Greece votes in referendum with future in euro in doubt

Greece votes in referendum with future in euro in doubt

By Deepa Babington

ATHENS (Reuters) – Greece votes on Sunday on whether to accept more austerity in exchange for international aid, in a high-stakes referendum likely to determine whether it leaves the euro-currency area after seven years of economic pain.

    Staged against a backdrop of shuttered banks & threats of financial apocalypse, the vote is too close to call & may not produce the clear mandate for negotiations that Athens’ creditors seek.

    Greeks are split on whether to accept an offer by creditors that Prime Minister Alexis Tsipras calls a "humiliation" & is urging people to reject. Investors & European policymakers say a rejection would set Greece on a path out of the euro, destabilising the global economy & financial markets.

    "On Sunday we should all send a message of democracy & dignity to the world," Tsipras told tens of thousands of Greeks rallying for a 'no' vote before campaigning ended.

    Voting on whether to accept more taxes & pension cuts would be divisive in any nation, even at the best of times.

    In Greece, the choice is faced by an angry & exhausted population who, after five years of crippling austerity, have now suffered through a week of capital controls imposed to prevent the collapse of the nation's financial system.

    Pensioners besieging bank gates to claim their retirement benefits, only to leave empty-handed & in tears, have become a symbol of the nation's dramatic fall over the past decade.

    Eleven years ago, in the early morning of July 5, 2004, Greeks poured into the streets, united in celebration of their country's victory in the European Cup soccer tournament. Today, Greece is divided — & scared — as rarely before.

    "There is an atmosphere of fear. You can just feel it," said Sarafianos Giorgos, a 60-year-old teacher in Athens, who says he will vote in favour of the creditors' proposals.

    Polls open at 7 a.m. local (0500 BST) & shut at 7 p.m, with the first official projection of the result expected at 9 p.m.

    Four opinion polls published on Friday showed the 'Yes' vote marginally ahead. A fifth put the 'No' camp 0.5 percentage points in front. All were well within the margin of error.

    Anxious Greeks rallying for a 'Yes' vote agree Greece has been handed a raw deal yet say the alternative, a collapse of the banks & a return of the old drachma currency, would be worse.

    Those pledging to deliver a rousing 'No' to tax hikes & pension cuts in return for more loans say Greece cannot afford more of the austerity that has left one in four without a job. They agree with Tsipras that Europe is "blackmailing" Greece.

    "As a Greek woman, I am embarrassed at those who are going to vote ‘Yes’ for fear of leaving the euro. They are asking us to accept unending slavery. I am offended," said Tenekidou Ermioni, a 54-year-old teacher.

    NIGHTMARE RESULT

    Greeks are likely to face more financial & political turmoil in the days & weeks ahead.

    "All in all, Prime Minister Alexis Tispras’ early exit from office is still more likely than Grexit," wrote Wolfgang Piccoli of Teneo Intelligence.

"Regardless of Sunday’s result, significant levels of political volatility are here to stay."

    Finance Minister Yanis Varoufakis promised Greeks on the eve of the vote that European creditors would immediately have to grant Athens better terms, including massive debt relief & less austerity, if they voted 'No'. EU ministers & officials have warned that his pledge is a cruel illusion.

    If Greeks vote 'Yes' to the bailout, both Tsipras & Varoufakis are expected to resign — triggering a new chapter of uncertainty as political parties try to cobble together a national unity government to keep talks with lenders going until elections are held.

    European creditors have said a 'Yes' vote will resurrect hopes of aid to Greece. But capital controls, & default last week to the IMF, have undermined Greece's economic standing & creditworthiness, so a new bailout package would probably entail harsher terms than those on offer even last week.

    A 'No' vote would bring even greater uncertainty, & the prospect of a sudden financial collapse.

    European policymakers have openly warned such a result would be read as a rejection of talks with creditors & the euro, leaving Greece to fend for itself without any realistic prospect of funds to avoid bankruptcy.

    Much would depend on the European Central Bank, which will review on Monday morning its policy on emergency liquidity, which Greek lenders rely on.

The ECB could decide to freeze the liquidity or cut it off altogether if Greeks vote ‘No’, or if Athens subsequently defaults on a bond redemption to the ECB on July 20.

    There is concern that an inconclusive result might sow further confusion, & possibly lead to violent protests, rather than sending a clear signal approximately Greek intentions.

    "The nightmare result would be 51-49 percent in either direction," a senior German official said. "And the chances of this are not insignificant."

   

(Additional reporting by Noah Barkin in Berlin & Lefteris Karagiannopoulos; Writing by Deepa Babington; Editing by Alessandra Galloni & Andrew Roche)

Source: “Reuters”