Europe News

Greece negotiating in 'much worse situation': Papandreou

Hoped for a 'yes' vote: Fmr. Greek Prime Minister

After the citizens of Greece voted to reject a proposed bailout deal by a near 2-to-1 margin, Prime Minister Alexis Tsipras may find himself in a more difficult position at the negotiation table, former Prime Minister George Papandreou said Tuesday.

"That has put the prime minister in a difficult situation because he has to go back and he has to sit down and build up the trust," he said on CNBC's "Power Lunch."

Papandreou, who voted in favor of accepting the proposed deal, added that Greece's weakening financial condition wouldn't make Tsipras' job any easier.

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"With the capital controls on the banks that has created a completely new fiscal situation for the country," he said. "So in fact we're going into a negotiation in a much worse situation, financially then we were before."

However, the former prime minister did highlight a silver lining that came along with Greece's referendum as Tsipras looks to return to the negotiating table with his country's creditors.

"He has now convened leaders of all the opposition and they have signed on a deal to support a new agreement so that would be supported by a very wide consensus of the Greek political parties," he said. "That I think is an important element for the creditors to know that if there is a deal struck it will be implemented."

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European Union leaders pressured Papandreou to scrap a similar referendum called for in 2011, and shortly after doing so, he resigned as part of an agreement that paved the way for a new unity government. That coalition was in turn replaced by one dominated by Tsipras' anti-austerity Syriza party earlier this year, but Papandreou isn't calling for Tsipras to step down.

"If you want to serve the national interest you have to put your national interest ahead of your own personal desires, history or ambitions," he said. "That doesn't mean he has to step down, I would say he now has the mandate to go and negotiate, but he also has the mandate from the Greek people not to break up from the euro."

He clarified that a vote against the proposed deal was not a vote in favor of leaving the euro zone as much as it was to "tell the world 'this is enough,'" and to voice the pain the Greek people have gone through with five years of austerity, seven years of recession and a loss of 25 percent of GDP.

Papandreou has previously placed part of the blame for Greece's ongoing problems on the EU's push for austerity over reforms and the European Central Bank's delay in launching quantitative easing measures as early as the U.S. enacted them.

—CNBC's Tom DiChristopher contributed to this report.