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maltatoday, SUNDAY, 5 JULY 2015 16 News JURGEN BALZAN GREECE'S day of reckoning has arrived. Today millions of Greeks will cast their vote in a referen- dum, which could shape the future of the birthplace of democracy and the rest of the European Union and the single currency. Greek Prime Minister Alexis Tsipras called for a snap referen- dum after months of negotiations with the country's creditors de- scended into acrimony, with his government refusing the creditors' demands. Voters will today decide whether or not to accept the proposal put forward by the troika (the Europe- an Commission, the International Monetary Fund and the European Central Bank). A day after Greece became the first developed economy to de- fault on debt to the International Monetary Fund, Tsipras accused Europe's leaders of attempting to "blackmail" Greek voters by deny- ing the country debt-relief. In a televised address, Tsipras urged voters to vote no, add- ing "the sirens of destruction are blackmailing you to say yes to eve- rything without any prospect of exiting the crisis". The left-wing Prime Minister is hoping for a strong mandate by the people to strengthen his position at the negotiating table. However, he said that if the people vote yes he would resign. In a twist of events on Thurs- day, the International Monetary Fund (IMF) published a document which revealed a deep split with Europe as it warned that Greece's debts are "unsustainable." The IMF said Greece needs €50 billion of extra funds over the next three years. It said that Greece re- quires large-scale debt relief to cre- ate "a breathing space" and stabilise the crippled economy. "Even with concessional financing through 2018, debt would remain very high for decades and highly vulnerable to shocks," the IMF said. Why is Greece in such a mess? The Greek economy was one of the fastest growing in the Eurozone from 2000 to 2007: during this pe- riod it grew at an annual rate of 4.2%, as foreign capital flooded the country. But the Hellenic country became the epicentre of Europe's debt crisis after Wall Street imploded in 2008. With global financial markets still reeling, Greece announced in Oc- tober 2009 that it had been deflat- ing its deficit figures for years, rais- ing alarm about the soundness of Greek finances. Suddenly, Greece was shut out from borrowing in the financial markets and by the spring of 2010, it was veering towards bankruptcy, which threatened to set off a new financial crisis. To avert disaster, the troika is- sued the first of two international bailouts for Greece, which would eventually total more than €20 bil- lion. In return, creditors imposed harsh austerity terms, requiring deep budget cuts and steep tax in- creases. Where did the bailout money go? Almost all the money owed by Greece has been used to pay off private banks, with only 8% mak- ing its way into the economy, ac- cording to the Jubilee Debt Cam- paign. Most of the money went to the banks that lent Greece money before the crash and only a small fraction of the €252 billion the creditors gave Greece in the 2010 and 2012 bailouts could be used to soften the blow of the 2008 fi- nancial crash and fund reform pro- grammes. A Jubilee study has shown that since 2010, the IMF, European governments and the European Central Bank have lent €252 billion to Greece. Since then, Greece has paid around €150 billion to foreign banks, mostly German and French based banks, and a further €48 bil- lion to Greek banks. Another €34.5 billion were hand- ed out as 'sweeteners' to speculators to get them to accept the 2012 debt restructuring. Back in 2010, nearly all govern- ment debt was owed to private banks and financial institutions. Today 78% of Greek debt is owed to the public sector, primarily Eu- rozone governments. What did the creditors propose? Tax increases and spending cuts are among the measures the troika is now demanding from the Greek government. The most politically sensitive of the proposals proposed by the creditors are the cuts to pen- sions. The plan also calls on Greece to "recognise that the pension system is unsustainable and needs funda- mental reforms," to fully implement a 2010 pension law and to start in- Europe on tenterhooks as Greeks vote Can they even hear each other? Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel: at opposites poles of the EU divide on austerity