Referendum “No” Vote Leaves Greece’s Future in Doubt

Greeks throw doubt on their future in the euro by overwhelmingly voting “no” in a referendum.

Greeks demonstrate outside parliament in Athens, June 29
Greeks demonstrate outside parliament in Athens, June 29 (Jan Wellmann)
  • 61 percent of Greeks voted down the latest bailout offer from their creditors in a referendum — even though that offer has already been withdrawn.
  • European leaders were dismayed. German vice-chancellor Sigmar Gabriel said negotiations for another bailout were “barely conceivable” now. Poland’s prime minister, Ewa Kopacz, said the Greeks were victims “of a bunch of populists.”
  • Greek prime minister Alexis Tsipras disputed that what he called a “brave” vote amounted to a rejection of the euro. “Our message is not a message of breaking with Europe but for negotiations for a viable agreement,” he said on television.
  • Antonis Samaras, the former prime minister and leader of the opposition New Democracy party, resigned after the scale of the “yes” camp’s defeat had become clear.
Nick Ottens Nick Ottens July 5, 20155:42 PM

As polling stations closed at 6 in the evening, a Greek exit from the euro looked more probable than ever.

Three surveys published immediately after the polls closed put the “no” camp narrowly ahead. Opinion polls in the days leading up to Sunday’s vote had shown Greeks almost evenly split on whether to vote “yes” or “no”.

The referendum was overshadowed by the early signs of a financial meltdown.

Throughout the week, pensioners struggled to collect their retirement benefits as capital controls limited cash withdrawals to €120 per day.

Greece failed to make a crucial €1.5 billion repayment to the International Monetary Fund on Tuesday when its €240 billion bailout program expired.

The far-left government of Prime Minister Alexis Tsipras threw away the chance of an extension of the program by unexpectedly calling the referendum on its creditors’ latest proposal a week ago.

With the proposal off the table, the referendum has turned into a proxy of Greece’s willingness to continue economic reforms in return for financial support from other European countries or reject austerity at the price of its eurozone membership.

European officials urged a “yes” vote.

Sigmar Gabriel, the German vice-chancellor, said, “It must be crystal clear what is being decided. It is, at the core, ‘yes’ or ‘no’ to remaining in the eurozone.”

European Commission president Jean-Claude Juncker, French president François Hollande and Italian prime minister Matteo Renzo, among others, said much the same thing.

But Tsipras insisted his country would stay in the euro no matter the outcome on Sunday.

At a rally in Athens, he said accepting the creditors’ offer would be a “humiliation” and he urged Greeks to “send a message of democracy and dignity to the world.”

The prime minister, who was elected in January on vows to end austerity, earlier told Greeks not to worry “because we will have a deal 48 hours after the referendum.”

Either with an agreement which will not be sustainable if people vote “yes” or, if people vote “no,” on Monday I will be in Brussels to sign a deal.

European officials denied there was a deal in the offing and said additional support could only be part of a totally new bailout program.

The Netherlands’ Jeroen Dijsselbloem, who chairs the meetings of eurozone finance ministers, told the Dutch parliament that in case of a “no” vote, “There is not only no basis for a new program; there is also no basis for Greece in the eurozone.”

He earlier raised doubts about being able to do a deal with Tsipras’ government at all, lamenting its tendency to say one thing in Brussels and another back home. “Even if the outcome of the referendum is a ‘yes’,” he said wondered last week, “who can we then trust to implement that program?”

Immediately after taking office, Tsipras reneged on the conditions of Greece’s bailout by canceling reforms, irritating other European nations. He spent the next five months seeking relief from austerity which the Greek left blames for shrinking the economy by a quarter. But the creditors insisted that he honor the conditions of the program which was designed to make Greece more competitive and prevent another debt crisis in the future.

Tsipras has suggested he will step down if the referendum goes against him. A government of national unity could then possibly restart negotiations for financial support to meet a mid-July deadline to pay back €3.5 billion to the European Central Bank.

