Euroskeptics Sympathetic as Greeks Vote Down Austerity

Euroskeptics were sympathetic in their response to the Greek “no” vote on Sunday, seeing it as a vindication of their long-held doubts about the euro.

Syed Kamall, the British Conservative who leads the European Parliament’s third largest bloc, the European Conservatives and Reformists, said the Greek bailout referendum “will shake the notion of some European leaders who believe that the peoples of European nations will always blindly vote for further integration and will always take rather than leave the offer on the table.”

He called on European leaders not to “punish” the Greeks for their “democratic choice.” Read more “Euroskeptics Sympathetic as Greeks Vote Down Austerity”

Another Bailout Now “Barely Conceivable”: Germany

German party leaders Sigmar Gabriel and Angela Merkel walk to a news conference in Berlin, June 29
German party leaders Sigmar Gabriel and Angela Merkel walk 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.

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

Athens Greece
The Acropolis of Athens, Greece, April 19, 2009 (John, Melanie Kotsopoulos)
  • 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.
  • 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.
  • Antonis Samaras, the former prime minister and leader of the opposition New Democracy party, resigned.

Germans Mock Greek Referendum, Unsure About Euro’s Future

Copies of Germany's Handelsblatt newspaper on sale in Oberding, July 3
Copies of Germany’s Handelsblatt newspaper on sale in Oberding, July 3 (Tomas Thoren)

Germany’s popular press on Friday revealed exhaustion in Europe’s largest economy with the Greeks’ latest demands for financial support.

Bild, the country’s most popular tabloid, printed a mock ballot paper on its front page that asked readers, “Should we continue to support Greece with further billions from taxpayers?”

The tabloid ridiculed the referendum Greece’s far-left leaders have called for Sunday on an offer to extend a bailout program that is now defunct. Read more “Germans Mock Greek Referendum, Unsure About Euro’s Future”

Greeks Split on Euro Future, Leaders Defiant

Greeks demonstrate outside parliament in Athens, February 16
Greeks demonstrate outside parliament in Athens, February 16 (Lefteris Heretakis)

Polls on Friday showed the Greeks almost evenly split on a referendum that is seen in the rest of the European Union as a test of the Balkan nation’s commitment to the euro currency.

A Bloomberg poll showed 43 percent inclined to vote “no” in Sunday’s referendum and 42.5 percent in favor. An Alco poll published in the Ethnos newspaper similarly showed the Greeks divided: 40 percent said they would vote “no” against 41.5 percent who said they would vote “yes”.

Greece’s far-left government insists the referendum is not a vote on the euro but other members of the single-currency union disagree.

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.”

French president François Hollande, German vice-chancellor Sigmar Gabriel, Italian prime minister Matteo Renzo and Jean-Claude Juncker, the president of the European Commission, have said much the same thing this week.

Yet Prime Minister Alexis Tsipras, who scuttled his country’s negotiations for an extension of a €240 billion program by unexpectedly calling the referendum last Saturday, 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.

Yanis Varoufakis, his finance minister, was also optimistic, telling the BBC there was a “100 percent chance of success” in talks for another bailout, whatever the outcome of the referendum.

He previously insisted there was no way Greece could be made to leave the eurozone. Although Varoufakis also vowed there would be no capital controls a day before they were imposed, limiting Greek bank withdrawals to €120 per day.

The next day, Dijsselbloem told reporters in The Hague that Varoufakis’ comments were pulled out of thin air.

To put Greece back on the right track and get its economy going again, difficult measures need to be taken. Any politician who says that wouldn’t be necessary in case of a “no” vote is fooling his people.

Greece’s creditors demanded budget cuts and liberal economic reforms in return for financial aid. Tsipras’ far-left Syriza party, which won the election in January on vows to end austerity, wanted to raise taxes instead and roll back privatizations and labor market reforms that were designed to make the country more competitive and prevent another debt crisis in the future.

Among the main sticking points for an extension of the bailout that expired on Tuesday were Greek proposals for a one-off 12 percent tax on corporate profits and its refusal to enact comprehensive reform of a pension system that is relatively the most expensive in the eurozone.

Without the extension, Greece was unable to pay off a €1.5 billion loan from the International Monetary Fund.

Although neither the IMF nor rating agencies considered Greece’s nonpayment an actual default, the country doesn’t have the money either to make good on €3.5 billion in bond redemptions that are due in the middle of July. If Greece fails to make that payment as well, the European Central Bank — which has so far spent €89 billion to keep the Greek banks afloat — would probably have to cut off funding and drive the country into bankruptcy.

Sunday’s referendum asks voters if they approve or disapprove of the creditors’ latest offer for a bailout extension — a question that is technically irrelevant because the offer is no longer on the table.

Tsipras and Varoufakis may hope that a “no” vote will strengthen their negotiating position in Brussels and give them a fresh mandate to demand a watering down of austerity measures and relief from Greece’s gargantuan debt, now equal to 177 percent of yearly economic output.

