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Greek PM urges 'No' vote to strengthen his hand

Update: July, 02/2015 - 15:36

ATHENS — Prime Minister Alexis Tsipras urged Greeks to vote 'No' in a referendum Sunday on bailout proposals after European leaders ruled out any further debt talks until seeing the outcome.

A defiant Tsipras said in a TV address Wednesday that a 'No' vote would strengthen his hand in negotiations with international creditors after six months of tortuous talks have failed to produce a deal.

Greeks will be asked on Sunday to accept or reject proposals made by creditors last week.

Tsipras insisted voting 'No' would not signify "a rupture with Europe" despite efforts by EU leaders to cast it as a referendum on Greece's place in the bloc.

"Come Monday, the Greek government will be at the negotiating table after the referendum, with better terms for the Greek people," he said.

Finance Minister Yanis Varoufakis said on Thursday the government "may very well" resign if the people vote 'Yes'.

Greece on Tuesday made a last-minute proposal for a third bailout worth nearly 30 billion euros ($33 billion) to follow the two rescue programmes worth 240 billion euros that cash-strapped Athens has received since 2010.

But frustrated eurozone finance ministers agreed Wednesday to wait until after the referendum before holding any more talks, saying there were "no grounds" for further discussions.

Germany immediately rejected any deal, with Chancellor Angela Merkel saying that Europe should "calmly" await the result.

Greece's plight was underlined when on Tuesday it became the first advanced economy to default on an International Monetary Fund (IMF) repayment.

In Greece, chaotic scenes ensued when nearly 1,000 banks reopened Wednesday to allow elderly people limited access to their pensions after several days of capital controls limiting withdrawals.

"I worked for 50 years on the sea and now I am a beggar for 120 euros," one pensioner in Athens said. "I have no money for medication for my wife, who had an operation and is ill."

EU officials consider a 'No' vote as a risky step towards a possible exit of Greece from the eurozone and the beginning of an unprecedented crisis for the bloc.

Ahead of the referendum, an opinion poll on Wednesday showed the 'No' camp in the lead with 46 per cent, against 37 per cent for 'Yes' and 17 per cent undecided.

The 'No' vote share was down compared to before capital controls were introduced Sunday.

The Council of Europe, a pan-European human rights body, has criticised the vote, saying it was being organised too quickly and that the question was not clear.

'World is watching'

Greece entered uncharted waters with its default on the 1.5-billion euro IMF payment and expiry of its current European bailout on Tuesday.

It is now without external financial assistance for the first time in five years.

The developments prompted Moody's to cut its credit rating for Greece to a deep-junk "Caa3" – the last of the three major ratings agencies to do so – warning it was now less likely that official creditors will support the country, whatever happens in Sunday's referendum.

Greece has requested more time to pay its debt, but the IMF said Wednesday that allowing a borrower to delay repayment was generally ineffective in helping a country overcome crisis.

Voicing frustration with the ongoing debt saga, IMF chief Christine Lagarde told CNN that talks between Greece and its creditors would benefit from "a bit more adulthood."

Stock markets, however, rebounded Wednesday amid hopes that a deal could still be struck to keep Greece in the eurozone. Asian markets pushed higher in early trade Thursday, tracking a surge in European and US equities the previous day.

Markets were still optimistic of an eventual deal despite German Chancellor Angela Merkel effectively ruling out all negotiations until after Sunday's referendum.

"The world is watching us. But the future of Europe is not at stake," Merkel told Germany's Bundestag, or lower house of parliament.

But signalling a possible rift in Europe's united front, France's President Francois Hollande called for an "immediate agreement" after six months of stalemate.

However the head of the Eurogroup of eurozone finance ministers, Dutch Finance Minister Jeroen Dijsselbloem, made clear there were "no grounds for further talks at this point" because of the Greek government's refusal to call off the referendum.

Ministers also agreed to "take note" of a letter from Tsipras that emerged Wednesday telling creditors he was ready to accept terms they offered at the weekend, as long as they included a VAT discount for Greek islands and postponing pension reform, he said.

Echoes of Argentina's default

The European Central Bank again decided to keep the amount of emergency funding Greek banks can access frozen at around 89 billion euros on Wednesday.

It was the ECB's decision on Sunday to refuse to increase emergency funding for Greek banks that pushed Athens to close lenders for a week and impose the capital controls.

The ECB stands "ready to intervene if and when it is necessary," said a Greek banking source.

Varoufakis said Thursday the restrictions could be lifted "immediately" once a new debt deal was agreed and insisted "Greece is, and will remain, in the euro."

Meanwhile, Argentinian President Cristina Kirchner compared the crisis in Greece to her own country's debt default in 2001, in the latest expression of solidarity from the Latin American nation.

In an interview on public television, she said "what the Greeks are living through corresponds exactly to what we, the Argentinians, went through in 2001: the consequences of terrible neoliberal policies... which led to misery, hunger and unemployment." — AFP


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