Panic grips Greece ahead of bailout referendum

Rumours of food and cash shortages as Greeks face decision that could see their country leave the euro zone.

A poster depicting German finance minister Wolfgang Schaeuble with the message ’For five years he is drinking your blood, now tell him NO’, hangs above another one reading ‘Yes to Greece, Yes to Euro’ on a lamp post in Athens on July 3, 2015. Thanassis Stavrakis / AP PhotoShow less

Athens // Greeks approached a crunch referendum on their country’s financial future amid a growing sense of alarm on Saturday, as polls showed the “yes” and “no” camps neck and neck.

On the eve of the vote that could also make or break the radical-left government, citizens were spooked by rumours that capital controls were leading to food and medicine shortages, and growing uncertainty over when the country’s banks would reopen.

“I’ve heard shops are running out of flour, sugar and salt. I’m really worried, how will we manage if we can’t get to our money and there’s no food to buy?” said Lena Antoniou, a 35-year old mother of two.

“Certain supermarkets are very concerned because they cannot forecast how the situation will evolve,” said Nikos Archondis, from the Panhellenic Exporters Association.

He said stocks of meat, cheeses, fruits and vegetables “risk running low in the following weeks”.

Many businesses said they had been forced to ask workers to take unpaid leave, some shops were refusing card payments in an effort to hoard cash and there were reports of companies paying workers in IOUs valid in local supermarkets.

“No one accepts your credit cards. Most people are buying food now because they fear the worst,” said Andreas Koutras, 51, who works in finance.

Prime Minister Alexis Tsipras got a rock-star welcome at an Athens rally on Friday night as he sought to revive support for the No vote to strengthen his hand in talks with international creditors.

EU leaders have warned that a No victory could cause Greece to crash out of the eurozone. But Mr Tsipras and his closest ally, finance minister Yanis Varoufakis, have accused them of fear-mongering.

In an interview published on Saturday, the outspoken Mr Varoufakis accused Athens’s creditors of “terrorism”.

"What they're doing with Greece has a name – terrorism," he told the Spanish daily El Mundo. "What Brussels and the troika want today is for the Yes [vote] to win so they could humiliate the Greeks."

As tensions rose he was forced to deny a Financial Times report that suggested Greek savers could lose 30 per cent of their bank deposits to shore up the banking system, slamming it a "malicious rumour".

The British business daily, quoting unidentified bankers and businessmen close to negotiations, reported that Greek depositors with more €8,000 (Dh32,660) in an account may be force to take a “haircut”.

A defiant Mr Tsipras told 25,000 cheering supporters at Friday’s rally to “say ‘no’ to ultimatums and to turn your back on those who would terrorise you”.

“No one can ignore this passion and optimism,” he said.

A rival rally of 22,000 Yes supporters shouted pro-European slogans and voiced fears of a so-called “Grexit” from the eurozone and a return to Greece’s former currency, the drachma, if Mr Tsipras got his way.

“They cannot pretend any longer that it’s not about leaving the euro,” said Nikos, a 43-year-old doctor who gave only his first name. “Outside the euro lies only misery.”

Many Greeks have crossed over to the Yes camp since capital controls were imposed this week limiting daily ATM withdrawals to just €60 to stem a cash haemorrhage after Greece’s international aid package ran out on Tuesday.

Adding to the sense of crisis, a eurozone emergency fund officially declared Greece to be in default on Friday for not making a €1.5 billion payment to the International Monetary Fund.

The latest voter intention polls, published late on Friday, showed the nation of 11 million people was evenly divided.

A GPO poll put the Yes voters at 44.1 per cent and the Nos at 43.7 per cent, while an Alco survey found 44.5 per cent would vote Yes while 43.9 per cent would vote No.

Mr Tsipras says the vote is needed to force creditors to finally accept his key demand of another round of debt relief to save Greece from financial meltdown and possibly crashing out of the euro.

But critics have complained the referendum’s very technical bailout question is unintelligible, and that the bailout deal it asks voters to weigh expired on Tuesday.

European Commission chief Jean-Claude Juncker warned in Brussels that Greece’s negotiating position would be “dramatically weakened” in the event of a No vote – and still difficult even in the event of a Yes.

As the clock ticked down there was palpable exasperation among Greece’s eurozone partners, at least one of whom branded the government as “amateurs” asking for a blank cheque.

The pitiful state of the country’s banking sector was being blamed on Greeks who, gripped by panic, moved money to bank accounts in France and Germany or are stashing cash at home.

European leaders fear the referendum will not only seal Greece’s fate; eurosceptic parties at the extreme left and right of the political spectrum have been exploiting the Greek referendum to bash the euro currency.

Mr Tsipras insists Greece needs to trim its suffocating €323bn debt burden by having creditors forgive 30 per cent of what they are owed and allowing a 20-year grace period for repaying the rest.

Mr Varoufakis has promised banks would reopen on Tuesday if a new deal is reached quickly. The Union of Greek Banks said on Friday that its members had enough liquidity until then.

In an article in Greece's Kathimerini newspaper, the minister warned a Yes vote would transform the country into a "colony regime subject to debt", with creditors "returning to Athens with wild revenge intentions".

* Agence France-Presse