Greek minister says Europe won't let Athens go under

ATHENS - Reuters

Greek Finance Minister Yanis Varoufakis reacts during an anti-austerity rally in Syntagma Square in Athens, Reuters photo

Greece's finance minister accused creditors of trying to "terrorize" Greeks into accepting austerity, warning Europe stood to lose as much as Athens if the country is forced from the euro after a referendum on July 5 on bailout terms. 

After a week in which Greece defaulted, shuttered its banks and began rationing cash, Greeks vote on July 5 on whether to accept or reject tough conditions sought by international creditors to extend a lending lifeline that has kept the debt-stricken country afloat. 

The left-wing government is urging a "No" vote, saying Greece's European partners are bluffing when they warn that would mean a Greek departure from Europe's single currency, with unforeseeable consequences for Greece, Europe and the global economy. 

Opinion polls on July 3 gave the "Yes" camp, which favors accepting the bailout terms, a slender lead but all were within the margin of error and pollsters said the vote was too close to call. 

Only one had the "No" vote winning, despite turnout of at least 50,000 opponents of the deal at a rally in central Athens on July 3 that appeared significantly bigger than a simultaneous rally by the "Yes" camp. 
"What they're asking us to accept is eternal slavery," said Ermioni Tenekidou, 54, a teacher. 

Finance Minister Wolfgang Schaeuble of Germany, Greece's biggest creditor and toughest critic, said any so-called Grexit, Greek exit from the euro zone, might only be temporary. 

"Greece is a member of the euro zone. There's no doubt about that. Whether with the euro or temporarily without it: only the Greeks can answer this question. And it is clear that we will not leave the people in the lurch," he said. 

But it is far from clear how a temporary exit from the 19-nation euro currency bloc might work. Some economists have raised the idea of a temporary suspension, whereby Greece would revert to a national currency for a number of years until its economy stabilized. 

Greece's European partners say the euro zone is better placed to minimize the impact on its vulnerable southern flank from a Greek exit than several years ago when the debt crisis exploded. But Greek Finance Minister Yanis Varoufakis said Europe stood to lose more than Greece. 

"If Greece crashes, a trillion euros (the equivalent of Spain's GDP) will be lost. It's too much money and I don't believe Europe could allow it," he told Spanish newspaper El Mundo. 

Varoufakis reiterated he would resign if Greeks vote "Yes", and accused creditors of trying to terrorize voters by capping a liquidity line to Greek banks. 

"What they're doing with Greece has a name: terrorism," he told El Mundo. "Why have they forced us to close the banks? To frighten people." 

Greece accounts for barely 2 percent of the euro zone's economic output, but its exit would represent a massive blow to the prestige of Europe's grand project to bind its nations into a union they said was unbreakable. 

It would also spell even greater hardship for Greece, stricken by one of the worst economic crises in modern times that has left one in four workers without a job, hammered pensions and pay and fuelled political instability. 

Germany's Welt am Sonntag newspaper, citing a "senior negotiator" among Greece's creditors, said the Athens government had money "for perhaps a week, but certainly not much longer." 

Critics accuse Prime Minister Alexis Tsipras, a 40-year-old former student protest leader, of gambling Greece's future with a plebiscite called with eight days' notice after negotiations with the European Union, European Central Bank and International Monetary Fund hit a wall. 

They point out that the offer Greeks will vote on is no longer on the table and the question is worded in cryptic legalese, leading the Council of Europe, a major European rights watchdog, to say the plebiscite falls short of international standards of fairness. 

Echoing a defiant Tsipras at July 3’s "No" rally, 60-year-old teacher Giorgos Sarafianos said the referendum was a question of "dignity." 

"The only message that can be sent tomorrow is that if we want to be part of the European community, it should not be with our heads bowed," he said.