Defiant Greek PM vows referendum will go ahead

BRUSSELS - Agence France-Presse

REUTERS photo

Greek Prime Minister Alexis Tsipras vowed July 1 to press ahead with a controversial bailout referendum as European leaders ruled out any fresh debt offer before July 5 vote.

Hours after Greece became the first advanced economy to default on an International Monetary Fund (IMF) repayment, the leftist leader used a live TV address to urge Greeks to vote 'No' on Sunday to creditors' current demands.
 
Tsipras, at loggerheads with Greece's creditors since his election in January, insisted a 'No' vote 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 added, standing between Greek and EU flags.
 
His comments came after Greece on June 30 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 cash-strapped Athens has received since 2010.
 
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.
 
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.
 
On Greece's streets, 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."  

Ahead of the referendum, an opinion poll on July 1 showed the 'No' camp in the lead with 46 percent, against 37 percent for 'Yes' and 17 percent 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.
         
Greece entered uncharted waters with its default on the 1.5-billion euro IMF loan and expiry of its current European bailout on June 30.
 
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 July 5 referendum.
 
Greece has requested more time to pay its debt, but the IMF said July 1 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 July 2, tracking a surge in European and US equities the previous day.
 
Ahead of the finance ministers' call, German Chancellor Angela Merkel had effectively ruled 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.
 
Signalling a possible rift in Europe's united front, France's President Francois Hollande called for an "immediate agreement" after six months of stalemate.
 
But Eurogroup chief 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.
         
The European Central Bank again decided to keep the amount of emergency funding Greek banks can access frozen at around 89 billion euros on July 1.
 
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.
 
In an interview on Greek television, Finance Minister Yanis Varoufakis said 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".