Latest update: Greece's finance minister is suggesting that his country might not pay the 1.6 billion euros ($1.8 billion) it owes to the International Monetary Fund on Tuesday. Check updates at bottom for more.
ATHENS, Greece -- Greece's parliament voted early Sunday in favour of Prime Minister Alexis Tsipras' motion to hold a July 5 referendum on creditor proposals for reforms in exchange for loans, with the country's future in the eurozone looking increasingly shaky.
Tsipras' surprise call stunned Greece's international debt negotiators, and the country took a big step closer to falling out of the euro currency union after fellow eurozone member states refused to extend its bailout program past its expiry date on Tuesday, leaving Greece on the brink of financial chaos.
In the streets of Greece, worried people queued outside banks for cash from dawn to dusk after Tsipras' announcement in the early hours of Saturday, after billions of euros had already been emptied in the preceding weeks.
Greece has a 1.6 billion euro ($1.8 billion) debt due to the International Monetary Fund on Tuesday and its bailout program expires the same day, after which it is unclear how the country might survive financially.
The referendum is set for next Sunday with the question on whether to accept proposed reforms needed to get bailout loans from other eurozone countries and the IMF. The government is advocating a rejection of the proposals.
The radical left-wing leader accused the creditors of using blackmail and ultimatums against his proud but struggling people. European officials and all Greek opposition parties except the extremist far-right Golden Dawn party called his move for a vote a foolish and rash gambit that effectively ended negotiations to keep Greece financially afloat.
The sudden move comes after five months of stalemated negotiations, with Tsipras accusing creditors of trying to strong-arm his country into taking harsh austerity measures he says would hammer an economy already on its knees after five months of creditor-demanded spending cuts and tax hikes.
"They didn't ask us to agree, they asked us to surrender our political dignity,'' Tsipras said during a tumultuous and nearly 13-hour parliamentary session that cumulated in a vote just before 3 a.m. Sunday. Out of parliament's 300 lawmakers, 178 voted in favour and 120 against, with two people absent.
He insisted the Greek side had "exhausted every limit of concessions so there could be an agreement, adding that ''perhaps some saw that as a weakness."
The referendum move further crumbled already strained relations between Greece and its European partners.
Tsipras said the Greek people would vote against a deal next Sunday.
"This no will also be a big yes, a big yes to the decision of the Greek government to reject an ultimatum that insults the Greek people.''
Tsipras dismissed harsh criticism from other European countries on his decision.
"The referendum will take place as scheduled, next Sunday, whether our partners want it or not,'' he said.
Eurozone finance ministers earlier rejected Greek Finance Minister Yanis Varoufakis' request for a one-month extension to the bailout program, with Varoufakis then leaving the meeting.
"It's a sad day for Europe, but we will overcome it,'' he said.
The other 18 finance ministers then huddled without him to assess how to minimize the damage from the Greek crisis on their currency.
"Our institutions are and will be prepared to take any action if needed,'' said top eurozone official Jeroen Dijsselbloem of fears that financial turbulence might extend to the rest of the currency bloc. Fellow ministers spoke candidly about the risks of a Greek exit from the euro in a way that would have been inconceivable only weeks ago.
The ministers stressed Greece remained in the eurozone for now, and Dijsselbloem said "the eurogroup stands ready to reconvene to take appropriate decisions where needed, in the interest of Greece as euro area member.''
Without a bailout program extension or more loans from creditors, Greece is likely to be in arrears on a debt payment due the same day. Its banks face the risk of collapse.
"The Greek authorities have asked for a month extension. But in that month there can be no disbursements,'' Dijsselbloem said. "How does the Greek government think that it will survive and deal with its problems in that period? I do not know.''
France's finance minister, Michel Sapin, stressed a deal was still possible and that he was ready to act as a go-between among Greece and the creditors after relations neared a breaking point.
Dijsselbloem refused to slam the door full shut. "The door is open. It was not the institutions that walked away from the last talks last night.''
Now much will depend on whether the European Central Bank will accept to continue to prop up Greek banks even after the country's bailout program expires. It would be under huge pressure to stop using eurozone taxpayer money to keep alive the banks if there is no prospect for a deal.
The eurozone finance ministers suggested Greece should take steps to stabilize its financial system -- code for putting limits on cash withdrawals and money transfers.
If Greece's banks collapse, the government would have to support them itself. Penniless, it would have to revert to printing a new currency, effectively drawing the country out of the euro union.
The ECB's governing council will meet "in due course'' to assess the situation, most likely this Sunday, officials said.
While the government is recommending a "no'' vote, Varoufakis noted "the high possibility that the Greek people will vote against the advice of the Greek government.''
What would happen in that case -- whether Greece would have to leave the euro or try to renegotiate with creditors -- is unclear.
An exit from the euro would put Greece through a new era of economic pain. With the new currency less valuable than the euro, the government would have to write off a chunk of its foreign loans -- mainly owed to eurozone countries -- and many companies and households would go bankrupt. Experts predict a long and deep recession in a country that has already been through five years economic depression.
The uncertainties of all this would roil European and global markets, though experts are divided on the extent. Some say Europe is better equipped to handle a Greek euro exit, but others say it is unclear what might happen. The euro dropped in value slightly on international markets after the referendum was called.
