors to Greece and its tourist industry. Anxious tourists had joined locals at ATM lines Sunday, thinking the restrictions would also apply to them.

For emergency needs, such as importing medicines or sending remittances abroad, the Greek Treasury was creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.

The decision to impose capital controls came after a Bank of Greece recommendation, Tsipras said during a televised address.

Tsipras blamed the Eurogroup, the gathering of the eurozone’s finance ministers, and its decision to reject a request for the bailout program, which expires June 30. He again asked for it to be extended by a few days to allow for a referendum.

The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours of Sunday, shocked and angered Greece’s European partners. The country’s negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.

Tsipras also blamed the European Central Bank’s Sunday decision not to increase the amount of emergency liquidity the lenders could access from the central bank — meaning Greece has no way to replenish fast diminishing deposits.

“It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum,” Tsipras said.

“They will not succeed. These moves will have the exact opposite effect. They will make the Greek people more determined in their choice to reject the unacceptable … proposals and ultimatums of the creditors,” he said.

In the referendum set for next Sunday, the government is urging Greeks to vote against its creditors’ proposals, arguing that they are humiliating and that they would prolong the country’s financial woes.

Spooked by rumors concerning impending fuel shortages, drivers flooded gas stations across Greece, prompting the country’s largest refiner, Hellenic Petroleum, to issue a statement reassuring there are sufficient reserves of gasoline to last several months. The rush to gas stations may have been prompted less by worries about shortages than the impending withdrawal limits and rumors, later proven untrue, that the use of credit or debit cards would not be permitted.

Greece’s current bailout expires Tuesday, and the 7.2 billion euros ($8 billion) remaining in it will no longer be available to Greece after that date.

Without those funds, Greece is unlikely to be able to pay a 1.6 billion-euro ($1.79 billion) International Monetary Fund debt repayment due the same day.

“We don’t know — none of us — the consequences of an exit from the eurozone, either on the political or economic front. We must do everything so that Greece stays in the eurozone,” French Prime Minister Manuel Valls told France’s i-Tele TV earlier Sunday.

“But doing everything, that means respecting Greece and democracy, but it’s also about respecting European rules. So Greece needs to come back to the negotiating table,” he said.

Two opinion polls published Sunday indicated that more Greeks want to stay in the eurozone and make a deal with creditors than want a rupture with the country’s European partners. Both polls were conducted before Tsipras’ referendum call, but they provide an indication of public sentiment.

In the poll by Alco for the Proto Thema paper, 57 percent said they believed Greece should make a deal while 29 percent wanted a rupture of ties. A Kapa Research poll for To Vima newspaper found that 47.2 percent would vote in favor of a new, painful agreement with Greece’s creditors, compared to 33 percent who would vote no and 18.4 percent undecided.

Both polls were conducted from June 24-26 and had a margin of error of about 3.1 percent.

On the banking front, the ECB has said it could reconsider its decision on credit levels.

“We continue to work closely with the Bank of Greece and we strongly endorse the commitment of member states in pledging to take action to address the fragilities of euro-area economies,” ECB chief Mario Draghi said.

Yannis Stournaras, governor of the Bank of Greece, said the bank would “take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”

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David McHugh in Frankfurt, Geir Moulson in Berlin and Jamey Keaten in Paris contributed to this report.

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