Type to search

In Landslide 61 Percent To 39 Percent Vote, Greece Says ‘No’ To Bailout Deal

Featured Post Top News Tribune News Service World

In Landslide 61 Percent To 39 Percent Vote, Greece Says ‘No’ To Bailout Deal

Share

By Henry Chu, Los Angeles Times (TNS)

ATHENS, Greece — The resounding rejection of an international bailout deal by voters in Greece raised fears Sunday of the collapse of the country’s banking system, a catastrophic government default, an eventual exit from the euro and potential social unrest.

In a surprising 61 percent to 39 percent result, Greeks said “no” in a referendum on a rescue package that would have kept their debt-ridden country afloat but subjected it to additional austerity measures.

The landslide delivered a sharp rebuke to European Union leaders who had warned that the plebiscite was, in effect, a vote on whether Greece wanted to remain a member of the eurozone, the group of 19 nations with the euro as their common currency.

The EU is now confronted with one of the gravest challenges to its mission of “ever closer union” between member states.

Jubilant crowds of “no” voters thronged Athens’ main square into the early hours of Monday to celebrate what they said was a chance for Greece to reassert itself and achieve a better deal from creditors. Motorists honked their horns, and triumphant chants of “Oxi! Oxi! Oxi!” — “No! No! No!” in Greek — rose in the balmy Mediterranean air.

But there were already signs of a backlash from angry European officials that could make any new bailout agreement even more difficult. If a deal is not struck quickly, Athens could find itself broke, forcing it to default on its debts and triggering a slide out of the Eurozone.

The left-wing government of Prime Minister Alexis Tsipras, which campaigned for a “no” victory, had “demolished the last bridge on which Europe and Greece could approach a compromise,” Sigmar Gabriel, the German economy minister, told the Tagesspiegel newspaper.

Jeroen Dijsselbloem, the leader of the eurozone’s finance ministers, described the poll result as “very regrettable for the future of Greece. For recovery of the Greek economy, difficult measures and reforms are inevitable.”

An emergency summit of eurozone leaders is to be held Tuesday.

More urgently, officials at the European Central Bank are to meet Monday to review the emergency aid that has propped up Greece’s nearly depleted financial system for the last few months.

If the ECB decides to cut off that lifeline or make it costlier, Greek banks are likely to run out of cash within days. Business would grind to a halt, shops could run short of basic supplies and increasingly agitated residents could find it hard to buy fuel and medicine.

Greek banks have been closed since June 29 on order of the government, and customers limited to 60 euros (about $67) a day in ATM withdrawals. Officials insist that the banks will reopen Tuesday, but analysts doubt this can happen unless the ECB maintains or increases its assistance.

“Our immediate priority is the rapid restoration of the functioning of our banking system and the restoration of our economic stability,” Tsipras said in a nationally televised address Sunday night. “I am certain that the ECB fully understands not only the general economic situation but also the humanitarian dimension which the crisis has taken in the country.”

Tsipras also said the referendum result had given him a mandate to press international lenders — mostly other eurozone countries — for a “sustainable” bailout package for the Greek government that would address its staggering debt load and free the country “from the vicious cycle of austerity.”

The Greek economy has contracted by a breathtaking 25 percent since Athens began accepting emergency loans in exchange for brutal spending cuts in 2010. Tsipras’ radical-left Syriza party swept to power in January on an aggressive anti-austerity platform, setting up the current standoff with Greece’s creditors.

Tsipras said Athens was prepared to return to the negotiating table immediately. But with relations at an all-time low, it was unclear whether any of Greece’s European partners would show up and, even if so, whether an agreement could be hashed out before the Greek government runs out of money.

A major debt to the ECB falls due July 20. If Athens fails to pay — as it already did with a loan from the International Monetary Fund last week — and bank coffers are empty, Greece could be forced to introduce a parallel currency and eventually quit the eurozone.

Financial analysts say this is not a threat in the next few days, but warn that the probability of a “Grexit” down the line has increased dramatically because of Sunday’s vote.

Before the ballots were cast, a parade of European leaders, including German Chancellor Angela Merkel and French President Francois Hollande, said they would interpret a win for the “no” side as an expression of Greece’s desire to quit using the euro.

But Tsipras insisted that the vote “did not answer the question ‘in or out of the euro.’ That question must be removed definitively from the discussion.”

