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Published: Monday 6th July 2015 by The News Editor
Greece has lurched into uncharted territory and an uncertain eurozone future after voters overwhelmingly rejected demands by international creditors for more austerity measures in exchange for a bailout of its bankrupt economy.
Results showed about 61% voted No compared with 39% for Yes, with all the ballots counted.
The referendum, Greece’s first in more than 40 years, came amid severe restrictions on financial transactions in the country, imposed last week to stem a bank run that increased after the vote was called.
Thousands of jubilant government supporters celebrated in Athens’ Syntagma Square in front of parliament, waving Greek flags and chanting “No, no, no!”.
Early trading on Asian markets indicated investors were alarmed as stock indexes fell.
It was a decisive victory for prime minister Alexis Tsipras, who had gambled the future of his five-month-old coalition government and his country in an all-or-nothing game of brinkmanship with Greece’s creditors from other European countries that use the euro, the International Monetary Fund and the European Central Bank.
“Today we celebrate the victory of democracy,” Mr Tsipras said in a televised address to the nation, saying it was “a bright day in the history of Europe”.
“We proved even in the most difficult circumstances that democracy won’t be blackmailed,” he said.
Mr Tsipras called the referendum last weekend, saying a No vote would strengthen his hand to negotiate a better deal for his country. His government has said it believes it would be possible to conclude a deal with creditors within 48 hours.
But European officials and most of Greece’s opposition parties painted the referendum as one of whether the country kept using the euro, even though that was not the convoluted question asked on the ballot. Opinion polls on Friday showed that 74% or more wanted their country to remain in the euro.
“Given the unfavourable conditions last week, you have made a very brave choice,” Mr Tsipras told Greeks in his address. “But I am aware that the mandate you gave me is not a mandate for rupture.”
How European officials react to the referendum result will be critical for the country and a eurozone summit was called for tomorrow to discuss the situation.
German chancellor Angela Merkel and French president Francois Hollande spoke last night and agreed “the vote of the Greek people must be respected”, Mrs Merkel’s office said.
The referendum result was “very regrettable for the future of Greece”, said Jeroen Dijsselbloem, head of the eurozone finance ministers’ meeting known as the Eurogroup, which also will meet tomorrow.
Mr Dijsselbloem, finance minister for the Netherlands, had been a steadfast opponent of Greece as it sought better conditions during five months of bailout talks.
“For recovery of the Greek economy, difficult measures and reforms are inevitable,” he said. “We will now wait for the initiatives of the Greek authorities.”
Sigmar Gabriel, Germany’s vice chancellor and economic minister, said the Greek government was leading its people “on to a path of bitter austerity and hopelessness”.
Mr Tsipras had “torn down the last bridges, across which Europe and Greece could move towards a compromise”, he told the daily paper Tagesspiegel.
“By saying ‘no’ to the eurozone’s rules, as is reflected in the majority ‘no’ vote, it’s difficult to imagine negotiations over an aid package for billions.”
Belgian finance minister Johan Van Overtveldt was somewhat softer in his reaction, saying a No result “complicates matters” but the door was open to resume talks immediately.
Time has run out for Greece, which is dealing with an economy in a protracted recession, with high unemployment and banks dangerously low on capital.
The international bailout – under which it received nearly 240 billion euros (£170bn) in rescue loans – expired last week, on the same day Greece defaulted on an IMF repayment, becoming the first developed nation to do so.
Of critical importance will be whether the European Central Bank decides to maintain its lifeline to Greece in the form of emergency liquidity assistance, or ELA. The assistance, now at around 90 billion euros (£64bn), has been maintained but not increased in past days, leaving the country’s financial system in a stranglehold.
Yesterday’s vote was held after a week of capital controls imposed to halt a bank run, with Greeks restricted to a daily cash withdrawal maximum of 60 euros (£43). Long lines have formed at ATMs, while pensioners without bank cards have thronged the few bank branches opened to allow them access to a maximum 120 euros (£85) for the week. Queues at ATMs swelled again as the initial results of the referendum came in.
The ECB operates on rules according to which it can only continue ELA funding if Greece is in a bailout. Without an increase, it is unclear how much longer people will be allowed to withdraw their 60 euros a day.
Some analysts say Greece is so starved of cash that it could be forced to start issuing its own currency. No country has ever left the 19-member eurozone, established in 1999.
The margin of victory was far wider than expected and is likely to strengthen the young prime minister’s defiance towards Europe. Mr Tsipras was voted into office in January on a promise to repeal bailout austerity.
Yiannis Gkovesis, 26, waved a large Greek flag in the capital’s main square with supporters of the No vote.
“We don’t want austerity measures any more. This has been happening for the last five years and it has driven so many into poverty, we simply can’t take any more austerity,” he said.
Constantinos Papanikolas, 73, who also clutched a Greek flag, said the result meant “a fresh start, a new page for Greece and for Europe, which has condemned its people to poverty”.
Opposition conservative New Democracy lawmaker Vangelis Meimarakis said he was expecting Mr Tsipras to keep his pledge for a quick deal.
“If we don’t have an agreement within 48 hours as the prime minister promised, then we are being led to a tragedy,” he said.
Published: Monday 6th July 2015 by The News Editor