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PM's call for referendum on debt deal increase uncertainty for Greece, sends depositors to ATMs

Greek Prime Minister Alexis Tsipras's dramatic call in the early hours of Saturday for a referendum on July 5 on the debt deal proposed by international lenders has increased uncertainty for Greece, analysts said.

It has also sent some depositors to line up in front of ATMs in the small hours of Saturday, as they have feared imminent capital controls as of Monday.

Without an agreement by June 30 when the current second Greek bailout expires, Greece faces the danger of running out of cash, defaulting on its debt and possibly being forced out of the euro zone.

The countdown could begin if the country fails to make a 1.5 billion euro debt payment that is due on the same day to the International Monetary Fund.

In a surprise move at the end of a week of marathon inconclusive negotiations in Brussels to seal an honest compromise and a few hours before another crucial Euro Group meeting was due to convene on Saturday, Tsipras announced his government's decision in a televised address to the nation shortly after midnight.

The unanimous decision of the cabinet, which convened on Friday night, was the response to the ultimatum set by lenders, he said, raising the tone in the five-month heated argument over the terms of the release of further aid to Greece.

As the leftist premier saw behind the institutions' last offer, he told Greek people that "some of the partners and institutions did not seek a viable and beneficial agreement for all sides, but the humiliation of an entire people."

He argued that the creditors's proposal undermined Greek peoples' painful efforts to put an end to austerity, restore growth and social justice.

The remarks of ministers and ruling Radical Left SYRIZA deputies to Greek media indicated that the government's proposal for a snap referendum would pass the parliament on Saturday.

"Democracy deserved a boost in euro-related matters. We just delivered it. Let the people decide," Finance Minister Yanis Varoufakis tweeted.

Opposition parties and media commentators criticized the government that the high stake gamble of the shock referendum could cause financial, political and social turmoil in coming hours and days, as it could be translated into a referendum in favor or against the euro.

Some analysts saw behind Tsirpas' call a last bid to force creditors who fear the impact of a Grexit to make concessions and give Athens a better deal.

Others said that this step dramatically increased uncertainty and posed major risks for the country, maybe worse compared to the previous time a Greek premier suggested a referendum.

They noted that in the autumn of 2011 when the then Prime Minister George Papandreou made a similar surprise announcement, the result was more easily predicted. Greeks were strongly supporting the euro at any cost.

Still, Papandreou faced strong reactions, was forced to resign, and made way for a transitional government and the prolonged political instability that has plagued the country.

This time a "no" vote in the July 5 referendum would most likely lead Greece to default and Grexit, according to analysts.

According to all the latest opinion surveys the overwhelming majority of Greeks still wants to stay in the euro zone, but at the same time by equal percentages of about 70 percent voters embrace the government's rhetoric against a "barbaric and humiliating" draft deal.

[Source: By Maria Spiliopoulou, Athens, 27Jun15]

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small logoThis document has been published on 29Jun15 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.