Polls consistently show that an overwhelming majority of Greeks want their country to remain in the eurozone and, by extension, the 28-nation European Union.

Merkel and other European leaders must now ponder whether to let Greece go bust and drop out of the eurozone or whether such a course would inflict irreparable damage to the credibility of the euro and to the project of greater European unity. The Greek debt crisis is the severest test the euro has faced since it was introduced more than a decade ago.
To try to entice his eurozone partners back to the bargaining table, Tsipras is apparently considering shuffling his negotiating team to include a broader spectrum of members. Several European officials have said openly that they no longer trust Tsipras or his Syriza party; a Greek delegation with some members drawn from other parties could be more palatable.

“That will show that Greece does not want a conflict,” said political commentator George Papageorgiou. “If there is a consensual approach from the Greek part, that could facilitate a consensual approach from the other part.”

Dijsselbloem, the eurozone finance ministers’ chief, said the first move was Athens’. “We will now wait for the initiatives of the Greek authorities,” he said.

The size of the victory for the “no” campaign came as a surprise both inside and outside Greece after a flurry of opinion polls showed voters to be split down the middle. Bitter disagreement over the significance and possible impact of the plebiscite cleaved living rooms and workplaces across the country.

Just over 62 percent of the country’s 9.9 million voters cast a ballot, easily surpassing the mandatory threshold of 40 percent for a referendum to be considered valid.

Surveys suggested that young people voted “no” in droves. Many agreed with Tsipras’ contention that the bailout proposals on offer from Greece’s lenders demanded too much austerity on top of years of brutal spending cuts and would hit the poor and elderly disproportionately hard.

“These measures would worsen the situation,” said teacher Paula Andriotaki, 33, after casting her vote in a local school on a bright and warm afternoon. “We try to see light, but we get worse and worse.”

“Yes” supporters had urged Greeks to join them in order to guarantee Athens’ continued place in the eurozone. They said that membership in the wider European Union could also be at risk and that Greece could not afford to be isolated.

A 40-year-old man named Giorgos, who declined to give his surname, blamed Tsipras for passing the buck.

“I would have preferred the referendum not to have happened,” he said. “I believe it is a political alibi. We are being asked to take a decision that should have been taken by someone else.”

The ballot paper was the subject of some criticism, because the question it asked was wordy and couched in jargon and the check box for “no” was above that for “yes.”

Moreover, the bailout deal referred to was technically moot. The offer from Greece’s creditors expired Tuesday night, after talks with Athens collapsed over Tsipras’ surprise decision to call a referendum. Creditors say that negotiations on a new agreement must start from scratch.

Because of the convoluted ballot question, and the conflicting claims of whether the real issue at stake was the future of Greece as a member of the Eurozone, many Greeks complained of confusion over just what was being asked of them.

“I don’t know what result I would like to see,” said a 19-year-old voter named Dimitris, who was still undecided as he prepared to enter a voting booth. “It would be a disaster to leave the euro, but it would also be disastrous to accept more austerity measures. ‘Yes’ is a bad choice, but ‘no’ is also suicidal.”

Sunday’s referendum was Greece’s first in 41 years. In 1974, Greeks were asked to decide whether their country should retain its monarchy.

The answer then: also a resounding “no.”

(Special correspondent Pavlos Zafiropoulos contributed to this report.)

(c)2015 Los Angeles Times. Distributed by Tribune Content Agency, LLC.

Photo: TheLastMinute via Flickr

Tags:

24 Comments

  1. Dominick Vila July 6, 2015

    I don’t think the Greek people had a choice other than NO to seek moderation in the demands being imposed by its creditors. More austerity than has already been imposed would require euthanasia or mass starvation, two choices that most people would reject regardless of consequences.
    Greece’s creditors, who in addition to the European Central Bank include several EU countries, with Germany (62bn), France, Italy, and Spain (25bn) as the top four creditors are, obviously, trying to protect their loans and demand guarantees that Greece is simply unable to satisfy.
    Negotiations are likely to continue for a short while, and I would not be surprised if Tsipras offers some concessions and European leaders try to seek middle ground, but a successful end to this crisis is tenuous at best. With 52% of its population retired, coupled with children and people who for a variety of reasons are unable to work, what Greece has is 30% of its population supporting the rest, and an economy that depends almost entirely on tourism and agriculture. Clearly, their financial and economic situation is unsustainable, and everybody knows that.
    The greatest fear for the U.S. is not financial over exposure, simply because it does not exist in our case. The fear is that if Greece is ejected from the Eurozone and the EU, a NATO member with a failed economy would have no choice but to seek help elsewhere to survive. The probability of Greece falling in Russia’s or China’s sphere of influence terrifies our geo-political and military strategists. In the end, if such scenario emerges, we may have no choice but to bite the bullet and bailout Greece to defend our strategic, military, political, and economic goals. We simply could not afford a country on the doorsteps of the Islamic world leaving NATO and aligning itself with our foes.

