Greece’s Tsipras digs in against bailout, referendum continues
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Greece’s Tsipras digs in against bailout, referendum continues

Hours after Greece became the first advanced economy to default on an IMF repayment, Prime Minister Alexis Tsipras used a live TV address to urge Greeks to vote 'No' on Sunday to creditors' current demands.

world Updated: Jul 02, 2015 00:54 IST

Greek Prime Minister Alexis Tsipras vowed Wednesday to go ahead with a controversial bailout referendum despite pressure from European leaders as they declined to consider any fresh debt offer before Sunday's vote.

Hours after Greece became the first advanced economy to default on an 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 Tuesday 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 that 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.

Most Greeks are still only allowed to withdraw 60 euros ($66) per day after capital controls.

But nearly 1,000 banks reopened Wednesday to let elderly people draw a limited amount from their pensions, prompting chaotic scenes.

"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."

Finance ministry employees hung a huge banner saying "No to blackmail and austerity" out of the window of their office.

'World is watching'

Greece entered uncharted waters with its default on a 1.5 billion euro ($1.7 billion) International Monetary Fund loan, the first by an advanced economy, and expiry of its current European bailout at 2200 GMT Tuesday.

It is now without external financial assistance for the first time in five years.

However stock markets rebounded on the latest developments amid hopes that a deal could still be struck to keep Greece in the eurozone.

London's FTSE 100 rose 1.34% to close at 6,608.59 points, Frankfurt's DAX 30 jumped 2.15% to 11,180.50 points and the CAC 40 in Paris was up 1.94% to 4,883.19 points.

In New York, the Dow Jones Industrial Average opened up at 17,785.33, an increase of 165.82 points or 0.94%.

Tsipras "offered enough hope to spring a relief rally by suggesting Greece would meet most of the demands of its creditors in the most recent proposal," said CMC Markets UK analyst Jasper Lawler.

Ahead of the finance ministers' call, German Chancellor Angela Merkel had effectively ruled out all negotiations until after Sunday, saying that Europe could "calmly" await the outcome of the referendum.

"The world is watching us. But the future of Europe is not at stake," Merkel told Germany's Bundestag lower house of parliament.

After the call, 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.

The ministers "take note" of a letter from Tsipras that emerged Wednesday telling creditors he was ready to accept terms they offered at the weekend.

The letter added however that any deal would have to allow Greece to maintain a 30% VAT discount on islands and postpone a 2012 pension reform until October 2015.

"We will simply await now the outcome of the referendum on Sunday and take into account the outcome of that referendum," added Dijsselbloem, the Dutch finance minister.

Referendum standards 'fall short'

But there were signs the crisis was opening rifts in Europe's united front, with France's leader Francois Hollande urging an "immediate agreement" after six months of stalemate with the radical leftists in Athens.

Ahead of the referendum, an opinion poll on Wednesday showed the 'No' camp in the lead with 46%, against 37% for 'Yes' and 17% undecided. The 'No' vote share was down compared to before capital controls were introduced Sunday.

Meanwhile, the Council of Europe, a pan-European group which promotes the rule of law, said the vote fell short of its standards. It said the referendum was organised too quickly and that the question was not clear.

The European Central Bank's governing council was also meeting Wednesday to discuss the crisis in Greece.

It was the ECB's decision on Sunday to refuse to increase emergency funding for Greek banks that pushed Athens to close lenders and impose the capital controls, and it is thought likely to stick with its current stance.

Greece faces further big repayments to the ECB on July 20.

First Published: Jul 02, 2015 00:47 IST