Greece crisis: Eurozone chief warns of consequence of 'no' vote

Athens: The head of the eurozone finance ministers' group, Jeroen Dijsselbloem, says it will be "incredibly difficult" to build a new bailout package for Greece if the country votes "no" in Sunday's referendum. Speaking Thursday in a parliamentary committee, Dijsselbloem told lawmakers, "If the result is a 'no,' what foundation is there of ownership? And how can you then accept such a program if the result is 'no.' So it will be incredibly difficult." The Dutch finance minister put the blame squarely on the Greek government for promoting a 'no' vote with unrealistic expectations.

He said, "The Greek government is rejecting everything with the suggestion that if you vote 'no' you will get a better or less tough, or more friendly package. That suggestion is simply wrong." He noted that Greece's economic situation is only getting worse in the meantime, making a rescue program more difficult. The German president's office says Greek President Prokopis Pavlopoulos has canceled a previously planned visit to Germany that was set for next week.

Pavlopoulos was to make his first visit to Germany since being elected president on Tuesday, meeting President Joachim Gauck in Berlin. Gauck's office didn't give a reason for the cancelation, but Greece is holding a referendum on Sunday in which the country's prime minister has urged voters to denounce the last deal offered by creditors for releasing bailout funds.

Pavlopoulos, a conservative law professor and veteran politician, was elected as head of state in February. Spain's economy minister says the doors for negotiations will remain open for Greece regardless of the outcome of Sunday's referendum. Luis de Guindos has told Spain's Cadena SER radio that a "yes" vote would amount to a vote of no confidence in the Greek government.

He says that "if the 'no' vote wins, we will continue to be open to talks." He points out, however, that the conditions referred to in the referendum question no longer apply as they are based on Greece's bailout program, which expired Tuesday.

De Guindos stresses that up to a week ago, Greece and the eurozone creditors had been very close to an agreement but that the referendum announcement was an ultimatum that left no room for discussion until after the vote. He warns the referendum could have consequences, among them Greece's exit from the euro, a scenario he says no one wants.

Working out a strategy for Greece's debt burden, which stands at around 180 percent of the country's annual GDP, is becoming a key discussion point ahead of Sunday's referendum on creditor proposals. Greek Finance Minister Yanis Varoufakis said he won't sign any deal that doesn't include a restructuring of Greece's debts.

"I prefer to cut my arm off," he told Bloomberg TV in an interview where he also said he'd resign if the "Yes" campaign wins.

Many economists think Greece should get debt relief to allow the economy to breathe. That could take the form of a reduction in the debt, extending repayments way into the future and slashing the interest rates payable on the debts.

Greece has had some relief when in 2012, the country's private creditors agreed a big write-down on their Greek debt holdings. Greek Finance Minister Yanis Varoufakis has said he will resign if there is a "Yes" vote in Sunday's referendum over recent creditor proposals.

Asked on Bloomberg TV whether, come Monday, if there is a yes vote, he will not be finance minister, Varoufakis said: "I will not." Varoufakis also said he wouldn't sign any deal with creditors without any reference to a restructuring of Greece's debt burden. Varoufakis claimed Greece was being treated as a "debt colony" that doesn't have rights. However, he expected a "No" vote and that he and Prime Minister Alexis Tsipras will be around Monday "to forge mutually beneficial agreement with rest of Europe."

Credit ratings agency Standard & Poor's is warning that a "distressed" Greek exit from the euro would have "severe" consequences for the country's economy. A so-called Grexit, according to S&P, would cause Greek economic output to fall by 20 percent below what it would otherwise have been after four years.

It adds that Greece would permanently lose access to financing from the European Central Bank, which would create a serious foreign currency shortage for the private and public sectors. And without the support of European institutions, Greece's payment system would shut down and its banks would not be able to operate.

"The overall economic impact of a Grexit would be severe for Greece but more contained for the rest of the eurozone," S&P says.

French Finance Minister Michel Sapin says Europe remains committed to avoiding "catastrophe" for Greece and keeping it in the eurozone. Sapin said on France's iTele television Thursday that "the exit of Greece from the eurozone is not desirable, nor envisaged."

Sapin had been pushing for an agreement with Greece before Sunday's referendum, but after a fruitless meeting of European finance ministers Wednesday, he conceded that there's no point negotiating until after the vote.

Sapin said that regardless of what happens Sunday, France's own economy will be able to bear the outcome, in contrast to the situation five years ago when the Greek debt crisis first exploded. "There are no immediate consequences for France. France is stronger than in 2010."

"We are committed to avoid a catastrophe for Greece and difficulties for Europe and France." European stock markets have opened steady, a day after Greece's European creditors said they would not talk with the Greek government about its bailout request until after Sunday's referendum.

In Greece, most banks remain shuttered and will remain so at least until after the referendum on recent creditor proposals. Greek Prime Minister Alexis Tsipras confirmed Wednesday that the referendum would take place and that he would be backing the "No" campaign.

"The Greek government would appear to continuing its game of cat and mouse with its creditors," said Michael Hewson, chief market analyst at CMC Markets.

Soon after opening, the Stoxx 50 index of leading European shares was up 0.2 percent. The euro itself was 0.1 percent higher at $1.