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DERMOT MURNAGHAN: People in Greece have begun voting in a referendum that could determine the country’s future in the eurozone.  Voters are deciding whether to accept a deal offered by the country’s creditors.  The country’s leader, Alexis Tsipras is urging his people to vote no but those in the yes camp say that may lead to the country’s exit from the eurozone.  Both the yes and no campaigns are thought to be currently neck and neck.  Well Petros Doukas is a former Greek Finance Minister and joins me now, a very good morning to you Mr Doukas.  Let’s explore the two possible outcomes and start with, if it is a yes that would presumably mean the fall of the government and then what?

PETROS DOUKAS: If there is a yes vote it is going to a defeat for the Prime Minister and he will have to go to Europe and come up with a deal as fast as possible, however a no vote would have even tougher consequences for him because he will get all he wants from the Greek people, i.e. a no vote and then have to go to Europe and he promised a deal within the next few days so he is going to be under a very, very tough spot.  If I were him,  I would hope for a yes vote even though he is arguing for a no vote.   He also has a major problem with the banking system.  Greek banks are insolvent today and need their recapitalisation in excess of €40 billion, he has to do something about that as soon as possible because one more week or two more weeks of the banks being closed and not doing any transactions are going to cost even more to the dysfunctional Greek economy and the problem is that a no vote may actually get the Europeans more upset with the Greeks and actually call for a haircut of Greek deposits.  A haircut however would actually punish those that are friendly towards Europe, the more progressive middle class, the more progressive working class so we are really in a very, very, very tight spot today and the Prime Minister himself is in a tight spot.  Either a yes vote will be a personal defeat for him or a no vote will put complete pressure on him to deliver a deal which is not going to be easy to deliver and avoid a haircut because what he did when he walked out of the negotiations, he did not just release Greece from its obligations towards the memorandum and the European Union, it released the Europeans from their obligations towards Greece so it is going to be a very, very tough week but I think the Prime Minister realises the consequences and even if he gets a resounding no vote he will actually have to go to Europe tomorrow morning or Tuesday morning and try to make a deal because the country is now completely dysfunctional and it cannot function unless there is an immediate agreement.  

DM: But on that point, on a no vote for Mr Tsipras, do you think he is misreading the mood in Europe or German or bluffing, because his analysis is of course that if the Greeks deliver a no vote it means that it strengthens his hand and that the rest of Europe must offer concessions.  

PETROS DOUKAS: Yes, it does not actually strengthen his hand, it makes the Europeans a bit more aggressive towards him.  The likelihood of a haircut is growing by the day and he may not be able to avoid that unless he goes and makes amends with them.   We are in the weak spot, there were some people in Syriza who thought that if he walked away from the negotiations the market would collapse and they would be forced, the Europeans, to do a deal.  That has not happened, the only people that have collapsed are the poor pensioners waiting in line in the ATMs for their €120 pension so all the design of the people in Syriza has not actually worked and I think he is realising that, he is stuck with a no vote and he has to deliver and especially find a way to reopen the banking system because there is absolutely no transactions being able to be carried today.  We cannot import raw materials with which to build our export sector, the tourist sector is having problems with a lot of cancellations so he must be seeing what is happening and he must try to strive for a deal this coming week.  He needs to go out, set up camp in Brussels and Berlin and come up with a deal even if he gets a resounding no and a resounding no does not by any way mean a Grexit.  Greece could still be in the European Union with the euro as a functional currency but in an impoverished state and this is what we need to all help him to avoid.  

DM: With an impoverished state, and as you mentioned there, the banking system effectively closed down, people only being able to take €60 out if they can find it, why do you think the people of Greece on the streets are remaining so calm at the moment through all this?

PETROS DOUKAS:  We have been very stoic about the whole development, we know there is no easy solution.  A lot of people are both angry and fatigued, we have five years of deep recession, 25-30% of GDP down, 30% of pensions are down, salaries are down, unemployment is now 29 towards 30%, it is an unprecedented crisis, not even during the crash of the late 1920s there wasn’t so much distraught so there is a lot of anger to be vented by the Greek people and I think our European allies and American allies need to understand that even if Mr Tsipras annoys them, they need to be a little bit more fatherly, understand that the country has deep problems and give them some time to work it out, not try to say this is an ultimatum, take it or leave it and we’ll kick Greece out of the euro.  That’s not the way to handle it and I understand the Europeans being angry at us and I understand a lot of Greeks being angry at the Europeans but we need to find a way to live closer together and make amends so there is a way to work it out and one of the ways I think is not to allow a major haircut of Greek deposits which would strike completely and liquidate the Greek middle class and the progressive working class.  So there is a lot of ways we can work together without a lot of acrimonies and ultimatums, there is a way out without a Grexit.  I actually think the chances of a Grexit are less than 10% as we stand and talk today.

DM: For the future, I mean do you foresee Greece growing again?  I mean it’s gone back into recession now, do you see a rosy economic future for Greece eventually?  Surely that is a pipe dream whatever happens.

PETROS DOUKAS: Actually I am a very strong believer in Greece, the business class is actually first class.  For Greek businesses to survive five years of deep cuts and recession means they are very lean and mean and hungry so if we get things right, if we stop over taxing the people – and I know a lot of people think Greeks don’t pay any taxes, not only do they pay a huge proportion of their income in taxes, they have no incomes, they pay taxes by selling a home or drawing down their deposits.  Greek deposits in Greek banks were 240 billion five years ago and they are now 115 billion, there has been no country in the world that has seen its deposit based reduced by 50%.  In every country they grow 2, 3, 4, 5% a year and in Greece we have the destruction of 50% of our deposits either because people are scared and take their money out or because they have to pay taxes out of their deposits.  So yes, the Greek people are really ready to pull up their sleeves and work, if they are given a chance and the government, our government, needs to understand that the public sector cannot offer anything anymore to Greek growth, they have to try to take better care of the Greek private sector. That’s where the future is and I think for Greece there is a very bright future if there is some understanding with our European partners and some deal sorted out over the next two days.  I think the Europeans sometimes are heavy handed on Greece, Greece has been used to borrow and pay and make transfer payments and be very generous when it didn’t have the production base to have the revenues to be so generous with some of its people but now it’s a problem and we need to fix it and I think we can fix it from our side and the Europeans can help us.

DM: Okay, Mr Doukas, thank you very much indeed.  Petros Doukas there live from Athens.