Greek crisis: 'Nobody can say what will happen in the referendum'

One by one they came, smiling for the cameras, voicing optimism that at long last this day had arrived: the day when Greeks could decide for themselves.

Any doubts that the leftwing government in Athens would cave into the demands of the international creditors keeping Greece afloat were firmly dispelled on Saturday as the country’s great debt drama entered another act.

In scenes that spoke more of defiance than fear, leading Syriza party figures applauded prime minister Alexis Tsipras’s surprise decision to give Greek voters the final say over the terms of a bailout deal proposed by the EU and IMF.

The high-stakes move of calling a referendum only days away from the deadline for a €1.6bn (£1.1bn) loan repayment to the IMF may have raised fears of default – and cast an even longer shadow over Greece’s future in the eurozone – but in governing circles this weekend it was welcomed with nothing short of glee.

“On 5 July Greeks will have the opportunity to say a resounding ‘no’ to their brazen demands,” deputy social security minister Dimitris Stratoulis told reporters before a parliamentary debate on the referendum. “And that will arm the government with a new determination to apply its programme. I am optimistic, very optimistic.”

After several days of heated discussions in Brussels, the Greek prime minister returned to Athens late on Friday, rejecting the €8bn worth of tax rises, pension cuts and wage cuts that creditors had set as the precondition for the release of desperately needed bailout funds. In exchange for the hard-hitting measures, the EU, European Central Bank and International Monetary Fund had offered to extend Greece’s current rescue programme until November, propping up its near-bankrupt economy with €15.5bn in emergency loans.

In a televised address that followed a cabinet meeting at 1am on Saturday, Tsipras said that the offer amounted to an ultimatum “at odds with the founding principles and values” of Europe. “These proposals, which clearly violate European rules and the basic rights to work, equality and dignity, show the purpose of some was not a viable agreement, but possibly the humiliation of an entire people,” he said.

After five months of fraught negotiations with creditors, they were impossible to accept. “It is now up to the Greek people to decide,” Tsipras proclaimed, adding that voters would be posed with a simple question: whether they accepted or rejected the terms of the lenders’ latest financial lifeline.

News of the referendum sent shudders through Greece. Since late 2009, when it became clear that without help the Greek economy was heading towards insolvency, the country has lost more than a quarter of its GDP and seen unemployment reach a record 27% and poverty levels soar.

Fears that the population may now refuse to swallow the price of further assistance was evident on the streets yesterday, when depositors worried about imminent capital controls rushed to withdraw cash from banks.

“The mood is very brittle,” said Giorgos Christodoulakis, a newspaper vendor. “There’s an element of uncertainty that has really unnerved people. If we do go ahead with this referendum, nobody can say for sure which way it will go.”

Takis Kanellopoulos, an employee in a fur shop in Plaka, the picturesque district beneath the Acropolis, said he was concerned that many would not understand the consequences of a No vote. “Everybody I have spoken to today has said they will reject the proposals, mostly out of spite for the Germans,” he said. “But that could have devastating effects for our economy.”

The plebiscite, the first to be held since 1974, when Greeks rejected the monarchy in favour of becoming a republic, could be one of the worst mistakes the country has committed in modern times, analysts said.

Speaking to the Observer, Aristides Hatzis, a prominent professor of economics and law at Athens University, likened the decision to “the government acting like a suicide bomber”.

“It is a very risky decision that could jeopardise Greece’s position not only in the eurozone but the EU,” he said. “I thought Tsipras would be pragmatic and accept a deal that would ultimately have allowed him to consolidate his position on the moderate left. Instead, with this decision he has allowed his ideologue, Bolshevik side to take over. It is as if he wants to transform this country into Venezuela, but the problem is it would become a Venezuela without the oil.”

Catapulted into power on a platform to end austerity, the leftwing Syriza government vehemently denied that it was posing Greeks with the dilemma of remaining in the euro or returning to its own currency.

“They accuse us of wanting the drachma – there is no such thought,” said the health minister, Panagiotis Koroumblis. “But I defy any serious Greek to say that what [the creditors] have proposed is good for this country. If we adopt them, it will kill tourism, dismantle our pharmaceutical trade, totally demolish our productive base. We were voted in to end austerity, not kill off the country.”

But in an electric atmosphere, it was becoming clear last night that the referendum would further polarise the country between those who want to remain in the euro at any cost and those who now want out.

“Syriza is trying to make its own problem the problem of the country and that is immensely dangerous,” said the former development minister Kostis Hatzidakis. “The dilemma it is posing is false and, at great peril, could lead us into uncharted waters.”

Source: theguardian.com