Greece enters uncharted territory after referendum 'no' vote

July 06, 2015

ATHENS, Greece (AP) — Greece lurched into uncharted territory and an uncertain future in Europe's common currency Sunday after voters overwhelmingly rejected demands by international creditors for more austerity measures in exchange for a bailout of its bankrupt economy.

Results showed 61 percent voted "no," compared with 38 percent for "yes," with 97 percent of the vote counted. The referendum — Greece's first in more than four decades — came amid severe restrictions on financial transactions in the country, imposed last week to stem a bank run that accelerated after the vote was called.

Thousands of jubilant government supporters celebrated in Syntagma Square in front of Parliament, waving Greek flags and chanting "No, no, no!" It was a decisive victory for Prime Minister Alexis Tsipras, who had gambled the future of his 5-month-old coalition government — and his country — in an all-or-nothing game of brinkmanship with Greece's creditors from other European countries that use the euro currency, the International Monetary Fund and the European Central Bank.

"Today we celebrate the victory of democracy," Tsipras said in a televised address to the nation, describing Sunday as "a bright day in the history of Europe." "We proved even in the most difficult circumstances that democracy won't be blackmailed," he said.

Tsipras called the referendum last weekend, saying a "no" vote would strengthen his hand to negotiate a better deal for his country. His government has said it believes it would be possible to conclude a deal with creditors within 48 hours.

But European officials and most of Greece's opposition parties painted the referendum as one of whether country kept using the euro currency — even though that was not the convoluted question asked on the ballot. Opinion polls Friday showed that 74 percent or more want their country to remain in the euro.

"Given the unfavorable conditions last week, you have made a very brave choice," Tsipras told Greeks in his address. "But I am aware that the mandate you gave me is not a mandate for rupture." He said he would seek to negotiate a viable solution with the country's creditors.

How European officials react to the referendum result will be critical for the country, and a eurozone summit was called for Tuesday evening to discuss the situation. German Chancellor Angela Merkel and French President Francois Hollande spoke to each other Sunday night and agreed "that the vote of the Greek people must be respected," Merkel's office said.

The referendum result was "very regrettable for the future of Greece," said Jeroen Dijsselbloem, head of the eurozone finance ministers' meeting known as the Eurogroup, which also will meet Tuesday. Dijsselbloem, who is finance minister for the Netherlands, had been a steadfast opponent of Greece as it sought better conditions during five months of bailout talks.

"For recovery of the Greek economy, difficult measures and reforms are inevitable," he said. "We will now wait for the initiatives of the Greek authorities." Sigmar Gabriel, Germany's vice chancellor and economic minister, told a German newspaper the Greek government was leading its people "onto a path of bitter austerity and hopelessness."

Tsipras has "torn down the last bridges, across which Europe and Greece could move toward a compromise," Gabriel told the daily Tagesspiegel. "By saying 'no' to the eurozone's rules, as is reflected in the majority 'no' vote, it's difficult to imagine negotiations over an aid package for billions."

Belgian Finance Minister Johan Van Overtveldt was somewhat softer in his reaction, saying a "no" result "complicates matters," but that the door was open to resume talks immediately. "What we certainly don't want to do is to take decisions that will threaten the monetary union," he told Belgium's VRT. "Within that framework we can start talks again with the Greek government, literally, within hours."

Time has run out for Greece, which is dealing with an economy in a protracted recession, with high unemployment and banks dangerously low on capital. The international bailout — under which it received nearly 240 billion euros in rescue loans — expired last week, on the same day Greece defaulted on an IMF repayment, becoming the first developed nation to do so.

Of critical importance will be whether the European Central Bank decides to maintain its current lifeline to Greece in the form of emergency liquidity assistance, or ELA. The assistance, currently at around 90 billion euros, has been maintained but not increased in past days, leaving the country's financial system in a stranglehold.

Sunday's vote was held after a week of capital controls imposed to halt a bank run, with Greeks restricted to a daily cash withdrawal maximum of 60 euros ($67). Long lines have formed at ATMs, while pensioners without bank cards have thronged the few bank branches opened to allow them access to a maximum 120 euros for the week. Queues at ATMs swelled again as the initial results of the referendum came in.

