Greece’s Eurozone Future in Doubt after Decisive No Victory
TEHRAN (Tasnim) - Greece’s anti-austerity government scored a decisive victory in Sunday’s referendum as voters backed its call to reject a compromise with international creditors, raising serious doubts about the country’s ability to remain inside the Eurozone.
The No camp won 61.3 per cent of the vote and was victorious in every region of the country, a remarkable political exploit by Greek Prime Minister Alexis Tsipras. But the result is likely to plunge Greece deeper into turmoil as it tries to prevent the collapse of a financial system that is rapidly running out of cash.
Mr. Tsipras said he was ready to resume talks immediately, “but this time the issue of debt will be on the negotiating table”.
“The mandate you’ve given me does not call for a break with Europe, but rather gives me greater negotiating strength,” Mr. Tsipras was quoted by Financial Times as saying in a victory speech, sounding a little more conciliatory towards his Eurozone partners than in recent weeks.
But there was a scathing response from Berlin, which has refused to contemplate debt relief until Greece commits to and implements reforms. Sigmar Gabriel, deputy German chancellor, said Mr. Tsipras had “torn down the last bridges on which Greece and Europe could have moved towards a compromise”.
“With the rejection of the rules of the Eurozone ... negotiations about a programme worth billions are barely conceivable,” he told Tagesspiegel newspaper.
Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup committee of his counterparts, warned, “This result is very regrettable for the future of Greece. For recovery of the Greek economy, difficult measures and reforms are inevitable. We will now wait for the initiatives of the Greek authorities.”
The euro fell in thin early Asian trading as the referendum results came in, dropping 0.8 per cent to $1.1026 by 9.25am in Tokyo.
The heads of the European Commission, European Central Bank and eurogroup of finance ministers will hold a conference call on Monday morning.
Mr. Tsipras said his immediate priority was “the swiftest possible restoration of the functioning of our banking system”.
Greek banks are fast running out of cash even with capital controls and are unlikely to re-open this week unless the ECB governing council approves an increase in emergency loans in a conference call on Monday afternoon. The ECB may decide it needs the Eurozone to guarantee Greek debt if it is to continue supplying emergency loans, as it did in 2012, a decision that would have to be taken by leaders.
The Greek central bank also called in executives from the lenders to discuss a possible reduction in the daily cash withdrawal limit from €60 to €20.
Members of the leftwing Syriza-led government tried to reassure voters on Friday, claiming that banks would reopen by Tuesday regardless of the outcome of the referendum.
But a No vote could mean that negotiations with creditors, which were suspended by Mr. Tsipras’s decision to hold the referendum, may not be resumed immediately, if at all.
“This could mark the point of no return. Greece and the euro have now entered totally uncharted waters,” said Mujtaba Rahman, head of European analysis at the risk consultancy Eurasia Group.
The ECB may also choose to step up purchases of Eurozone government debt under its quantitative easing programme if markets react badly to the Greek result on Monday.
Benoît Coeuré, a member of its executive board, said it stood ready to do more to support the bloc. “If we are needed to do more [to support the Eurozone], we will do it,” he told the same conference. “There should be no doubt about that."
The ECB is expected to front-load asset purchases undertaken as part of its QE should events in Greece drive up yields on the bonds of other Eurozone member states.
In Athens’ Syntagma square, No supporters were jubilant at the scale of their victory.
“Now we will be free from the Troika, from Mrs. Merkel, from them all. This is the right result,” said Irma, a 45-year-old civil servant. “I love my freedom. I do not want to keep having that taken away.”
Huge cheers erupted in the square when it emerged that Antonis Samaras, who lost power to Mr. Tsipras in January, had stepped down as leader of the center-right opposition.
