Greece will hold a referendum vote on Sunday to determine the course the indebted country should take with their creditors as tensions rise across Greece and Europe about how to deal with the weakest economy in the European Union.
The final outcome reached during Sunday’s vote is expected to raise some questions about the role Greece will play in the 19 member euro currency union as it struggles to refinance its debts and implement the necessary fiscal reforms to restore its economy that is plagued with high unemployment.
After 5 months of failed negotiations over a 3rd bailout package and a temporary debt extension having already expired on June 30th, leading to capital controls across Greece, leftist Syriza Party with majority control in Athens is making a final push to convince Greeks that a “no” vote on the plebiscite referendum means better negotiating power with their creditors while minimizing the Greek exit scenario and the volatile outcome that will likely unfold if the country returns to the drachma instead of the euro.
A war of words is occurring over the impact of Sunday’s referendum vote and many international observers are left feeling confused about the complicated debt deal vote on Sunday with both sides pointing fingers and blaming the other side for refusing to make concessions over Greece’s large debt pile.
Greek Prime Minister Alexis Tsipras tweeted 2 days ago on Twitter: “Voting ‘no’ on a referendum doesn’t mean saying no to Europe. It means demanding a solution that is realistic”
Greek Finance Minister Yanis Varoufakis optimistically told a German newspaper that he expects to get a debt deal on Monday, regardless of the outcome with Sunday’s referendum vote.
Never shy from making controversial statements, Varoufakis went on the attack one day before the referendum vote and likened Greece’s creditors to committing “terrorism”, after telling Spanish newspaper El Mundo that they wanted to “instill fear in people”.
Those fiery and yet confident words from Greece’s leaders leading up the referendum vote tomorrow sharply contrasts with statements from Greece’s creditors.
Eurogroup President Jeroen Dijsselbloem said yesterday about Greece, “We are not talking to the government any more. They have chosen an extremely risky route, but we’re now waiting for the result of the referendum.”
Dijsselbloem rejected assertions from Greek Finance Minister Varoufakis that Greece is not far from reaching a deal with their creditors and warned earlier that a “No” vote in the referendum would set Greece on the course of an exit from the euro area.
Klaus Regling, managing director of the European Financial Stability Facility (EFSF), told Greek newspaper Kathimerini that a “no” vote on the referendum would lead to more skepticism about whether Greece’s leaders would implement the necessary reform measures that their creditors have demanded as a condition of Greece qualifying for a new bailout package.
“With a “no” vote there would be great skepticism as to whether the necessary follow-up reforms would be implemented. To implement a program requires ownership, the government needs to be convinced that it is necessary to implement difficult measures in a credible way” Regling said.
“If conviction and ownership are not there, then we will not see the positive results that Greece needs” Regling added.
Antonio Samaras, former Prime Minister of Greece and leader of Greece’s New Democracy Party, provided a vastly different perspective from Greece’s current political leadership and said that a “no” vote in Sunday’s referendum vote would hurt Greece’s negotiating position with its creditors.