If Greece fails to make that payment after defaulting on the IMF loan, the central bankers in Frankfurt, who have so far spent €89 billion to keep the Greek banks afloat, would probably have to cut off funding — effectively driving the country into bankruptcy and forcing it to introduce a new or parallel currency.

Nick Ottens Nick Ottens July 5, 20155:56 PM

The Netherlands’ conservative weekly Elsevier argues that the rest of the eurozone would be better off without Greece.

Indeed, it would have been better if Greece had left the euro when the sovereign debt crisis began in 2010, rather than “rewarding bad policy with aid,” according to the magazine’s chief political commentator, Syp Wynia.

This left the eurozone vulnerable to blackmail from Greece, something that persists up to this day.

If Greece defaulted on all its debt obligations, the Netherlands would suffer some of the highest losses per capita in the European Union. But for the sake of stability in the eurozone, an exit is still preferable, argues Wynia.

Nick Ottens Nick Ottens July 5, 20156:00 PM

The BBC’s economics correspondent in Athens, Duncan Weldon, argues that this time, Greece’s blackmail backfired.

Prime Minister Alexis Tsipras’ ruling Syriza party assumed — as did many others — that the risk of a Greek exit from the eurozone would see markets fretting that Portugal, Spain or even Italy could be next.

“That hasn’t happened,” according to Weldon. Judging by the virtually unchanged interest rates these countries are being charged on their bonds, “The markets have decided that what happens in Greece, stays in Greece.”

The effect of this is that Syriza thought that threatening Grexit was mutually assured destruction for them and the eurozone. But instead it looks like a plan to blow yourself up if you don’t get what you want.

Nick Ottens Nick Ottens July 5, 20156:15 PM

Nikos Konstandaras, the managing editor of the Greek newspaper Kathimerini, argues in The New York Times that far more is at stake on Sunday than “the only stable currency Greece has had in a history punctuated by bankruptcies.”

Will we raise children and grow old in a united society? Will we remain part of Europe’s further development? Will the idea of Europe — named after a maiden in Greek myth, Europa — as a union fall apart, country by country? Will our children be able to study abroad or will we sink into an isolation that will harm the next generation as much as our pensioners now suffer?

Konstandaras partly blames the rigidity of Greece’s creditors for the current crisis. But he argues that a Greek exit from the euro would ultimately be the responsibility of a far-left government that “has overseen the unraveling of many reforms, done little to crack down on tax evasion and corruption and repeated the cronyism of the past with blatantly political appointments in the public sector.”

A “yes” majority might allow us to get down to the business of making Greece a viable economy while an integral part of the European Union; a “no” vote would divide us further, with economic woes and social tensions growing.

Nick Ottens Nick Ottens July 5, 20156:20 PM

Nikos Voutsis, the Greek interior minister, told reporters after polls closed that more than 50 percent of eligible voters participated in the referendum, meaning it is legally valid. (The threshold is 40 percent.) He also said a good indication of the final result should be available around 9 in the evening local time.

The latest prediction by pollsters on Greek television put “no” voters clearly ahead with 55 to 57 percent.

Nick Ottens Nick Ottens July 5, 20156:26 PM

Even if a “no” vote does not lead to a Greek ejection from the euro, it seems highly unlikely that Tsipras will be able to make good on his promise to secure a deal “within 48 hours”.

The Financial Times reports that in a brand new bailout, debt relief is more likely to be on the table. But so would other thorny issues that were recently sidelined in an effort to find a quick compromise, like labor market reform and liberalizing prices.

That would make negotiations for a new two-year program far more challenging than the previous talks, which concerned only a single tranche of an existing bailout.

Nick Ottens Nick Ottens July 5, 20156:33 PM

With 15 percent of the votes counted, “no” is ahead with 60 percent.