The ECB operates on rules according to which it can only continue ELA funding if Greece is in a bailout. Without an increase, it is unclear how much longer people will be allowed to withdraw 60 euros per day.

Some analysts say Greece is so starved of cash that it could be forced to start issuing its own currency. No country has ever left the 19-member eurozone, established in 1999. The margin of victory was far wider than expected, and is likely to strengthen the young prime minister's defiance toward Europe. Tsipras was voted into office in January on a promise to repeal bailout austerity.

"This victory for the 'no' camp will unfortunately embolden the government, but is likely to do little to convince the creditors that Tsipras is a trustworthy negotiating partner who has any ability to implement a deal," said Megan Greene, chief economist of Manulife Asset Management.

"Any deal for Greece will involve a much larger fiscal adjustment than the one on which Greeks voted today. I don't think that Germany in particular will be willing to make any concessions for Tsipras."

There was confusion Sunday night over the fate of bank safety deposit boxes, with Deputy Finance Minister Nadia Valavani saying people would be allowed to remove items but not cash from them, and Alternate Finance Minister Dimitris Mardas later said the issue would have to be legislated.

Yiannis Gkovesis, 26, waved a large Greek flag in the capital's main square with supporters of the "no" vote. "We don't want austerity measures anymore. This has been happening for the last five years and it has driven so many into poverty, we simply can't take any more austerity," Gkovesis said.

Constantinos Papanikolas, 73, who also clutched a Greek flag, said the result meant "a fresh start, a new page for Greece and for Europe, which has condemned its people to poverty." Opposition conservative New Democracy lawmaker Vangelis Meimarakis said he was expecting Tsipras to keep his pledge for a quick deal.

"If we don't have an agreement within 48 hours as the prime minister promised, then we are being led to a tragedy," he said.

Derek Gatopoulos, Costas Kantouris and Menelaos Hadjicostis in Athens, Raf Casert in Brussels, Frank Jordans in Berlin and Carlo Piovano in London contributed to this report.

Greece votes on high-stakes bailout referendum

July 05, 2015

ATHENS, Greece (AP) — Greeks started casting ballots early Sunday in the closely watched bailout referendum, with opinion polls showing people evenly split on whether to accept creditors' proposals for more austerity in exchange for rescue loans, or defiantly reject the deal.

Polling stations are open until 7 p.m. (1600 GMT; noon EST). Greek Prime Minister Alexis Tsipras is gambling the future of his 5-month-old left-wing government on the snap poll, called last weekend — insisting that a "no" vote would strengthen his hand to negotiate a better deal with the country's creditors, and a "yes" would be a capitulation to their harsh demands.

The opposition accuses Tsipras of jeopardizing the country's membership in the eurozone and says a "yes" vote is about keeping the common currency. Tsipras' high-stakes standoff with lenders— the European Union and the International Monetary Fund — resulted in Greece defaulting on its debts this past week and shutting down banks to avoid their collapse, and lose access to billions of euros after an existing bailout deal expired.

The sense of urgency was palpable all week when Greeks struggled to decipher a convoluted referendum question while being bombarded with frenzied messages of impending doom or defiance. The campaign was fought amid banking transaction restrictions on cash withdrawals to 60 euros ($67) per day and large queues forming at ATMs and the few bank branches opened to help pensioners without bank cards.

A series of polls published Friday at the end of a frantic weeklong campaign showed the two sides in a dead heat, with an incremental lead of the "yes" vote well within the margin of error. They also showed an overwhelming majority of people — about 75 percent — want Greece to remain in the euro currency.

Aris Spiliotopoulos, a 22-year-old who is launching his own tourism start-up, said he believes the vote is about whether Greece choses to stay among the club of nations that uses the euro aand ultimately whether the country opts to stay in the European Union itself.

"I am voting 'yes' because I believe that my future and even my kids' future, in twenty or thirty years from now, is in the eurozone and the European Union," Spiliotopoulos said on the eve of the referendum.

Gym teacher Alkiviadis Kotsis said he is voting "no" because the country and its people simply can't take more austerity. "No matter how many loans you take, you cannot get by if you don't produce things. You can't do anything," he said.

