Rival rallies in Greece, PM sees slipping support for vote

Rival rallies swelled in central Athens late Friday ahead of a referendum the Greek government called to bolster it in its struggle with creditors, even though polls now show public support swinging against it.

Police said 25,000 people had gathered for the pro-government demonstration urging a 'No' vote in Sunday's plebiscite, while 20,000 for a 'Yes' outcome yelled pro-European slogans just 800 metres (yards) away, separated by police with riot shields.

Prime Minister Alexis Tsipras, who was expected to address the 'No' rally later Friday, went on television earlier to urge voters to ignore European scaremongering that the ballot could lead to Greece crashing out of the euro.

But many Greeks are jumping into the 'Yes' camp because of that fear and because of a heightened sense of crisis brought on by capital controls this week that limit their daily ATM withdrawals to just 60 euros ($67).

Adding to that, a eurozone emergency fund officially declared Greece to be in default on Friday for not paying a 1.5-billion loan instalment to the International Monetary Fund loan earlier this week.

The European Financial Stability Facility (EFSF), Greece's single biggest creditor, said however it was not yet demanding immediate repayment of its loans worth 145 billion euros ($160 billion).

The two latest polls on the referendum showed voter intentions were now effectively tied -- a change from earlier published surveys that had indicated strong support for the government's 'No'.

An Alco institute poll Friday found 44.8 percent of Greeks intend to vote 'Yes' and 43.4 percent are for 'No'.

A Bloomberg survey for Greece's Macedonia University was equally split, showing 43 percent to vote 'No' and 42.5 percent 'Yes'.

Greece's top administrative court ruled late Friday the referendum could go ahead after rejecting a challenge by two citizens who argued its question was confusing and unconstitutionally dealt with a matter of "public finances".

Tsipras said on television the plebiscite was meant to "silence the sirens of destruction" by forcing creditors to finally accept his key demand of another round of debt relief.

He stressed his decision to stop debt negotiations last week and announce the vote "does not mean a break with Europe".

Tsipras said Greece needed to trim its suffocating 323-billion-euro debt burden by having creditors forgive 30 percent of what they are owed and allowing a 20-year grace period for repaying the rest.

European Commission chief Jean-Claude Juncker warned in Brussels however that Greece's negotiating position, far from being strengthened, would be "dramatically weakened" in the event of a 'No'.

Even if the 'Yes' vote wins, there would still be "difficult" negotiations ahead, he added.

- Confusing question -

Greek voters are confronted with a referendum question that has stumped many.

The question reads: "Should the deal draft that was put forward by the European Commission, the European Central Bank and the International Monetary Fund in the Eurogroup of June 25, 2015, and consists of two parts, that together form a unified proposal, be accepted? The first document is titled 'Reforms for the Completion of the Current Programme and Beyond' and the second 'Preliminary Debt Sustainability Analysis'."

Eurozone officials have firmly said that the "deal" referred to expired on Tuesday.

Some voters who initially backed the government have swapped sides ahead of Sunday's ballot.

"I was going to vote 'No' because I think the Greek people are being treated with contempt. But Tsipras has made the situation so much worse, it's his fault the banks are closed," said Athens shop assistant Suzanna Alizoti.

- Despair -

Greek Finance Minister Yanis Varoufakis has promised that banks would reopen next Tuesday, and the Union of Greek Banks said Friday it had enough liquidity until then.

But the current cash rationing has led many to despair, especially pensioners, who have been allowed a one-off over-the-counter withdrawal of 120 euros if they don't have a bank card.

In Greece's second-biggest city of Thessaloniki, one 77-year-old man unable to withdraw his 120 euros crumpled to the ground, scattering his papers. A bank manager quickly resolved the problem.

"I am a sensitive person," the man, George Chatzifotiadi, explained later to AFP. "I cannot stand to see my country in this situation."

He added: "Europe and Greece have made mistakes. We must find a solution."

In Athens, another pensioner, Kostas, was regularly withdrawing his and wife's daily euro limits from ATMs for fear they might be seized by the government or converted to drachmas. "My money is safer at home," he said.

Many cash machines were running short of denominations, allowing only the withdrawal of a 50-euro note.

- Government future -

Varoufakis has said he would step down as finance minister if a 'Yes' vote carried the day, and the rest of the government "may very well" do the same.

But Tsipras has been ambiguous, saying only he would respect the referendum's result and take the necessary steps "set out in the constitution".

Europe's main stock markets slipped lower Friday as all eyes were riveted on Greece's referendum and what that might mean to investors at the beginning of next week.

"The vote seems tight," said VTB Capital economist Neil MacKinnon.

"A 'Yes' vote results in the resignation of the Greek government though it is not clear that this would necessarily result in a more creditor-compliant Greek administration that would sign up to the creditors' proposals quickly."

But if the 'No' vote wins, "much would depend on the reaction of the ECB and whether it was willing to continue to sanction Emergency Liquidity Assistance to Greek banks," without which "capital controls in the country would probably have to remain in place or even be stepped up," said analyst John Higgins of Capital Economics.