    Reply
    1. patrick g van meter July 6, 2015

      At least they got to vote on it. That is more than the American people got. I believe given the chance to vote, the American people would not have bailed out Wall Street. The US need not be concerned about Greece. Our attention needs to be on Puerta Rico.

      1. Kurt CPI July 6, 2015

        Yes, in Greece there is still democracy.

      2. Dominick Vila July 6, 2015

        From an economic perspective, you are 100% correct. However, from a geo-political perspective, letting Greece collapse and forcing it to seek alliances that may not be in our best interest is not something that can be ignored.

        1. patrick g van meter July 6, 2015

          I’m more amazed that anyone would offer to help them. Let the EU worry about it. Puerta Rico on the other hand is 72 billion with most of it in Wall Street with hedge funds and bonds. At a time with the US in debt some where in the neighborhood of 18 to 19 trillion and growing. Impossible to ignore. Now that Greece has said they refuse to pay, I can’t picture Russia or China in any rescue program unless it is a program to rescue themselves.

          1. Dominick Vila July 6, 2015

            Greece’s Oxi (no) vote referred to a refusal to agree to greater demands from its creditors. The fact that they will not be able to pay their debt, now or 30 years from now, is a given. The bottom line for them is that they do not have the industrial or economic capacity needed to support the current government outlays, not so much because the cost of their social programs is exorbitant, but because of demographics, and because its economy relies mostly on agriculture and tourism.
            The situation in the USA is an entirely different matter. Our GDP is second to none. We have a diversified, strong, industrial base, and the rest of the world catches bronchitis whenever our economy sneezes. The problem for us is that we refuse to pay for what we get and benefit from. Revenues from taxation are simply too low to cover outlays. In our case, it is a matter of choice. In Greece’s case, they simply don’t have a choice but to beg for alms or hope for a miracle that is not forthcoming.

          2. paulyz July 6, 2015

            Or to put it another way, our Spending is too high that increasing taxes even more will become an economic hardship, & when the interest on our National Debt consumes even greater amounts of tax revenue, we will be spiraling downward.

          3. Dominick Vila July 7, 2015

            There are always better ways to do things and achieve financial savings, particularly when technology and more efficient processes are available to reduce staffing, eliminate duplication, and unnecessary processes, regulations, or tests. That does not mean our social programs are unnecessary and should be eliminated or curtailed. Compared to other industrialized nations our social programs are grossly inadequate.
            Our national debt, which is caused largely by liabilities, and our refusal to pay for the social programs we need, for our adventurism, our insistence on not changing our tax laws to ensure all segments of our population pay their fair share, greed, corruption facilitated by ideology and greed, and a reliance on deficit spending, can be reversed. The United States is not Greece. We have the financial resources and industrial capacity to become fiscally solvent, if we decide to make that our goal.

          4. patrick g van meter July 7, 2015

            If China ask the US to pay up I would argue we would be begging for a miracle. I don’t see that happening but debt is debt. I will agree revenues need to be increased. I would also argue an increase in tax to a level of 90% would not get us into the black. Until we address spending, more money will not help. There is nothing going on out there that makes me believe we will make the right choice.

    2. FT66 July 6, 2015

      A third bail out from EU to Greece won’t be done without any condition. Greeks must also understand, it is always EXPENSIVE to be poor.

      1. Dominick Vila July 6, 2015

        I am sure the Greek people understand that creditors have the right to demand assurances or conditions to protect their loans. I think it is important to note that only about 10% of the amount being negotiated will actually go to the average Greek citizen. Most of it will be spent covering debt and protecting the creditors. The problem for Greece is the fact that it does not have the financial, industrial, or economic resources to pay even a small fraction of what they owe. Instead, they are likely to rely on more borrowing and larger debt to stay afloat. Most European countries don’t want to see Greece default, leave the Eurozone and, very likely, the EU, but they may have no choice. The longer the Greek albatross hangs around their necks the worse the problem is going to get.

