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Greece can't take more austerity - UN

Beijing - Greece cannot take any more austerity as it will cause more social unrest and lessen the chance of an economic recovery, a United Nations debt expert said on Monday.

Greeks overwhelmingly rejected conditions of a rescue package from creditors on Sunday, throwing the future of the country's euro zone membership into further doubt and deepening a standoff with lenders.

Juan Pablo Bohoslavsky, the UN Independent Expert on Foreign Debt, told reporters in Beijing that Greece's creditors in the European Union should have paid more attention to what international law says on the matter of debt.

"I have the impression that the EU had forgotten that international human rights law plays and should play a key role in finance. The international community attaches great importance to the interlinks between human rights and finance," said Bohoslavsky, who operates under the auspices of the UN's High Commissioner for Human Rights.

"The message here is that if the parties involved in the Greek tragedy paid more serious attention to what human rights law has to say, everything would be easier, for the Greek population particularly," he added.

Bohoslavsky said the austerity demanded of Greece had not worked, adding he will visit Greece later in the year.

"It's very clear the message from the Greek population - no more austerity measures. Actually if you look at the figures, austerity measures didn't really help the country to recover."

In a separate statement, Bohoslavsky said he was concerned at reports of food and medicine shortages, and that he was asking to meet EU officials to remind them of their human rights obligations to Greece.

Bohoslavsky, visiting at the invitation of China's government, said he carried a message of the need for human rights to be considered in global lending, something important for China which is setting up two new multilateral lenders - the Asian Infrastructure Investment Bank and the New Development Bank.

"A narrow idea of efficiency in which human rights plays a limited role should not find its way into these two banks," he said.

China has promised that the infrastructure bank will follow global best practices in transparency and governance.

Rights groups often criticise China for its "no-strings" loans to countries, especially in Africa, for encouraging corruption and abuses with a lack of oversight.

EU stunned by vote

France and Germany called for an emergency summit of eurozone leaders to discuss Greece's stunning referendum vote on Sunday to reject bailout terms, as calls mounted in Berlin to cut Athens loose from Europe's common currency.

German Chancellor Angela Merkel's deputy said Athens had wrecked any hope of compromise with its eurozone partners by overwhelmingly rejecting further austerity.

Merkel and French President Francois Hollande conferred by telephone and will meet in Paris on Monday afternoon to seek a joint response. Responding to their call, European Council President Donald Tusk announced that eurozone leaders would meet in Brussels on Tuesday evening (18:00).

German Vice-Chancellor Sigmar Gabriel, leader of Merkel's centre-left Social Democratic junior coalition partner, said it was hard to conceive of fresh negotiations on lending more billions to Athens after Greeks voted against more austerity.

Leftist Prime Minister Alexis Tsipras had "torn down the last bridges on which Greece and Europe could have moved towards a compromise," Gabriel told the Tagesspiegel daily.

His comments reflected a mounting public demand in the most powerful EU country, which is also Greece's biggest creditor, to eject Athens from the 19-nation currency area, of which membership was intended to be irreversible.

It was not clear whether Merkel, who has repeatedly said she wants to keep Greece in the eurozone, would shift to a similarly hard line.

But senior lawmakers in her conservative bloc also spoke firmly: "Now one has to ask the question whether Greece would not be better off outside the eurozone," Hans Michelbach, a member of the Bavarian Christian Social Union, told Reuters. "Unfortunately, Greece has chosen a path of isolation."

The vote sharpened differences between Greece's few remaining sympathisers in the eurozone - mostly in Italy and France - and hardline countries led by Germany that are fed up with pouring loans into Greece.

Italy's Foreign Minister, Paolo Gentiloni, said the eurozone should resume efforts to reach a deal with Athens.

"Now it is right to start trying for an agreement again," he tweeted. "But there is no escape from the Greek labyrinth with a weak Europe that isn't growing."

Silence from Brussels

The euro fell sharply in early Asia-Pacific trading on Monday, losing about 1.4% against the US dollar, as analysts for Citi, Barclays and other banks said a Greek exit was now their "base case" or most likely outcome.

There was a thunderous silence from top EU policymakers in Brussels and Frankfurt who conferred by telephone but avoided public appearances to comment on an outcome that was a stunning setback for EU governments but delighted Eurosceptic populists.

The European Commission said in a brief statement that it "takes note of and respects" the referendum result.

Jeroen Dijsselbloem, chairperson of the Eurogroup of finance ministers of the currency bloc, said in a letter to his Dutch Labour Party members before the vote: "Although the government in Athens would like people to think otherwise, it is about the question of whether Greece stays in the eurozone or not."

European Parliament President Martin Schulz said the EU should start preparing a humanitarian aid programme for Greece.

The 60-40 margin of defeat for the terms of a cash-for-reform deal, which the leftist Greek government rejected a week ago, shocked EU officials who had been heartened by opinion polls showing the 'Yes' camp gaining ground as bank closures and the rationing of cash withdrawals began to bite.

It was a personal blow for European Commission President Jean-Claude Juncker, one of the architects of the euro, who worked for months to try to broker a debt deal with Tsipras despite misgivings in Berlin.

"The European Union oligarchy"

Deputy finance ministers and senior officials of the Eurogroup Working Group will hold a conference call on Monday to take stock of the situation, another euro zone official said.

Any future negotiation would run up against the hardening of opinion in Germany.

The head of Germany's savings bank association said Greece had broken with the rules of the eurozone and should leave the currency bloc. The head of the German exporters' body said he could not see how Greece could stay in the eurozone now.

Hardline German Finance Minister Wolfgang Schaeuble, denounced in 'No' campaign posters as a blood-sucker, has leaned towards making an example of Greece and pushing it towards the exit, sources familiar with his thinking say.

In a weekend newspaper interview, Schaeuble said Athens might consider leaving the currency area temporarily.

Eurosceptics around the EU were jubilant at the rejection of what French far right National Front leader Marine Le Pen called "the European Union oligarchy".

"It is 'No' vote of freedom, of rebellion against European 'diktats' of those who want to impose the single currency at any price, through the most inhuman and counter-productive austerity," she said in a statement.

In Britain, anti-EU UK Independence Party leader Nigel Farage commended Greek voters for "calling the EU's bluff".

"EU project is now dying. It's fantastic to see the courage of the Greek people in the face of political and economic bullying from Brussels," he said.

Eurosceptics in the Netherlands and Italy joined the chorus of glee at the EU's discomfiture. In Spain, leader of the new far-left Podemos party, Pablo Iglesias, who is close to Tsipras, tweeted: "Today in Greece, democracy has won."

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