BackGreece heads for ‘no’ vote, raising risk of exit from euro
With more than half of votes counted, 61% of Greeks backed Prime Minister Alexis Tsipras by voting 'no' to the latest proposals for spending cuts and tax hikes
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Athens: Greeks voted against accepting further austerity in exchange for a new bailout, emphatically raising the stakes in the country’s confrontation with creditors.
With more than half of votes counted, 61% of Greeks backed Prime Minister Alexis Tsipras by voting “no" to the latest proposals for spending cuts and tax hikes. Some 39% voted to appease creditors, according to results from the interior ministry in Athens.
As Tsipras’s supporters party outside the Greek parliament, the country now enters unknown economic and financial territory, with no clear path to continued European aid and banks closed. Greece’s immediate fate lies with the European Central Bank (ECB), which may take its cues from European Union (EU) leaders as to whether it can keep emergency loans flowing to a country without the prospect of a bailout package.
“If confirmed, the ‘no’ would not put Greece on autopilot towards Grexit," Holger Schmieding, an economist in London at financial group Berenberg, said by email. “But it makes it much more difficult to still avoid that fate."
The result will likely roil financial markets and reverberate across Europe’s political establishment after a confrontation that has torn up the rulebook on how Greece engages with the euro region.
Euro declines
JPMorgan Chase and Co. economist Malcolm Barr told clients a Greek departure from the euro is now the most likely scenario. In early trading in Asia, the euro declined 1.2% to $1.0986 as of 5.06am Sydney time.
The question for German Chancellor Angela Merkel and fellow leaders is whether they can negotiate with a government that has rejected their latest conditions for staying in the 19-member currency union, after forcing countries such as Portugal, Spain and Ireland to suffer through similar measures.
Merkel and French President Francois Hollande will meet in Paris to discuss the Greek situation on Monday.
Tsipras, 40, swept to power in January after campaigning to end crippling budget cuts forced upon the country by creditors and promising to restore “dignity". Five months of protracted and often antagonistic negotiations followed and optimism for a deal toward the end of June was suddenly dampened when he called the referendum a week ago.
European leaders largely characterized the plebiscite as a vote on membership in the euro itself, though Tsipras insists Greece can stay in regardless.
Street dancing
Supporters of the “no" camp gathered in Athens’s main Syntagma Square to celebrate as results started trickling out showing a solid victory. Some were dancing to loud music playing from speaker phones or were having their picture taken with the crowds in the background.
Waving a Greek flag, John Govesis, 26, said he and his whole family voted “no." “I like freedom, I don’t need money from Europe," he said. “This is the only way forward. I have a job, but maybe tomorrow I don’t."
The country meanwhile is buckling under the strain of capital controls and at risk of undoing four decades of integration with Europe. Banks, which have been closed for a week to stem withdrawals, are running low on cash and will struggle to reopen without significant new aid from the ECB.
Expired package
The question on the ballot paper left some wiggle room for negotiations, since it applied to conditions on a bailout package that ceased to exist when talks broke off.
Tsipras’s government “will make every effort to close an agreement soon" with creditors, spokesman Gabriel Sakellaridis said in televised comments.
Finance minister Yanis Varoufakis said in an interview last week he expected a deal to be done however the referendum went, though he would step down should it be a “yes" vote.
Greece has flirted with losing its place in the euro before, in 2011, when then-premier George Papandreou threatened to call a referendum. That too was framed by European leaders as an in-out decision on the euro, but was scrapped before it could be held and led to Papandreou’s departure.
Since Syriza came to power, the government has been trying to unlock about €7 billion from an existing bailout to meet payments to its creditors. That rescue package expired on June 30, the day the country missed a payment to the International Monetary Fund—becoming the first-ever developed country to do so. Bloomberg
Paul Tugwell, Vassilis Karamanis, Jenny Paris and Ilya Gridneff in Athens and Emma O’Brien in Wellington contributed to this story.
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