The early results are mostly from sparsely populated and rural areas. The outcome in Greece’s major cities and on its tourism-dependent islands may be closer to “yes”. But taking into account the nationwide opinion polls, a decisive “yes” vote seems highly unlikely at this point.

Nick Ottens Nick Ottens July 5, 20156:49 PM

Last week, I argued that calling the referendum was an act of political cowardice on the part of the Greek prime minister, Alexis Tsipras.

Tsipras’ Syriza party came to power in January on vows to end austerity. […] But the Greeks never gave Tsipras a mandate to exit the euro. Polls show that most Greeks still believe they can unilaterally tear up the bailout and continue to get financial support from other European countries — despite countless warnings from European officials to the contrary.

Tsipras should either have followed through on his promises and accepted that the price of ending austerity could be Greece’s euro membership. Or he should have told their Greeks their expectations were unreasonable.

Hiding behind a referendum is weak and unlikely to change a basic fact: The rest of Europe is not going to help Tsipras keep his word to eleven million Greeks by breaking his nation’s word to nearly 500 million other Europeans.

Nick Ottens Nick Ottens July 5, 20157:06 PM

The Greek Interior Ministry has released an official projection that shows the “no” side winning with 61 percent.

That corresponds with the outcome so far, with around a third of the votes counted.

Nick Ottens Nick Ottens July 5, 20157:31 PM

The Economist Intelligence Unit puts the chances of a Greek exit from the euro at 60 percent.

It is still possible that a Grexit is avoided. Given the severe consequences of not securing a deal, there is a chance that the creditors could offer further concessions or that Syriza could unilaterally return to the table.

But that seems unlikely. Tsipras will probably interpret a “no” vote as a mandate for demanding more concessions from Greece’s creditors, betting that — despite all their warnings — they’re unwilling to see the country leave the euro. That could turn out to be a major miscalculating.

A “no” vote would be interpreted by the region as an indication to prepare for a Greek default and exit from monetary union.

Nick Ottens Nick Ottens July 5, 20157:48 PM

With almost 50 percent of the votes counted, “no” is still ahead at 61 percent.

Even in Attica, the capital region, “no” voters are outnumbering the “yes” camp 69 to 31 percent — although just a quarter of the votes have been counted there so far.

In Thessaloniki, the region that contains Greece’s second-largest city, the outcome also mirrors the national trend with a third of the votes counted.

Nick Ottens Nick Ottens July 5, 20157:58 PM

With all the world’s attention focused on Greece, it may be worth remembering we’re talking about a nation of eleven million that accounts for hardly more than 1 percent of the European Union’s yearly economic output.

If turnout in the referendum was 58 percent, it means around five million Greeks voted on Sunday. If the numbers hold up, that means over three million Greeks voted “no” and under two million voted “yes” — giving around one million voters the power to decide the outcome.

Nick Ottens Nick Ottens July 5, 20158:23 PM

The American Interest‘s Walter Russell Mead argues that the outcome of the referendum underlines what has become evident through seven years of crisis: “Greece cannot change enough to fit in the European monetary union — and that the European monetary union cannot change enough to accommodate Greece.”

In such a case, there is only one real option: Greece needs to leave the euro and its partners and allies need to assist it in making as smooth a transition as possible.

In purely economic terms, a Greek exit from the eurozone is trivial, Mead argues. But the euro was never just an economic project. A Greek exit would raise serious doubts about the ability of different European cultures and societies to sustain a single currency.

There is the immediate and practical question of whether Italy and Spain, also, are too different from Germany and Finland to live together happily in the same currency. There is also a fundamental question that Eurocrats would rather keep off the agenda completely: what are the limits that Europe’s diversity of cultures, levels of development and aspirations impose on the architects of European order? How much Europe is too much?

