RPT-Questions, conflicts mark path to Greek bailout referendum – Reuters


(Repeats friom Sunday without changes)

By Michele Kambas

ATHENS, June 28 (Reuters) – Prime Minister Alexis Tsipras
has easily clinched parliamentary approval of his desired July 5
referendum on Greece’s creditors’ latest bailout terms.

By the time Greeks go to vote, however, the issue they will
be voting on might be entirely irrelevant since the creditors
have suggested their offer may now be off the table.

Even if the offer remains valid, many in Greece say the
question that the left-wing Tsipras is posing is not actually
about the bailout terms – rather the more fateful issue of
Greece’s euro membership.

On top of that, the only information many Greeks have about
the creditors’ offer has been gleaned from leaks in the media
since Greece’s government has not published the proposal.

Further complicating matters, Greece could be in the middle
of a full-blown financial crisis with capital controls and a
default by next Sunday.

The confusion is illustrative of a country that squarely
wants to remain in the euro – but bristles at what it calls the
crippling conditions of its international lenders.

“The government is taking a big gamble. It is a big
dilemma,” said Stefanos Nikdma, a 40-year-old shop decorator in
Athens. “Basically they are asking us if we should stay or leave
Europe.”

AN UNEXPECTED TWIST

When Tsipras unveiled the referendum in the early hours of
Saturday, he said he wanted Greeks to decide whether to accept
or reject final terms that creditors had offered.

In defending the referendum before parliament early on
Sunday, Tsipras said the vote was an act of democracy that would
“take place, whether our partners like it or not.”

Greece’s creditors want the country to cut pensions and
raise taxes in ways that Tsipras has long argued would deepen
one of the worst economic crises of modern times in a country
where a quarter of the workforce is already unemployed.

Though the Syriza government had floated the idea of a
referendum on bailout terms before, few expected the
announcement to be made days before Greece’s existing bailout
expires on June 30 – which is also the day Athens owes 1.6
billion euros to the International Monetary Fund.

To allow time for the referendum, Tsipras asked Greece’s
European partners to extend the expiring bailout by a few days.

The rejection of that request by European finance ministers
on Saturday now leaves Athens likely to default on its debt days
before the vote. A default or a decision by the European Central
Bank to yank funding to Greek banks could set off an
uncontrollable cascade of events before polls open next Sunday.

Moreover, it is unclear whether the bailout offer on which
the referendum is based is still valid. European finance
officials made clear on Saturday that they had moved beyond
bailout negotiations to emergency planning for the possible
ripple effect beyond Greece of a default.

IMF head Christine Lagarde told the BBC that because the
European part of Greece’s bailout programme would have expired
by July 5, any referendum would relate to “proposals and
arrangements which are no longer valid”. But she also said that
if there was a “resounding ‘yes'” to staying in the eurozone,
then the response would be “a resounding ‘let us try'”.

“You are calling the Greek people to vote on a proposal of a
negotiation that has already closed,” former Greek Prime
Minister and current opposition leader Antonis Samaras told
parliament.

EURO EXIT RAMP

Samaras joined other opposition leaders in saying that the
referendum, while ostensibly about bailout terms, risked –
wittingly or not – pulling Greece out of the euro.

Andreas Loverdos, a lawmaker for the centre-left Pasok
party, said it was misleading to ask people to say whether they
were for or against more austerity measures. “The question is
deceptive and leading. How could citizens possibly vote in
favour of taxes?” he tweeted.

Spyros Lykoudis, parliamentarian for the To Potami centrist
party, said the referendum was based on a false pretext,
suggesting to people that they could vote “no” but still remain
in the euro.

In theory, Greece could default and remain in the euro since
there is no legal basis for partners to force it out. But a
default coupled with the ECB pulling emergency funding for banks
would almost inevitably open the way to a euro exit, forcing the
government to issue a parallel currency or issue IOUs to pay
wages and pensions if it runs out of cash.

“We are in the last act of the Greek drama. But this tragedy
is not played in real terms,” said To Potami lawmaker Lykoudis.
“It is a shadow play with false dilemmas and divisive terms.”

There is also a question over whether the upcoming
referendum would run afoul of Greek law. Nikos Skoutaris, a
lecturer in European Union law at East Anglia university, said
that Article 44 of the country’s constitution prohibits people
from voting on fiscal issues.

Skoutaris said the deeper issue is that there is unlikely to
be any resolution from the vote, whatever the result – which
remains unclear at the moment.

“There is sheer uncertainty over the repercussions…no
matter what the outcome,” he said. “If it’s a ‘No,’…we don’t
know if we are going to have a bankruptcy, a bankruptcy within
Europe, or even a parallel currency in the future. But even if
it’s a ‘Yes,’ we don’t know what Greece is committing itself
to.”

Still, many in Athens over the weekend struck as defiant a
tone as Tsipras. Though the prospect of financial chaos led
Greeks across the country to line up outside bank machines in
order to take out cash, many said they stood by their prime
minister on the referendum.

“He absolutely did the right thing. Of course I will vote
against the lenders proposals,” said Areti Kazanzioglou, 40, a
private sector employee. “Europe is all about democracy, and not
what the institutions are trying to do to us.”

(Writing by Alessandra Galloni; editing by Janet McBride)

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