Questions, conflicts mark path to Greek bailout referendum

By Michele Kambas ATHENS (Reuters) - Prime Minister Alexis Tsipras has easily clinched parliamentary approval of his desired July 5 referendum on Greece's creditors' latest bailout terms. By the time Greeks go to vote, however, the issue they will be voting on might be entirely irrelevant since the creditors have suggested their offer may now be off the table. Even if the offer remains valid, many in Greece say the question that the left-wing Tsipras is posing is not actually about the bailout terms - rather the more fateful issue of Greece's euro membership. On top of that, the only information many Greeks have about the creditors' offer has been gleaned from leaks in the media since Greece's government has not published the proposal. Further complicating matters, Greece could be in the middle of a full-blown financial crisis with capital controls and a default by next Sunday. The confusion is illustrative of a country that squarely wants to remain in the euro - but bristles at what it calls the crippling conditions of its international lenders. "The government is taking a big gamble. It is a big dilemma," said Stefanos Nikdma, a 40-year-old shop decorator in Athens. "Basically they are asking us if we should stay or leave Europe." AN UNEXPECTED TWIST When Tsipras unveiled the referendum in the early hours of Saturday, he said he wanted Greeks to decide whether to accept or reject final terms that creditors had offered. In defending the referendum before parliament early on Sunday, Tsipras said the vote was an act of democracy that would "take place, whether our partners like it or not." Greece's creditors want the country to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed. Though the Syriza government had floated the idea of a referendum on bailout terms before, few expected the announcement to be made days before Greece's existing bailout expires on June 30 - which is also the day Athens owes 1.6 billion euros to the International Monetary Fund. To allow time for the referendum, Tsipras asked Greece's European partners to extend the expiring bailout by a few days. The rejection of that request by European finance ministers on Saturday now leaves Athens likely to default on its debt days before the vote. A default or a decision by the European Central Bank to yank funding to Greek banks could set off an uncontrollable cascade of events before polls open next Sunday. Moreover, it is unclear whether the bailout offer on which the referendum is based is still valid. European finance officials made clear on Saturday that they had moved beyond bailout negotiations to emergency planning for the possible ripple effect beyond Greece of a default. IMF head Christine Lagarde told the BBC that because the European part of Greece's bailout programme would have expired by July 5, any referendum would relate to "proposals and arrangements which are no longer valid". But she also said that if there was a "resounding 'yes'" to staying in the eurozone, then the response would be "a resounding 'let us try'". "You are calling the Greek people to vote on a proposal of a negotiation that has already closed," former Greek Prime Minister and current opposition leader Antonis Samaras told parliament. EURO EXIT RAMP Samaras joined other opposition leaders in saying that the referendum, while ostensibly about bailout terms, risked - wittingly or not - pulling Greece out of the euro. Andreas Loverdos, a lawmaker for the centre-left Pasok party, said it was misleading to ask people to say whether they were for or against more austerity measures. "The question is deceptive and leading. How could citizens possibly vote in favour of taxes?" he tweeted. Spyros Lykoudis, parliamentarian for the To Potami centrist party, said the referendum was based on a false pretext, suggesting to people that they could vote "no" but still remain in the euro. In theory, Greece could default and remain in the euro since there is no legal basis for partners to force it out. But a default coupled with the ECB pulling emergency funding for banks would almost inevitably open the way to a euro exit, forcing the government to issue a parallel currency or issue IOUs to pay wages and pensions if it runs out of cash. "We are in the last act of the Greek drama. But this tragedy is not played in real terms," said To Potami lawmaker Lykoudis. "It is a shadow play with false dilemmas and divisive terms." There is also a question over whether the upcoming referendum would run afoul of Greek law. Nikos Skoutaris, a lecturer in European Union law at East Anglia university, said that Article 44 of the country's constitution prohibits people from voting on fiscal issues. Skoutaris said the deeper issue is that there is unlikely to be any resolution from the vote, whatever the result - which remains unclear at the moment. "There is sheer uncertainty over the repercussions...no matter what the outcome," he said. "If it's a 'No,'...we don't know if we are going to have a bankruptcy, a bankruptcy within Europe, or even a parallel currency in the future. But even if it's a 'Yes,' we don't know what Greece is committing itself to." Still, many in Athens over the weekend struck as defiant a tone as Tsipras. Though the prospect of financial chaos led Greeks across the country to line up outside bank machines in order to take out cash, many said they stood by their prime minister on the referendum. "He absolutely did the right thing. Of course I will vote against the lenders proposals," said Areti Kazanzioglou, 40, a private sector employee. "Europe is all about democracy, and not what the institutions are trying to do to us." (Writing by Alessandra Galloni; editing by Janet McBride)