In a dramatic move that will put Europe on tenterhooks, the Greek prime minister Alexis Tsipras told his fellow citizens last night he would call a referendum on the bailout accord that international creditors have proposed to keep the debt-stricken country afloat.



Following an emergency meeting of his cabinet, Tsipras said his leftist-led government had decided a package of austerity measures proposed by the country’s creditors – made in a last-ditch effort to avert default – would be put to popular vote. The referendum will take place on Sunday 5 July.

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“After five months of hard negotiations our partners, unfortunately, ended up making a proposal that was an ultimatum towards Greek democracy and the Greek people,” he said in a national address, “an ultimatum at odds with the founding principles and values of Europe, the values of our common European construction.”

The leader, who only hours earlier had rejected the proposed reforms after several days of high-stakes talks in Brussels, said Greeks now faced a “historic responsibility” to respond to the ultimatum.

He said the reforms were “blackmail for the acceptance on our part of severe and humiliating austerity without end and without the prospect of ever prospering socially and economically”.

Describing the vote as a “historic decision”, Tsipras said he had informed the leaders of France, Germany and Mario Draghi, the head of the European Central Bank about the decision. “I asked them to extend our current bailout by a few days so this democratic process could take place,” he said.

Greeks would be asked whether they wanted to accept or reject excoriating tax hikes and pension cuts that the EU, ECB and International Monetary Fund have set as a condition to release desperately needed bailout funds. Greece’s current rescue programme, already extended once, expires on 30 June.

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Panic-stricken depositors, worried that capital controls may only be hours away, rushed to ATMs to withdraw savings. Queues quickly formed outside banks around the capital.

Prompted by the response, the government spokesman, Gavriel Sakellarides, insisted the plebiscite would not endanger Greece’s place in Europe. “The question is not whether we will remain in the eurozone. The Greek people should not be afraid,” he said in the early hours.

But Tsipras, whose radical-left Syriza party was catapulted into power five months ago on a platform of eradicating austerity, did not hide his own feelings for the accord.

Greeks, he said, were being subjected to “humiliation and blackmail”. “These proposals, which clearly violate the European rules and the basic rights to work, equality and dignity, show the purpose of some of the partners and institutions was not a viable agreement for all parties, but possibly the humiliation of an entire people,” he said.

“But I personally pledge that I will respect the result of your democratic choice, whatever that may be.” The Greek parliament, in an emergency step, would convene on Saturday so that the referendum could be called in line with the constitution. Several ministers emerging from the cabinet session said they would not support the “barbaric measures” being demanded of Athens by foreign lenders.

The energy minister, Panagiotis Lafazanis, who heads Syriza’s militant wing known as the Left Platform, said he would support a no vote against measures that had resulted in the widespread “misery and pillaging” of the country since its debt crisis exploded five years ago.

The recipient of €240bn in bailout funds – the biggest rescue programme in global financial history – Greece has seen its economy contract by more than a quarter, unemployment soar and poverty levels rise precipitously under the weight of draconian budget cuts and tax increased demanded by creditors.

“It is a democratic decision and the Greek people are being called to give a democratic answer. And that answer is going to be a resounding no,” Lafazanis told Kontra TV.

“If the Greek people say a big no, it is going to be impossible for those who wield power not to take note unless democracy no longer exists.”

Echoing that sentiment, the Greek 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!).”

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Konstantinos Chrysogonos, a Syriza MEP, told BBC 2’s Newsnight: “It’s obvious that the deal creditors are proposing to the Greek government is beyond the popular mandate this government has.”

He added: “There was probably no other way but to submit the demands of the creditors to a referendum.”

Chrysogonos said it was not clear yet what recommendation the government would make in the runup to the vote. “I don’t know what the suggestion of the government will be, whether it will be to accept or to withdraw or to refuse the demands of the creditors. This remains to be seen. It remains to be seen what the verdict of the Greek people will be.”