Greeks deciding 'destiny' in referendum: PM

Greece voted in a tightly fought referendum Sunday that Prime Minister Alexis Tsipras said would determine its "destiny" in the eurozone, as the debt-laden EU country teetered on the brink of financial collapse.

"No one can ignore the will of the people to live, to live with determination, to take its destiny into its own hands," Tsipras, appearing relaxed and wearing an open-necked white shirt, said after casting his ballot in Athens.

Polling stations were open across the country of 11 million people -- on far-flung Aegean islands, in the shadow of the 2,400-year-old Parthenon in Athens, to the northern border shared with fellow EU state Bulgaria.

Voters were weighing a question asking whether they were willing to accept worsening austerity in exchange for more bailout funds from international creditors.

The referendum was taking place after the government imposed strict capital controls, forcing banks to close and limiting daily ATM withdrawals to just 60 euros ($67).

The European Union and international investors were intently watching the poll, which is the biggest challenge to the European single currency since it came into being in 1999 and was adopted by Greece two years later.

EU leaders have warned a 'No' result sought by Tsipras's government could lead to Greece crashing out of the 19-nation eurozone.

But Tsipras said Greeks were only voting to live "with dignity" and predicted "a new chapter for Europe" on Monday based on "democracy and solidarity in Europe".

He called the referendum just a week ago, arguing that a 'No' would strengthen his hand in demanding the creditors forgive some debt and scrap austerity measures that have ground Greece's economy down under an interminable depression.

The outcome was far from certain. Polls suggest the 'Yes' and 'No' camps are neck-and-neck.

Tsipras's flamboyant finance minister, Yanis Varoufakis, has accused Athens's creditors of "terrorism" for raising fears of a Greece exit from the eurozone -- a 'Grexit'. He and Tsipras point out that no legal mechanism exists to make it drop what is meant to be an "irreversible" monetary union.

Under clear sunny skies, young and old voters queued to have their say in schools and university buildings transformed into polling stations. Voting was to close at 7:00pm (1600 GMT), with results expected a couple of hours later.

Dimitris Halatsis, a teacher, said it was "a crucial day" and he was voting 'No' because "it's the only chance the government and Greece have to apply pressure" on the creditors.

- 'Better for the country' -

Michelis, an 80-year-old first through the doors of an elementary school being used for the vote in central Athens, said he too was saying 'No' "because they (the creditors) will take us more seriously".

Theodora, 61, a retired journalist, said she was voting 'Yes' because "it's a 'Yes' to the European Union".

In the largely middle-class Pangrati neighbourhood, voter turnout was high, with even the very elderly making their way determinedly up a flight of forty steps to reach polling booths inside a school.

Summing up the uncertainty felt by many Greeks, 56-year old Katerina had still not made up her mind which way to vote, even as she collected her ballot paper.

"It is very confusing, it's very hard, not at all easy to decide," she said, admitting that she had voted to elect Tsipras but was disappointed by his failure to strike a deal with the country's creditors.

- Run on food -

Greece was officially declared in default on Friday by the European Financial Stability Facility, which holds 144.6 billion euros ($160 billion) of Greek loans, days after becoming the first developed country to miss a debt payment to the IMF to the tune of 1.5 billion euros.

Austerity-plagued Greeks were squeezed yet further this week after the government, scrabbling to stay afloat, imposed the credit controls.

The banks' liquidity was expected to dry up entirely in days unless the European Central Bank (ECB) -- a major creditor -- injected funds quickly.

Supermarket shelves have been emptied in the days leading up to the referendum and imports of medicines have been affected by the controls, which prevent money transfers abroad.

"Most people are buying food now because they fear the worst," said Andreas Koutras, a 51-year-old Greek woman who works in finance in the capital.

The referendum is seen as so crucial that some Greeks living outside the country made the trip back to vote as no provisions had been made to permit ballots in embassies for the hastily called poll.

But financial analysts said they doubted a result either way would greatly change things. Many said they expected negotiations would resume in either case, though a 'No' could hasten a Grexit.

Some of the world's top economists, however, said Greece's least-bad choice was to vote 'No,' accept a painful exit from the euro and claw its way back to economic stability through a devalued national currency.

"A 'No' vote would at least open the possibility that Greece... might grasp its destiny in its own hands" and shape a future that "though perhaps not as prosperous as the past, is far more hopeful than the unconscionable torture of the present," wrote Joseph Stiglitz, a Nobel laureate in economics and professor at Columbia University in the United States.