But it would be unfeasible for other European politicians to give in to Greece at this point. More likely, a “no” vote would cut off Greece’s ECB funding, trigger a financial meltdown and culminate in Greece’s ejection from the eurozone.

A “yes” vote, on the other hand, would likely force Tsipras and his Syriza-led coalition to step down in favor a government of national unity. It could then restart negotiations for financial support in order to meet the ECB deadline.

Relieved to be rid of a government that constantly tested their patience, European leaders may then be willing to throw Greece another lifeline, provided it recommitted to reforms — if possibly on an extended timetable.

After Greek Default, Euro Exit Hinges on Referendum

A European Union flag is seen on Crete, Greece, January 28, 2015
A European Union flag on Crete, Greece, January 28, 2015 (Theophilos Papadopoulos)

After Greece failed to make a crucial €1.5 billion payment to the International Monetary Fund at midnight on Tuesday, its future in the eurozone seemed to hinge on the outcome of a referendum planned for Sunday.

Called by the country’s far-left government this weekend on whether or not to accept its creditors’ latest bailout proposal, the vote will now be a de facto referendum on Greece’s eurozone membership.

Germany’s chancellor, Angela Merkel, on Tuesday said no decisions about what to do now Greece is entering default could be made until after the referendum.

Her economy minister, Sigmar Gabriel, added, “It must be crystal clear what is being decided. It is, at the core, ‘yes’ or ‘no’ to remaining in the eurozone.”

Other leaders, including France’s François Hollande, Italy’s Matteo Renzo and Jean-Claude Juncker, the president of the European Commission, said much the same thing. Read more “After Greek Default, Euro Exit Hinges on Referendum”

Leaders Rule Out Greece Deal Before Referendum

Sigmar Gabriel Angela Merkel
German party leaders Sigmar Gabriel and Angela Merkel walk to a news conference in Berlin, June 29 (Bundesregierung)

On the day its €240 billion bailout program expired, Greece made a last-minute effort to get emergency funding from other European Union countries but was turned away by creditors who said it now had to wait until voters confirm they want to stay in the eurozone.

Greece’s far-left government called a referendum on the creditors’ latest bailout proposal this weekend in a move that infuriated European leaders who had been negotiating with it for months. They wanted the Balkan country to honor the conditions of a financial aid package that saved it from bankruptcy but is also blamed for depressing growth and leaving one in four Greeks without a job.

Alexis Tsipras, the Greek prime minister, likened the creditors’ position to “blackmail” and said their demands for economic and pension reforms in return for the final tranche of the bailout placed “unbearable new burdens on the Greek people.” He urged them to turn down the creditors’ proposal.

But that proposal is no longer on the table as the bailout is legally over. Another round of financial assistance would require approval from eurozone parliaments. It unlikely lawmakers in countries like Finland, Germany and the Netherlands would agree to lend Greece more money after it reneged on the terms of its last bailout. Read more “Leaders Rule Out Greece Deal Before Referendum”

Greek Euro Exit Could Herald Anti-Western Shift

European Union flag
A European Union flag on Crete, Greece, January 28 (Theophilos Papadopoulos)

If Greece is forced to leave the euro, the immediate repercussions for the rest of the European Union could be limited. Greece barely accounts for 1 percent of the European economy while both the bloc as a whole and other heavily-indebted states in its periphery, such as Italy and Portugal, say they are now better prepared for a Greek exit than they were in 2010, when the country received its first bailout.

But in the long term, a Greek withdrawal from the currency union or even the European Union altogether could do serious damage to the strategic position of other European states. Read more “Greek Euro Exit Could Herald Anti-Western Shift”

Greece Edges Closer to Euro Exit, Imposes Capital Controls

The Acropolis of Athens, Greece at night
The Acropolis of Athens, Greece at night (Shutterstock)

Greece imposed capital controls on Sunday night and announced it would keep its banks closed for several days in anticipation of an exit from the eurozone.

Prime Minister Alexis Tsipras assured Greeks their bank deposits were safe. But people have nevertheless taken billions out of their bank accounts in the last few weeks as it looked increasingly unlikely that Tsipras would do a deal with other European countries and the International Monetary Fund to stave off default.

The European Central Bank has provided up to €89 billion in emergency funding to Greece’s banks. In the absence of a political agreement to continue financial support, the bank said it would freeze the loans. Read more “Greece Edges Closer to Euro Exit, Imposes Capital Controls”

Greek Default Imminent After Euro Talks Break Up

Athens Greece
The Acropolis of Athens, Greece at night (Shutterstock)

A Greek default seemed inevitable when a meeting of European finance ministers broke up on Saturday without a deal to release the final €7.2 billion tranche of the country’s €240 billion bailout.

Greece desperately needs the money to pay off a €1.5 billion loan from the International Monetary Fund on Tuesday.

Any hope of a last-minute compromise was dashed when Prime Minister Alexis Tsipras unexpectedly announced a referendum on the latest offer from Greece’s creditors overnight. Read more “Greek Default Imminent After Euro Talks Break Up”