Greek drama won’t end with vote as polls indicate a tight race3 min read . Updated: 03 Jul 2015, 09:00 AM IST
Germany and the rest of the euro region are bracing for more Greek political upheaval even if the country votes for more austerity in Sunday's referendum
Berlin/Athens: Germany and the rest of the euro region are bracing for more Greek political upheaval followed by tortuous negotiations even if the country votes for more austerity in Sunday’s referendum.
There is no quick fix to the crisis because European Union rules make negotiations on financial aid difficult to re-start, according to an official in chancellor Angela Merkel’s government. Adding to the murky landscape are polls showing the outcome of Sunday’s referendum on austerity too close to call.
From Berlin to Brussels, policymakers are studying scenarios that suggest the ballot is only another chapter in a prolonged saga rather than the endgame. Greek prime minister Alexis Tsipras is campaigning for citizens to vote ’no,’ while the rest of the 19-nation bloc says a clear ’yes’ can get Greece back on the path to reform.
“We desperately want to stay in the euro," said Greek finance minister Yanis Varoufakis in a Bloomberg Television interview. “We are going to win on Sunday."
If they don’t, Tsipras said he’ll respect the people’s will and fly to Brussels the day after to sign a deal while his 54-year-old finance chief said he’d rather cut off an arm than capitulate to an accord that fails to restructure Greece’s debt.
A GPO poll cited by euro2day.gr said 47% leaned toward a “yes" vote, an endorsement of austerity and the international bailout. The “no" camp, the government’s position rejecting those terms, was 43%. The margin of error in the survey of 1,000 people was 3.1 percentage points.
“The bizarre twists of events since the referendum was called has clearly caused the rest of the euro area to now seek regime change in Athens," said Jacob Kirkegaard, a senior fellow at Peterson Institute in Washington.
A change of guard in Athens to restore lost trust would probably speed up the process, according to several German officials and lawmakers. That alone, won’t be enough.
Two days after Greece missed a payment to the International Monetary Fund (IMF), the Washington-based global lender of last resort said the country needs at least another €36 billion ($40 billion) from the euro region over the next three years and easier terms to make the debt sustainable.
The IMF report is “a confession of the failure of bailout," Greek government spokesman Gabriel Sakellaridis said in e-mail.
While communications haven’t broken down, months of conflicting signals by Greece’s government have left the German chancellery unsure of Tsipras’s intentions, according to an official involved in policy making in Berlin.
If Tsipras called the plebiscite and walked away from aid talks with the aim of winning more concessions from Greece’s creditors, he miscalculated, the official said.
The question becomes whether Germany, as a founding member of the EU and the biggest contributor to Greece’s bailout, is prepared to see Greece go. While Merkel is leaving the door open to talks after the referendum, she says Greece no longer poses a threat to Europe’s future.
“We can calmly wait" for any Greek aid request, she said in a speech to parliament Wednesday. “Overcoming Europe’s sovereign debt crisis requires time and staying power."
Time is a luxury Greece doesn’t have.
With the country under capital controls and depositors barred from withdrawing more than €60 ($67) a day from ATMs, liquidity reserves will probably only last until Monday, according to people familiar with the matter.
Scenes of the long lines of pensioners collecting reduced retirement benefits capture the sense of despair.
“The people who are struggling, standing in queues at banks & ATMs, know that we’re fighting for a viable and dignified solution," Tsipras posted on Twitter. Bloomberg