No matter the referendum result, Tsipras faces a tough road ahead, fraught with uncertainty about whether he will be able to deliver an improved bailout agreement. Yale University political science professor Stathis Kalyvas said the Greek government will face daunting challenges no matter which way the vote goes. In case of a "no" win, Kalyvas said the Greek government could be confronted with the refusal of other eurozone countries to negotiate a better deal because of their distrust of Tsipras.

A "yes" win won't mean a road to the negotiating table strewn with roses either, but would likely usher in a new government with a shot at negotiating an improved deal, Kalyvas said. He said if the European Union wants to keep Greece in the eurozone, it will have to come up with "a very generous plan" since the cost of the crisis has shot up to unanticipated levels.

That was borne out by German Finance Minister Wolfgang Schaeuble, who told daily Bild on Saturday that future negotiations between Greece and its creditors will be "very difficult," because the country's economic situation has worsened dramatically in recent weeks.

Schaeuble repeated the German government's position that for a community like Europe to work, all countries need to abide by the rules. Meanwhile, Greece's Finance Minister Yianis Varoufakis launched a salvo at other eurogroup nations, accusing them of holding out on a bailout deal to allow bank coffers to run dry so they could spring a "vile ultimatum" on the government to accept what he called a humiliating deal.

Writing in the Saturday edition of daily Kathimerini, Varoufakis said other eurogroup members rejected Greece's "honorable" counter-proposals and insisted on extracting "humility." Varoufakis said accepting the creditors' terms would be a "permanent condemnation" while rejecting it would offer the "only prospect for recovery."

With speculation swirling on the referendum's impact on Tsipras' government, Greece's Deputy Prime Minister Yiannis Dragasakis denied media reports that he would accept to lead a new "grand coalition" government.

"The country has a prime minister who will have an even stronger popular mandate and support. I will serve this mandate on my part," he said in a statement.

Associated Press writers Elena Becatoros, Iuliia Subbotovskaia and Eftehia Katsareas in Athens, Greece, contributed to this report.

Yes or no? What Greece's landmark vote might bring

July 05, 2015

LONDON (AP) — The Greek people are voting on a future in which they face two painful prospects: the slow grind of years more of austerity cuts or the country's potentially catastrophic exit from the 19-nation eurozone.

The question is whether their vote on Sunday can help them escape either. "Yes" to more budget cuts demanded by creditors in exchange for a financial aid package for the country? Or reject it in the hope it will not lead the country out of the euro?

For the radical left-led Greek government, the proposals are unacceptable. It's urging a "no" vote and says that will have no impact on Greece's euro status. Proponents of a "yes" vote, including a parade of former prime ministers and the main opposition party, say backing the government will jeopardize Greece's place in the euro. Instead, they argue that by voting "yes" Greece would get a new deal quickly to shore up the economy.

In fact, what might happen in each case is unclear. Here's a look each possibility:

IF THE PEOPLE SAY 'NAI'

A "yes" vote backing the reform proposals creditors had made would likely see Greece turn immediately to talks on a new rescue package. Whether that leads to a swift deal that might allow Greece to reopen its banks and restore a semblance of normality is another question.

The government has said it will respect the verdict. Greek Finance Minister Yanis Varoufakis has said he'll resign in the event of a "yes" vote and Prime Minister Alexis Tsipras has hinted as much. If the government does not collapse, it could try to build a new coalition with other parties, Varoufakis hinted.

It's not clear, however, if that would involve new elections. That would take time and without financial assistance, Greece would surely go bankrupt.

Greece is no longer in a bailout program since its previous package expired. So it would have to negotiate a new one with its creditors that involves more money for the government and the banks and new economic austerity measures. That is unlikely to be agreed on overnight, meaning the banking restrictions on money withdrawals and transfers may remain in place for longer than anticipated.

Varoufakis says banks will reopen Tuesday whatever the referendum's outcome. That's unlikely to happen unless the European Central Bank agrees to increase the credit to Greek banks.

An additional difficulty is that the International Monetary Fund has said it will not get involved in a third bailout unless it includes substantive debt relief for Greece. The Europeans, on the other hand, have ruled out debt relief until Greece makes its reforms.

