ATHENS, Greece—Greece’s parliament voted early on Sunday in favor of Prime Minister Alexis Tsipras’s motion to hold a July 5 referendum on creditor proposals for reforms in exchange for loans, with the country’s future in the euro zone looking increasingly shaky.
Tsipras’s surprise call stunned Greece’s international debt negotiators, and the country took a big step closer to falling out of the euro currency union after fellow euro zone member-states refused to extend its bailout program past its expiry date on Tuesday, leaving Greece on the brink of financial chaos.
In the streets of Greece, worried people queued outside banks for cash from dawn to dusk after Tsipras’s announcement in the early hours of Saturday, after billions of euros had already been emptied in the preceding weeks.
Greece has a €1.6-billion ($1.8-billion) debt due to the International Monetary Fund (IMF) on Tuesday and its bailout program expires the same day, after which it is unclear how the country might survive financially.
The referendum is set for next Sunday with the question on whether to accept proposed reforms needed to get bailout loans from other euro zone countries and the IMF. The government is advocating a rejection of the proposals.
The radical left-wing leader accused the creditors of using blackmail and ultimatums against his proud, but struggling people.
European officials and all Greek opposition parties except the extremist far-right Golden Dawn party called his move for a vote a foolish and rash gambit that effectively ended negotiations to keep Greece financially afloat.
The sudden move comes after five months of stalemated negotiations, with Tsipras accusing creditors of trying to strong-arm his country into taking harsh austerity measures he says would hammer an economy already on its knees after months of creditor-demanded spending cuts and tax hikes.
“They didn’t ask us to agree, they asked us to surrender our political dignity,” Tsipras said during a tumultuous and nearly 13-hour parliamentary session that cumulated in a vote just before 3 a.m. on Sunday.
Out of parliament’s 300 lawmakers, 178 voted in favor and 120 against, with two people absent.
He insisted the Greek side had “exhausted every limit” of concessions so there could be an agreement, adding that “perhaps, some saw that as a weakness.”
The referendum move further crumbled already strained relations between Greece and its European partners.
Tsipras said the Greek people would vote against a deal next Sunday.
“This no will also be a big yes, a big yes to the decision of the Greek government to reject an ultimatum that insults the Greek people.”
Tsipras dismissed harsh criticism from other European countries on his decision.
“The referendum will take place as scheduled, next Sunday, whether our partners want it or not,” he said.
Euro-zone finance ministers earlier rejected Greek Finance Minister Yanis Varoufakis’s request for a one-month extension to the bailout program, with Varoufakis then leaving the meeting.
“It’s a sad day for Europe, but we will overcome it,” he said.
The other 18 finance ministers then huddled without him to assess how to minimize the damage from the Greek crisis on their currency.
“Our institutions are and will be prepared to take any action if needed,” said top euro-zone official Jeroen Dijsselbloem of fears that financial turbulence might extend to the rest of the currency bloc. Fellow ministers spoke candidly about the risks of a Greek exit from the euro in a way that would have been inconceivable only weeks ago.
The ministers stressed Greece remained in the euro zone for now, and Dijsselbloem said “the euro group stands ready to reconvene to take appropriate decisions where needed, in the interest of Greece as euro area member.”
Without a bailout program extension or more loans from creditors, Greece is likely to be in arrears on a debt payment due the same day. Its banks face the risk of collapse.
“The Greek authorities have asked for a month extension. But in that month there can be no disbursements,” Dijsselbloem said. “How does the Greek government think that it will survive and deal with its problems in that period? I do not know.” AP
Image credits: AP/Giannis Papanikos