Another Bailout Now “Barely Conceivable”: Germany

The outcome of the Greek referendum makes further financial support almost impossible, Germany says.

German economy minister Sigmar Gabriel and Chancellor Angela Merkel are seen walking to a news conference in Berlin, June 29
German economy minister Sigmar Gabriel and Chancellor Angela Merkel are seen walking to a news conference in Berlin, June 29 (Bundesregierung)

Germany’s vice-chancellor, Sigmar Gabriel, lamented on Sunday night that Greece’s Alexis Tsipras had “burned the last bridges” with Europe after his government convinced more than 60 percent of Greeks to vote “no” in a referendum that was seen by many in the European Union as a test of their commitment to the euro currency.

Gabriel, who leads the junior Social Democrats in Chancellor Angela Merkel’s coalition, told Berlin’s Tagesspiegel newspaper that Tsipras had fooled Greeks by claiming a “no” vote would strengthen his negotiating position.

To the contrary, he said, the outcome of the referendum makes another bailout almost impossible.

With this rejection of the rules of the eurozone that is expressed in the majority’s “no,” negotiations about a program worth billions are barely conceivable.

While his party initially sympathized with the far-left Tsipras’ demands for relief from austerity when it came to power in January, Gabriel has lately taken a hard line. He told the Bild tabloid last month, “We will not let the exaggerated electoral pledges of a partly-communist government be paid for by German workers and their families.”

Immediately after taking office, Tsipras reneged on some of the economic reforms Greece had committed to enact under its €240 billion bailout program — and which especially Germany saw as necessary to improve Greek competitiveness and prevent another debt crisis in the future.

After failing to win concessions from his nation’s creditors, Tsipras unexpectedly called a referendum on their latest offer for a bailout extension last Saturday.

Without an extension, Greece failed to make a crucial €1.5 billion repayment to the International Monetary Fund on Tuesday and could be short of cash to pay back €3.5 billion to the European Central Bank later this month.

The ECB capped its support for Greece’s banks at €89 billion, forcing the country to limit cash withdrawals to €60 per day and €120 per day for pensioners.

As the bailout formally expired on Tuesday, the Greek referendum turned into a proxy of its willingness to continue economic reforms in return for financial support or reject austerity at the price of its eurozone membership.

Gabriel warned last week, “It must be crystal clear what is being decided. It is, at the core, ‘yes’ or ‘no’ to remaining in the eurozone.”

With turnout at 62.5 percent, a 61 percent majority of Greeks followed their government’s advice to vote “no” on Sunday.

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