Greek PM calls referendum on bailout plan

By Matthew Karnitscnig

Greek leader Alexis Tsipras called for a July 5th national referendum to let voters decide if they are willing to accept deep budget cuts to pensions and other public spending in order to stay in the euro, or face the economic and financial consequences of defaulting on the country’s debts.

After midnight in Athens, the prime minister addressed the nation saying he was calling the vote “for future generations, for the sovereignty and dignity of our people.”
The move amounts to the government’s acknowledgment that creditors will make no further concessions ahead of a June 30 deadline, when a €1.6 billion loan repayment to the International Monetary Fund is due. The country’s bailout expires on the same day, meaning it would lose the right to draw on untapped bailout money.
Finance ministers for the eurozone are scheduled to meet at 2 p.m. Saturday in Brussels for another emergency summit to discuss options.
The referendum amounts to a final gambit on the part of the government to keep Greece in the euro. It’s far from certain, however, whether Europe will play along.
Germany would have to agree to any extension of the bailout, and winning that support will be difficult and almost certainly require the approval of Germany’s parliament by Tuesday.
Greek officials were in contact with the European Central Bank over the weekend in an effort to win another reprieve for the country’s banks until the referendum. Greeks have withdrawn more than €35 billion in deposits since the beginning of the year, forcing the banks to seek emergency liquidity from the ECB.
Once the bailout expires, it may also be difficult for the ECB to continue to provide emergency liquidity to Greek banks. Without the assistance, which has reached nearly €90 billion, the country’s financial system would likely collapse.
“For the last six months, the Greek government has been waging a battle under conditions of unprecedented economic asphyxiation, in order to implement your mandate,” Tsipras said in a televised address.
In calling a popular vote, Tsipras is putting the onus for the decision directly on the Greek population. His leftist government rose to power by opposing the kind of cuts demanded by creditors. The decision to call a referendum suggests that Tsipras doesn’t believe he has the political legitimacy to endorse a deal without a direct mandate from voters.
“We never considered giving in, not even for a moment, of betraying your trust,” he added

• Eurozone finance ministers adjourn after less than two hours, reconvening just before Thursday's summit.
  

Tsipras will go to Parliament at noon today and get a majority to support the referendum. Parliament is expected to vote around 7 p.m.
However, it’s unclear how a referendum would be phrased since Greece’s constitution does not allow popular votes on fiscal matters.
Nevertheless, Finance Minister  Yanis Varoufakis tweeted, “Democracy deserved a boost in euro-related matters. We just delivered it. Let the people decide. (Funny how radical this concept sounds!)”
Recent polls suggest that the vast majority of Greeks — about 80% — want the country to remain in the euro. At the same time, Tsiipras’s far-left Syriza party consistently places first in national polls.
The announcement of a surprise referendum came several hours after tense discussions in Brussels between Tsipras and German Chancellor Angela Merkel and French President François Hollande.
Tsipras could barely hide his anger as he left the two-day summit of the European Council, expressing his frustration, as he has often done in recent months, in comments laced with pathos.
“The founding principles of the European Union were democracy, solidarity, quality of life and mutual respect,” he said leaving the summit. “These principles are not based on blackmail and ultimatums.”