IF THEY SAY 'OXI'

Despite the Greek government's assertion that a "no" vote will not lead to a euro exit, most people agree it would open up more uncertain outcomes, especially if the ECB halts its life-support measures to Greece's banks.

A number of European politicians, including Jeroen Dijsselbloem, the top eurozone official, have said a "no" vote would jeopardize Greece's place in the euro. Others, such as the leaders of France and Italy, appear to be holding the door ajar for further talks.

But investors are likely to be that a "no" vote increases the chance of a Greek exit from the euro, or "Grexit."

The word 'Grexit' has dominated the past months of negotiations on Greece. But the country will not return to the drachma — Greece's former currency — immediately. Rather, the risk increases the longer there is a deadlock in talks. Without a deal and without money, Greece will default on more of its debt repayments and will not be able to pay salaries or pensions. The banks will run dry, even with the cash withdrawal limits.

In such a case, printing a new currency may be the only option available, which almost everyone thinks will be a short-term disaster for the Greek economy.

European heat wave gives Germany record temperature

July 06, 2015

BERLIN (AP) — Europe's heat wave has pushed the mercury to its highest level in Germany since measurements began in 1881.

The country's national weather service says an automated measurement station recorded a temperature of 40.3 degrees Celsius (104.54 Fahrenheit) in Kitzingen, northern Bavaria, on Sunday afternoon. Weather service spokesman Uwe Kirsche said Monday that the record won't be official until technicians have manually checked the station.

But he says "we assume that our equipment worked properly." The previous record of 40.2 Celsius was measured in the southwestern city of Karlsruhe in 2003. Storms across parts of Germany on Sunday night brought temperatures back down.

Service held in UK to remember Srebrenica massacre victims

July 06, 2015

LONDON (AP) — Days before the 20th anniversary of the Srebrenica massacre, hundreds of Bosnians and Britons attended a memorial service at Westminster Abbey on Monday to remember the more than 8,000 male Muslim victims.

The service was one of dozens of events in Britain this week to mark 20 years since the July 11-13, 1995 massacre — Europe's worst mass killing since World War II. Bosnian Serbs rounded up men and boys in Srebrenica after taking control of the town, killing most of the victims and buried their bodies in mass graves.

"We must never, ever forget what happened at Srebrenica," British Prime Minister David Cameron said in tributes before the service. "We must reaffirm our determination to act to prevent genocide in the future."

The Westminster Abbey service was attended by Bakir Izetbegovic, the Muslim Bosniak member of Bosnia's tripartite presidency. Britain has proposed a draft U.N. Security Council resolution that would call the Srebrenica massacre genocide. Serbia and Russia, a permanent Security Council member with veto power, strongly oppose that description.

Armenian police disperse protest after 2 weeks

July 06, 2015

YEREVAN, Armenia (AP) — Police cleared away barricades on Monday to unblock a central avenue in the Armenian capital that demonstrators had occupied for two weeks to protest hikes in electricity prices in the impoverished former Soviet nation.

Police also detained 46 demonstrators who refused to disperse, but released all of them quickly. The protest organizers called on supporters to gather in the evening on nearby Freedom Square, but fewer than 1,000 turned up and they were outnumbered by police. Police have allowed demonstrations to be held on the square, where they don't disrupt traffic, but they appeared determined to prevent the protesters from taking to the streets again.

The prolonged standoff with police was the most serious unrest that the Caucasus nation has seen in years. Armenia is closely allied with Russia, which watched the protests with concern. During the first week of the protests, the number of demonstrators grew steadily to reach about 15,000 and Armenian President Serzh Sargsyan responded by promising to suspend the rate increase. He said an international company would conduct an audit of the Armenian power grid, a subsidiary of the Russian electricity company Inter RAO UES, and only if the rate hikes were found to be justified would they be passed on to consumers.

The protesters, however, refused to remove their barricades, formed from large trash containers, and vowed to stay on the street until the government annulled the hike. But in the week that followed, the number joining the nightly protest rallies gradually dwindled.

At the end of last week, protest organizers gave the government a deadline of Monday evening to meet their demands, saying that otherwise they would begin moving the trash containers forward along the avenue in the direction of the presidential residence.

Instead, police announced Monday morning that they intended to open the road to traffic, and the sanitation company that owned the containers came to pick them up.