Greece’s Tsipras calls referendum on 5 July over bailout demands

27 Jun 2015 | Author: | No comments yet »

Greece’s Tsipras calls referendum on 5 July over bailout demands.

Athens/ London: Greek Prime Minister Alexis Tsipras called a referendum on whether he should accept the latest demands of the country’s creditors, the most dramatic move yet in a debt crisis that started five years ago.

Greece’s fraught bailout talks with its creditors took a dramatic turn early today, with the radical left government announcing a referendum in just over a week on the latest proposed deal and urging voters to reject it. “Right now, we bear an historic responsibility concerning … the future of our country. In a nationally televised address after midnight in Athens, Tsipras announced the 5 July vote and excoriated a take it-or- leave it offer as a violation of European Union rules and “common decency.” Deputy deputy foreign minister Euclid Tsakalotos said the government has no plans to impose capital controls and banks will stay open on Monday. “After five months of tough negotiations, our partners unfortunately resorted to a proposal-ultimatum to the Greek people,” Tsipras said. “I call on the Greek people to rule on the blackmailing ultimatum asking us to accept a strict and humiliating austerity without end and without prospect.” Since coming to power, Tsipras has refused to bend to the creditors’ terms accusing them of prolonging a punishing austerity. Faced by a rejection of its demands and those of other creditors, the European Central Bank could feel obliged to cut off the emergency funds that the country’s banks rely on for survival.

The referendum announcement also raises severe questions over whether the debt-crippled country will be able to remain solvent and in the 19-state eurozone. Others cheered the chance for Greece to regain control of its finances after more than five years of economic decline and fiscal cliffhangers directed by foreign bankers and politicians. “They’re trying to kill us, they’re trying to kill us, they’re trying to kill us,” said Ianos Kalivas, eating at a kebab shop near Parliament Square. “It’s like we live in a constant state of fear.” How Greeks will vote is unclear. On the other hand, a ‘yes’ vote would spell defeat for Tsipras and may force him into early elections. “The probability of Greece leaving the euro, sadly, has only increased with this decision,” said Nicholas Economides, Professor at the Stern School of Business at New York University, in a phone interview.

More than 56 percent favored retaining the euro, compared with 35.4 percent who preferred default and an exit over a bad debt deal, according to a Mega TV poll released June 16. That was before Greek leaders denounced euro area negotiators as blackmailers out to humiliate their country and urged people to vote “no” in the referendum. A Greek official close to the bailout negotiations said the country was unlikely to pay the IMF on Tuesday, adding that IMF rules allow a certain period during which a country is considered to be in arrears.

The surprise development throws into turmoil planned talks Saturday among euro-area finance ministers on their latest proposal, which would unlock €15.5 billion ($17.3 billion) and extend Greece’s programme through November, in return for a commitment to pension cuts and higher taxes that Tsipras opposes. The government could soon run out of cash, face huge difficulties in paying pensions and civil servant salaries, and that could force it to leave the eurozone and adopt a weak national currency. Nikolas Karagianakis, a pensioner who paused while kick-starting a scooter early Saturday morning to watch a live video feed on his phone, said he hoped his countrymen would consider the consequences of the referendum. “It’s a horrible idea,” Karagianakis said. “Staying in the euro is going to be tough, but going back to the drachma will be worse.

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