Greece Says No to New Bailout and Austerity Terms, Could Leave Eurozone

Claire Bernish
July 6, 2015

(ANTIMEDIAIn an historic decision, Greek voters categorically rejected a deal by the country’s European and IMF creditors—leaving Greece’s financial collapse and exit from the euro a striking possibility. With even more stringent austerity at stake than they have already suffered for five years, a definitive 61.3% majority felt the terms for further financial assistance—and staying in the single currency—were simply too intolerable to accept.

Flag-toting voters in Athens’ Syntagma Square chanted “oxi, oxi [no, no]!” as results of the vote began to indicate a landslide. Amidst the celebration, news of the resignation of right-wing opposition leader and former prime minister Antonis Samaras led to even louder cheers from the crowd.

Prime Minister Alexis Tsipras hopes the no vote in the referendum will leverage increased bargaining power since negotiations with lenders fell through last month. Widely viewed as a testament to the power of the people, Tsipras said the country “has proved that democracy cannot be blackmailed; Greece has made a brave choice and one which will change the debate in Europe. I understand that voters have not given me a mandate against Europe, but a mandate for a sustainable future.” Though voters flatly rebuffed the spending cuts and tax increases stipulated in a continued bailout, he warned there would be “no easy solutions.” With one in two young people currently unemployed—a figure greater than what the U.S. experienced during the Great Depression—many felt they had nothing to lose.

After the vote, Tsipras told Greek president Prokopis Pavlopoulos, “We must move forward immediately with negotiations . . . a strong national front must be created to seek an immediate solution.”

Greece’s finance minister Yanis Varoufakis said the voters’ rejection was a “no to a vision of the eurozone as a boundless iron cage for its people.” A short while later, he announced his resignation in a blog entry titled “Minister No More!” with aspirations to ease negotiations.  Tsipras recommended the move under pressure from Eurozone financial leaders who bristled when Varoufakis recently likened Greece’s creditors to terrorists.

In his announcement, Varoufakis penned, “Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my . . . ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today […] And I shall wear the creditors’ loathing with pride.”

Such potent optimism quickly faded Monday as the consequences of the referendum became apparent. “The no vote unfortunately widens the gulf between Greece and other Eurozone countries,” explained Valdis Dombrovskis, the most senior European official in charge of the euro. “There is no easy way out of this crisis. Too much time and too many opportunities have been lost.” Without stipulating whether the euro would remain in the country’s future, he added that “Greece is and remains part of Europe.”

Since 2010, the country has received €184 billion [slightly less than $203 billion] from the European Commission, European Central Bank, and International Monetary Fund—collectively known as the “troika”—in order to function. But its banks are running out of supply—ATM withdrawals are currently limited to just €60 [apprx. $66] per day.

German Chancellor Angela Merkel plans to meet with French President François Hollande in Paris ahead of an emergency summit of the 19 European leaders on Tuesday. Merkel’s spokesperson Steffen Seibert said, “The government takes notice of the no vote and respects it. However, in light of the decision by the Greek citizens, the conditions to start negotiations on a new aid program are not yet met.”

Many in the EU mainstream directly fault Tsipras’ radical left Syriza party—which came to power in January—for Greece’s worsening financial troubles. Dombrovskis expressed frustration with apparent missed opportunities from bailout funds. “Only eight months ago Greece was ready to turn the page,” he said. “Regrettably the current Greek government was not able to use this extension to produce a credible strategy to come out of this crisis, regain financial stability, and return to economic growth.”

There have been intimations Tsipras would accept aid from the Russian Federation in past months, and it’s possible Greece will be a sideline topic of the upcoming BRICS summit. Putin’s spokesperson said of the historic vote, “We treat with respect the voice raised during the plebiscite.”

With the situation critical in the next 48 hours, the Bank of Greece has asked for aid with additional euros from the ECB under its Emergency Liquidity Assistance procedure. In spite of the uncertain future, the citizens of Greece remained steadfast in their decision—with the eyes of the world upon them.

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