BackThe Greek referendum: yes or no?
Polls in recent years have shown that Greeks strongly support the euro but oppose further austerity demanded by creditors, said report
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New Delhi: While Greek Prime Minister Alexis Tsipras encouraged people to go ahead and reject the proposals of the country’s creditors in Sunday’s referendum, opinion polls suggest the scale could tip either way.
Polls in recent years have shown that Greeks strongly support the euro but oppose further austerity demanded by creditors, said a Wall Street Journal report .
Though Tsipras, in a televised interview, said that a ‘no’ vote would not translate into Greece exiting the euro zone, experts and economists the world over say that would be inevitable with some experts calling the referendum a “drachma versus euro" vote. Accusing the euro zone of blackmailing Greece, the leftist PM said Greeks who vote a ‘yes’ would be “accomplices" to austerity.
Here’s what a ‘yes’ or ‘no’ vote could mean for Greece and the world.
If Greeks vote ‘no’
• Greek’s exit from the euro becomes imminent. This would mean that Greek would switch back to its earlier currency, drachma. An earlier article from The Economist explains how this exit will affect Greece and the euro zone as a whole.
The Greek Central Bank will no more be part of the European Central Bank (ECB) and the country will have its own monetary policy. But the real losers from the Greek exit will not be from Greece. It will be a black day for the International Monetary Fund (IMF), the European Union, for German Chancellor Angela Merkel, and for the gold bugs.
Their standing may never recover from the blow that a “Grexit" will deliver.
Some economists believe a return to the drachma could eventually benefit the economy, but it is difficult to see anything positive in the short term, but others believe the country will plunge into a crisis.
• A ‘no’ vote could put German chancellor Angela Merkel in a very tough situation. The leader is seen as keen on taking a tough stand on Greece not only because Germans are fed up of supposedly paying for Greece’s woes, but also because Spain, Portugal, and Ireland, other economies that are in financial trouble and have accepted strict austerity measures, may not take leniency towards Greece so well. The real fear in Brussels and Berlin is not that people in countries such as Spain and Portugal who have taken the brunt of eurozone austerity will oppose relief for Greece but that they’ll want an end to austerity and their own debts written off as well, says another report in The Guardian. .
• It is unlikely that the troika will buckle down to let Greece continue in the single currency. According to a report in The Guardian, Merkel and her hawkish finance minister Wolfgang Schäuble have emphasised that there was no risk to the rest of the currency bloc from the Greek meltdown. However, if it still does, it will have to give in to Tsipras’ demand for a new bailout package acceptable to Greece. In the last 24 hours, Tsipras has pirouetted on his tactics to demand debt relief plus a new two-year €29 billion baillout from the eurozone’s permanent bailout fund, known as the ESM.
If Greeks vote ‘yes’
A ‘yes’ vote will be a victory for the Europe bloc and may force the Leftist Syriza government to step down. It will obviously mean political doom for Tsipras in Greece where opposition parties are against a referendum.
In that case, an interim government will take over and accept the austerity measures being offered by the troika. This will also rule out the much-feared Grexit.
Ironically, Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors.
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