Greece votes on financial future, government - and maybe euro

Across the country of 11 million people — on far-flung Aegean islands, in the shadow of the 2,400-year-old Parthenon in Athens, to the northern border shared with fellow EU state Bulgaria — voters were set to cast their ballots.

The rest of Europe, and international investors, will be watching intently, unsure of the outcome that could greet them on Monday. Polls suggest both the ‘Yes’ and ‘No’ camps are neck-and-neck.

Greece’s youthful Prime Minister Alexis Tsipras, a radical leftist who came to power six months ago, has staked his political career on the plebiscite.

He announced it a week ago in a bid to break a five-month impasse with international creditors and insists a ‘No’ vote would force a restructuring ofGreece’s massive debt and a softening of drastic austerity conditions.

Supermarkets emptied

But many who first backed him have swung to the ‘Yes’ camp, heeding warnings from EU leaders, notably European Commission chief Jean-Claude Juncker, that a ‘No’ result could see Greece expelled from the 19-nation eurozone — a so-called “Grexit”.

Greece was officially declared in default on Friday by the European Financial Stability Facility, which holds 144.6 billion euros ($160 billion) of Greek loans, days after becoming the first developed country to miss a debt payment to the IMF.

Tsipras’s flamboyant finance minister, Yanis Varoufakis, on Saturday accused Athens’s creditors of “terrorism” for trying to sow fear. around the vote.

He pointed out that no legal mechanism exists to force Greece out of what is meant to be an “irreversible” monetary union.

Greeks were nevertheless alarmed this week when the government imposed capital controls, closing banks and limiting daily ATM withdrawals to just 60 euros ($67), to stem a bank run.

The banks’ liquidity was expected to dry up entirely in just one or two days’ time unless the European Central Bank (ECB) injected funds quickly.

“Most people are buying food now because they fear the worst,” said Andreas Koutras, a 51-year-old Greek woman who works in finance in the capital.

Supermarket shelves have been emptied in the days leading up to the referendum.

Mothers, elderly men and university students were seen pushing heavily overloaded trolleys or coming out of shops weighed down by bags of food, with essentials such as sugar, flour and pasta top of the list.

Tsipras betrayed no doubt about the path he had set in a final mass rally late Friday in Athens urging a ‘No’. He told a crowd of 25,000: “On Sunday, we don’t just decide to stay in Europe — we decide to live with dignity in Europe, to work and prosper in Europe.”

Austerity or Grexit?

The referendum is seen as so crucial that some Greeks living outside the country made the trip back to vote as no provisions had been made to permit ballots in embassies for the hastily called poll.

“I came just to vote,” said Kostas Kokkinos, a 60-year-old Greek living on the nearby EU island nation of Cyprus, as relatives greeted him at Athens’s airport. He said he was voting “Yes” and then leaving just a day or two later.

Thanasis Hadzilacos, a professor in his late 60s working at Cyprus’s Open University, brought his summer Greek vacation forward to be able to vote in Athens. “I think I will vote ‘No’,” he said.

But he added: “I don’t think either result will make much difference anyway, especially as it is so close.”

Financial analysts also said they doubted a ‘Yes’ or a ‘No’ would greatly change things. Many said they expected negotiations would resume in either case, though a ‘No’ could still conceivably hasten a “Grexit”.

Some of the world’s top economists, though, said Greece’s least-bad choice was to vote ‘No’: accept a painful exit from the euro but then claw its way back to economic stability through a devalued national currency.

“A ‘No’ vote would at least open the possibility that Greece… might grasp its destiny in its own hands” and shape a future that “though perhaps not as prosperous as the past, is far more hopeful than the unconscionable torture of the present,” wrote Joseph Stiglitz, a Nobel laureate in economics and professor at Columbia University in the United States.

Paul Krugman, another Nobel winner, who writes for The New York Times, agreed, saying a ‘No’ vote “will also offer Greece itself a chance for real recovery”.