Finance minister: Europe can't afford to let Greece go under

Europe will lose a trillion euros if it allows Greece to go under, the country's finance minister said Saturday, accusing creditors of “terrorizing” Greeks into accepting austerity in a referendum on bailout terms.

After a week in which Greece missed a loan payment to the International Monetary Fund, closed its banks and began rationing cash, Greeks were set to vote Sunday on whether to accept or reject tough conditions sought by international creditors to extend a lending lifeline keeping the country afloat.

Their decision could determine Greece's future as a member of the single currency.

Addressing a crowd of more than 50,000 in central Athens, left-wing Prime Minister Alexis Tsipras urged Greeks to spurn the deal, rejecting warnings from Greece's European partners that this may bring an exit from the euro and even greater hardship.

A slew of opinion polls on Friday gave the "Yes" camp, which favors accepting the bailout terms, a slender lead, but all were within the margin of error and pollsters said the vote was too close to call. Only one had a win for the "No" vote, which the government advocates.

Tsipras' finance minister, Yanis Varoufakis, said there was too much at stake for Europe to cast Greece adrift.

"As much for Greece as for Europe, I'm sure," Varoufakis told the Spanish newspaper El Mundo. "If Greece crashes, a trillion euros (the equivalent of Spain's gross domestic product) will be lost. It's too much money and I don't believe Europe could allow it."

"What they're doing with Greece has a name: terrorism," Varoufakis said. "Why have they forced us to close the banks? To frighten people. And when it’s about spreading terror, that is known as terrorism."

Athens’ 18 partners in the eurozone say they can easily absorb the fallout from losing Greece, which accounts for barely 2 percent of the bloc's economic output. But it would represent a massive blow to the prestige of Europe's grand project to bind its nations into a union they said was unbreakable.

"For Europe, this would be easy to manage economically," Austrian Finance Minister Hans Joerg Schelling said in an interview with online newspaper Die Presse. For Greece, however, "it would indeed be considerably more dramatic."

Schelling said Greece would need humanitarian aid in case of a “Grexit,” or Greek exit from the eurozone, but described fears of widespread poverty as exaggerated and part of "a propaganda war.”

Capital controls imposed by the government this week have driven home for many Greeks the catastrophe they face if the country exits the euro and is forced to turn to a new, heavily-devalued currency.

Finance Minister Wolfgang Schaeuble of Germany, Greece's biggest creditor and toughest critic, appeared to suggest Greece may be left without the euro currency "temporarily."

"Greece is a member of the eurozone. There's no doubt about that. Whether with the euro or temporarily without — only the Greeks can answer this question. And it is clear that we will not leave the people in the lurch," Schaeuble told top-selling newspaper Bild in an interview.

Reuters