Nick Ottens Nick Ottens July 5, 20158:58 PM

German vice-chancellor Sigmar Gabriel, the leader of the junior Social Democrats in Chancellor Angela Merkel’s coalition, told Berlin’s Tagesspiegel newspaper that Alexis Tsipras had “burned the last bridges” with Europe and fooled Greeks by claiming a “no” vote would strengthen his negotiating position.

To the contrary, he said, the outcome of the referendum makes talks for 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.

Nick Ottens Nick Ottens July 5, 20159:18 PM

Antonis Samaras, the former prime minister and leader of the opposition New Democracy party, resigned after the scale of the “yes” camp’s defeat became clear on Sunday night.

With 76 percent of the votes counted, “no” remained far ahead at 61 percent.

In the days leading up to the referendum, Samaras had accused his successor, Alexis Tsipras, of bringing the country to a total deadlock, “between an unacceptable agreement and a euro exit.”

But Samaras did not assume a leading role in the “yes” campaign, hoping that pleas from the apolitical mayors of Athens and Thessaloniki would be more effective at swaying public opinion against the government.

Samaras led a coalition government between his conservative party and the socialist PASOK from 2012 to 2015 when a failed presidential election triggered parliamentary elections that brought Tsipras’ Syriza party to power.

Nick Ottens Nick Ottens July 5, 20159:28 PM

Germany’s Manfred Weber, leader of the conservative European People’s Party in the European Parliament, told ARD television the Greek “no” vote was a “bad signal for Europe.”

He expressed doubts that a deal could be done with the Greek finance minister, Yanis Varoufakis, who recently called his nation’s creditors terrorists.

When it became clear the referendum would produce a convincing “no” vote on Sunday night, Varoufakis accused other European countries and the International Monetary Fund — which jointly administered Greece’s €240 billion bailout — or refusing substantial negotiations and planning Greece’s humiliation ever since his radical Syriza party won the election in January.

Nick Ottens Nick Ottens July 5, 20159:54 PM

Slovakia’s finance minister, Peter Kažimír, warned on Twitter that a Greek exit from the euro was now a “realistic scenario.” He also implored other European countries, “Rejection of reforms by Greece cannot mean that they will get the money easier.”

Often overlooked because of their relatively small economies and willingness to go along with the European consensus at the end of the day, the Central Europeans have had a hard time bailing Greece out. They went through painful economic adjustments of their own after the fall of communism yet still have lower living standards than the Greeks.

Nick Ottens Nick Ottens July 5, 20159:57 PM

In a televised address to the nation, Greek prime minister Alexis Tsipras hailed the outcome of the referendum as an “historic and brave” decision. “The Greek people gave an answer to what kind of Europe they want, one of cooperation and democracy,” he said.

Tsipras denied the “no” vote was a vote against the euro. “Our message is not a message of breaking with Europe but for negotiations for a viable agreement,” he said.

But he already made one demand — that debt forgiveness be part of the next round of talks.

Nick Ottens Nick Ottens July 5, 201510:53 PM

Poland’s prime minister, Ewa Kopacz, said on Sunday night she saw no other option for Greece but to leave the eurozone after voters overwhelmingly rejected austerity in a referendum.

“Greeks today are the political victims of a bunch of populists,” she said.

The Netherlands’ Mark Rutte, whose country has otherwise taken a hard line in talks with Greece, was more cautious, saying only the outcome of the referendum had made the situation “more complicated.”

But Rutte’s liberal party was adamant that further financial support for Greece — which lacks the funds to make a critical €3.5 billion payment to the European Central Bank later month — would require more austerity. “And it’s exactly against deeper cuts that the Greek government and people just said ‘no’,” the party’s Mark Harbers said.

European leaders said they would meet in Brussels on Tuesday for an emergency summit to discuss the repercussions of the Greek “no” vote.

Nick Ottens Nick Ottens July 5, 201511:22 PM

With 95 percent of the votes counted, “no” still leads with 61 percent against 39 percent who voted “no”.

The Greek Interior Ministry said turnout was 62.5 percent.

Leave a reply