    3. CrankyToo July 6, 2015

      Our foes may find Greece to be as recalcitrant a partner as the European economic community has found it to be. And in the final analysis, Greece may prove to be a millstone around the neck of Russia or China (who have economic problems of their own), just as it’s been a drag on free-world economies these past few years.

      Insofar as having a potential enemy on the doorstep to the Islamic world is concerned, Turkey still holds the key to the door to Asia.

      1. Dominick Vila July 6, 2015

        The attraction for Russia would be moving its naval installations from the Crimea to the beautiful Greek isles.

        1. CrankyToo July 6, 2015

          Yes, that would certainly be an enticement for the Russians – if they could afford to play the long game.

  2. anothertoothpick July 6, 2015

    Non Tax collected base.

    Germany 2.3%

    Greece 90%

    It looks like somebody should start collecting taxes owed the state.

    Reply
    1. Lynda Groom July 6, 2015

      Indeed that would be a good place to start. Recent studies have shown that up to 49% of the companies inspected were found to have taken part in tax fraud to some extent. Also according to a study by the Univ of Chicago up to 31% of the countries budget deficit is caused by tax evasion from self-employed professions. Accountants, dentists, doctors, lawyers and independent financial advisors being the major free riders.

      Too bad the rest of the not so well off population will be paying the price for such corruption and alike.

      1. JPHALL July 6, 2015

        Isn’t it funny that the Republicans always push paying less taxes while pushing austerity? Yet we see from the examples of Greece and Japan that austerity only helps the bankers.

        1. Bob Eddy July 6, 2015

          And that austerity always seems to include more and more people…but never the wealthy!

          1. JPHALL July 7, 2015

            You are so right!
            Subject: Re: Comment on In Landslide 61 Percent To 39 Percent Vote, Greece Says ‘ No’ To Bailout Deal

    2. Bob Eddy July 6, 2015

      The escence of and the inevitable result of Reaganomics…economic failure.

  3. Godzilla July 6, 2015

    In economics, austerity is a set of policies with the aim of reducing government budget deficits: https://en.wikipedia.org/wiki/Austerity
    What is being ignored is that Greece is the end result of Socialism, they have simply run out of other peoples money. The Greeks want their cookies they were promised, hence the NO vote. Too bad few people at the national memo have adequate use of their brain functions because it’s so convoluted with Leftist brainwashing nobody can think straight. Progressivism is a cancer and needs to be eradicated from the planet earth. The Greeks are only the first in out modern times to learn this. Nobody learned from Stalin, Mao and the rest of the murdering Socialists. Maybe because most here prefer Hitler’s ideology.

    Reply
    1. charleo1 July 6, 2015

      Maybe what the Greeks need, besides a huge tax cut for the wealthy to spark up their economy. Is a good investment scheme cooked up by some Wall Street Hucksters? Er, I mean, financial whiz kids. Something fresh and unregulated from the ruling Plutocrat Elites of the U.S.A.? All ratings, AAA of course. The best money can buy. And with guaranteed, and insured returns in the pie in the sky range. To diversify, and perk up their quaint, little democracy.

      1. Bob Eddy July 7, 2015

        Yep, it turned out just as it always does in the Chicago school of economic theory, the wealth, by nature flows to the top and as it accumulates at the top, the economy stagnates and crashes…then those at the top demand more sacrifice. It happened in the thirties and led to the Great Depression. Japan suffered through their “lost decade” in the nineties as they tried in vain to make austerity work. Greenland did the same and then our economy nearly collapsed in 2008 and then we suffered through an agonizingly slow recovery as Republicans insisted on holding the economy hostage in hopes that they could blame Democrats and regain power.

    2. Bob Eddy July 6, 2015

      No, it is very much a result of Capitalism and the utter failure (again) of the conservative agenda ultimately brought on by the banksters that sold them a bill of goods and saddled then with userous debt and covering it with the same sort of junk paper the used in our 2008 meltdown. What we are seeing is the end of Reaganism…or what George Bush so aptly described as “Voodoo Economics.”

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.