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Breakdown of bailout talks has Greece on brink of default

Prime Minister Alexis Tsipras (right) lobbied for a referendum on Europe’s latest offer.SIMELA PANTZARTZI/European Pressphoto Agency

LONDON — Greece’s long-running standoff with its European creditors appeared headed Saturday for an abrupt and potentially cataclysmic ending as the continent’s finance ministers rejected an emergency Greek request to help the cash-starved country meet a Tuesday deadline for repaying its debts.

Greece’s Parliament voted early Sunday in favor of a motion by Prime Minister Alexis Tsipras to hold a July 5 referendum on creditor proposals for reforms in exchange for loans, with the country’s future in the eurozone looking increasingly shaky, the Associated Press reported.

Reflecting the newly dire outlook, people formed lines at ATMs across Greece, seizing perhaps their last chance to withdraw their savings. Some went away empty-handed after the machines ran dry.

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With speculation mounting the banks may lack the funds to reopen Monday morning, European officials huddled to plot out how to contain the damage of a Greek financial meltdown. The finance minister of Greece was pointedly excluded.

The collapse of negotiations Saturday was the most ominous turn in a process that has been poisoned from the start by bitter mistrust between Greece’s radical leftist government and the austerity-minded figures who set policy in Europe.

Although both sides have repeatedly expressed a determination to keep Greece inside the common currency — and to avoid at all costs an uncontrollable and potentially disastrous default — that shared aspiration has not been enough to bridge the substantial divide.

As has become customary, both sides on Saturday blamed the other for the breakdown.

Greek Finance Minister Yanis Varoufakis called Saturday ‘‘a sad day for Europe,’’ and said the decision to reject his request to extend Greece’s bailout ‘‘will certainly damage the credibility of the euro group as a democratic union.’’

European officials countered that Tsipras had blindsided them by calling the referendum on a proposal that was still being negotiated, a move that effectively torpedoed any chance for a deal.

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‘‘The negotiations are clearly ended, if I understand Mr. Tsipras correctly,’’ said Germany’s finance minister, Wolfgang Schäuble, as the continent’s top finance officials held their fifth emergency meeting in two weeks. ‘‘We have no grounds for further discussions.’’

Varoufakis later challenged European leaders to come back with a new proposal, and signaled an openness to further talks. But the acrimony on Saturday suggested that a return to the negotiating table is highly unlikely before two critical tests in the week ahead.

The first will come Monday, when Greek banks that have grown ever-more reliant on emergency loans from the European Central Bank face the prospect of reopening for business without new lifelines.

The second will be Tuesday, when a $1.7 billion payment to the International Monetary Fund comes due. The IMF has repeatedly said it will not offer an extension. Greek officials, meanwhile, say they don’t have the money to make the payment unless its creditors unlock $8 billion in bailout funds frozen amid the stalled talks.

Tsipras has set the referendum, although it is now unclear exactly what Greek voters will be deciding. Tsipras said he wanted to give the Greek people the chance to vote on the latest proposal, which he painted as ‘‘an ultimatum” by creditors.

But with Greece sliding toward default and a possible break with the euro zone, there is no guarantee that the offer will stand when the vote is held.

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The European Central Bank, the European Commission, and the IMF have together provided Greece with $264 billion in bailouts over the past five years to deal with sky-high debts.

After years of withering austerity policies imposed by European paymasters as a condition of those deals, Greece in January rejected the medicine and elected Syriza, a radical leftist party that promised to tear up the agreements and start anew.

Greece has repeatedly demanded that Europe reduce the nation’s debt load and ease up on austerity. But European officials have been unwilling to hand Syriza a victory, and have insisted the country keep to strict belt-tightening targets.

The past week began with rare optimism, as Greece submitted proposals that European officials initially welcomed as a significant step forward. But by Wednesday, the creditors had submitted counterproposals for slashing pensions and cutting spending that Greek officials rejected as going too far.