Casert reported from Brussels. Demetris Nellas, Thanassis Stavrakis and Paris Ayiomamitis in Athens, Greece, and Derek Gatopoulos and Lorne Cook in Brussels contributed.________________________
LATEST UPDATES (all times local):
2015-06-28 4:10 p.m.
Greece's finance minister is suggesting that his country might not pay the 1.6 billion euros ($1.8 billion) it owes to the International Monetary Fund on Tuesday.
Greek Finance Minister Yanis Varoufakis refused to reply to a direct question Sunday on the payment. Instead, he told BBC radio that the European Central Bank should pay the money to the IMF out of the profits it made on Greek bonds in 2014. Varoufakis calls that idea "a very sensible transfer.''
Asked directly, for the second time, whether Greece will pay up Tuesday, Varoufakis replies: "We are owed money by one part of the troika and we owe money to another part of the troika? Why don't they sort themselves out and transfer money from one pocket ... to the other?''
The European Central Bank has announced it is maintaining emergency credit to Greek banks at its current level.
The decision keeps a key financial lifeline open but does not provide further credit to Greece's banks, which are seeing deposits drain away as anxious Greeks withdraw savings.
The ECB said it was working closely with the Bank of Greece to maintain financial stability and added it could reconsider the decision on credit levels.
ECB head Mario Draghi said "we continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro-area economies.''
France's prime minister is urging Greece and other nations to do whatever they can to keep Greece in the 19-nation bloc that uses the euro currency.
French Prime Minister Manuel Valls said Sunday that "we don't know -- none of us -- the consequences of an exit from the eurozone, either on the political or economic front. We must do everything so that Greece stays in the eurozone.'' He was speaking on France's i-Tele TV.
Valls added that "means respecting Greece and democracy, but it's also about respecting European rules. So Greece needs to come back to the negotiating table.''
Greek Prime Minister Alexis Tsipras' call for a national referendum on creditors' demands has thrown Greece's negotiations with its international lenders into turmoil.
Germany's Foreign Ministry is advising travellers to Greece to ensure they have enough cash on them before they depart.
An updated version of the ministry's travel advice issued Sunday noted that people seeking to withdraw cash in Greece could face "significant waits'' and possible shortages at cash machines.
Worried Greeks were lining up at ATM machines on Sunday, the day after the Prime Minister Alexis Tsipras called for a referendum on creditors' financial proposals in return for rescue loans and creditors refused to extend Greece's international bailout beyond Tuesday.
While some machines in Greece were running out of cash, others were being replenished. Another top Greek financial official urged Greeks on Sunday to remain calm and not withdraw all their savings.
The European Central Bank faces a major decision.
It has been allowing Greek banks to draw emergency credit from Greece's central bank, a financial lifeline that has been keeping Greece's four major banks going during the country's tense bailout negotiations with creditors. The ECB has been slowly increasing the emergency credit to compensate for the increase in withdrawals from Greek banks.
But the ECB has said it can only continue such assistance if the banks are basically solvent. A failure by Greece's government to get more aid before its bailout ends Tuesday and a big payment to the International Monetary Fund is due could prompt the ECB to decide the Greek banks are not financially solid any more.
Capping the aid would quickly force Greek banks to limit withdrawals -- but such controls could take Greece a step closer to leaving the 19-nation eurozone.
ECB President Mario Draghi has said it's up to elected officials to decide Greece's fate. Analysts say the central bank wants to give politicians every chance to negotiate a deal.
Two opinion polls indicate most Greeks want to keep using the shared euro currency and would prefer a deal with Greece's European partners rather than a rupture.
The polls published Sunday were both conducted before Prime Minister Alexis Tsipras declared early Saturday that he was calling a referendum on financial proposals made by Greece's creditors in return for continuing to fund the country with bailout loans. Still, they provide an indication of public sentiment.
In the poll by Alco for the Proto Thema Sunday paper, 57 per cent said they believed Greece should make a deal with its EU partners while 29 per cent wanted a rupture. A separate poll by Kapa Research for the To Vima newspaper found 47.2 per cent of respondents would vote in favour of a new, painful agreement with Greece's creditors, compared to 33 per cent who would vote no and 18.4 per cent undecided.
Both nationwide polls were conducted from June 24-26. The Alco poll had a margin of error of 3.1 per cent while Kapa Research's was 3.09 per cent.
A Greek finance official says the government expects the European Central Bank to continue approving emergency liquidity assistance that Greek banks can draw even after Tuesday, when Greece's international bailout officially expires.
The ECB was expected to meet Sunday to decide what action to take about Greece. The central is bank is under pressure to end that emergency assistance.
A decision by Prime Minister Alexis Tsipras to call for a national referendum on creditor demands in exchange for bailout loans has thrown Greece's negotiations with its international lenders into turmoil. In response, other nations in the 19-nation eurozone are refusing to extend Greece's bailout program beyond its Tuesday expiration date.
Alternate Greek Finance Minister Nadia Valavani told private Mega television on Sunday "we are expecting the funding of Greek banks to continue normally via the ELA after Tuesday.''
Worried Greeks have formed lines at ATM machines all weekend and some machines were running out of cash Sunday morning.
Valavani said the country's banks could see "business as usual'' next week if they receive the emergency support "so long as there is calm'' and Greeks don't attempt to withdraw all their savings.
-- The Associated Press