Just as the economic and political consequences of the 2008 financial meltdown continue to reverberate through to the present events in Greece, so too will Greek prime minister Alexis Tsipras’ decision to call a ‘Yes’ or ‘No’ referendum continue to ripple far beyond this Sunday’s vote.

‘Reject austerity!’ but stay in the eurozone as Tsipras believes a ‘No’ vote would indicate, or vote ‘No’ to reject the euro as the future currency of Greece, as Jean-Claude Juncker, the back-slapping, high-fiving, European Commission President would have the Greek people believe. A confusing choice for Greek voters who want the euro but not the austerity. Juncker was quoted as saying that a ‘No’ Greek bailout referendum would be akin to the nation ‘commit[ing] suicide’, a sensitive issue in Greece as the suicide rate has jumped by 35% in the last two years.

The timeline following a ‘Yes’ vote seems clearer than a ‘No’ outcome; the European Central Bank would probably re-establish funding to Greek banks so that the Greek government could terminate capital controls and Greek citizens would be able to withdraw more than the current daily 60 euros limit, probably by Monday or Tuesday. Yanis Varoufakis, the dual-national Australian-Greek finance minister would resign as he has already said he prefers to cut off an arm rather than sign up for a deal based on the last negotiation document from 25th June. That Tsipras might resign and provoke new elections (which he might win) is also a possibility although Varoufakis said that if there were a ‘Yes’ vote, ‘we would not scupper it’ and a perhaps reconfigured government would find a way to sign an agreement. Christine Lagarde, the head of the International Monetary Fund, and daughter of a schoolteacher, would perhaps be able to discuss the important issues with, as she said on 19th June, ‘some adults in the room’. It seems the tieless Varoufakis and Tsipras were not swimming in sync with the former member of the French national synchronised swimming team. If Juncker is to be believed, a Greek withdrawal from the Eurozone would no longer be on the cards and there would be no immediate Greek withdrawal from the European Community or the single currency.

European Parliament, Strasbourg.   Photo Graham Waghorn
European Parliament, Strasbourg. Photo Graham Waghorn

A ‘Yes’ vote would probably mean that a Greek government would scrape together the 1.6 billion euros it owes to the IMF, the Greek government will probably get back 7.6 billion euros from the IMF and other creditors and the cycle will begin again. A ‘Yes’ vote will certainly be well received by the financial markets who will be rubbing their hands at the imminent fire-sale of privatised Greek government assets. Greek citizens will see hikes in VAT and see the retirement age increased to 67 years.

The timeline following a ‘No’ vote result in the ‘Greferendum’ are less certain. According to Tsipras and Varoufakis, it will give them a stronger mandate to re-negotiate and they believe this will enable them to achieve much needed debt restructuring and so avoid a similar crisis some months down the road. Varoufakis believes that a ‘No’ vote, will mean negotiations will restart immediately and the ECB will at once extend its Emergency Liquidity Assistance (ELA) so that the 60 euros ATM limit will end on Monday or Tuesday. Varoufakis said in an interview with Bloomberg ‘Isn’t it a terrible thing that the Eurogroup chose to close down our banks, just to deny the Greek people a right to have a say on the institutions proposals?’ However, if this is the case, it seems logical that if a ‘No’ vote wins, Greece will continue to be the object of the wrath of the Eurogroup and an immediate return of ELA seems doubtful unless there is international pressure on the issue.

A ‘No’ vote may mean that the Eurogroup says ‘Goodbye’ and leaves the Greeks to their own devices. It seems there is little support for the ‘No’ vote from centre-left politicians in Europe; Martin Schulz, the president of the European Parliament said that a ‘Yes’ vote means that the Tsipras government should resign, to be replaced by a technocratic government. The French socialist president François Hollande, said that a ‘No’ vote would be entering into the ‘unknown’ whereas a ‘Yes’ vote means that ‘negotiations can very easily begin and a deal…will be reached very quickly’.

Greece currently owes 323 billion euros, this equates to around 30,000 euros per citizen. The outcome of Sunday’s referendum is currently considered to be ‘too close to call’ and whether an OXI (No) or NAI (Yes) vote wins, the referendum is unlikely to be the closing chapter of this Greek tragedy.

Graham Waghorn