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Snippets from the Greek Crisis

The Greeks are holding a referendum and the consequences from the vote is an event horizon

It is alarmingly close to a Greece exit from the Euro as the deadline for Greece repaying the €6.74 billion to the Troika is approaching. The Syriza government refuses to accept the bailout package with the conditionality of excessive austerity measures and the Troika is unwilling to back down and extend the deadline or give fresh bailout money without imposing conditions. This post last week explained the exact conundrum that Europe finds itself in.

As predicted, stock markets across Europe have plummeted. Capital controls have been imposed in Greece. A bank run is on the way, with hundreds of people queuing outside ATM kiosks across Greece. In order to counter the bank run, all commercial banks will be shut for a week and there is a cap of €60 withdrawal.

As discussions between the Greek government and the Troika have broken down, the choice of accepting the austerity measures lies with the people of Greece.

Greece calls for referendum (Greferendum):

Prime Minister Alexis Tsirpas, in a surprising move, decided to hold a referendum to ask the Greek people if they should accept the bailout money with the conditions of further austerity. He claims that it is the “sovereign democratic right of the Greek people, necessary to ensure ownership over the financial assistance programme that will be eventually agreed with the institutions”. Needless to say, the EU, ECB, IMF and the private creditors did not take to the idea.

Wording of the Greek Referendum Ballots:

The exact wording of the referendum is highly unclear and it would make Greek voters more confused than they already are.

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This is what it translates to (supposedly in English):

Should the plan of agreement be accepted, which was submitted by the European Commission, the European Central Bank, and the International Monetary Fund in the Eurogroup of 25.06.2015 and comprises of two parts, which constitute their unified proposal? The first document is entitled ‘Reforms for the completion of the current program and beyond’ and the second ‘Preliminary debt sustainability analysis’.”

Not Accepted/NO

Accepted/YES

One can readily imagine that the two documents outlined in the ballot are not any clearer than the wordings of the ballot.

Positioning the choices – Government nudge?: There has been quite a bit of criticism against the positioning of the choices in the ballot paper. The format for the ballot paper is quite unusual as the government has decided to present the ‘No’ choice, which is what the present Syriza government wants, above the ‘Yes’ choice.

Logistical Issues: In a slightly ironic development, the Greek government may not have the money to conduct the bailout. The referendum will cost around 110 million Euros, which the Greek government cannot afford. Further, the Athens Chamber of Commerce added there is no paper to print some 20 million required ballots!

Significance of the Yes/No Vote: The Troika and the Greek opposition party are emphasising that a No vote would essentially result in Grexit. The European Commission Chief Jean-Claude Juncker passionately pleaded for the Greeks to vote ‘Yes’, so that Greece need not exit the Euro.

However, Mr. Tsirpas clearly believes that a No vote does not imply that Greece has to exit. He is calling the Troika’s bluff on the basis that a Greek exit would be too costly for them and thus, they have no choice but to relent on the push for austerity measures.

Ultimately, the events after the 30th of June, 2015 remain an event horizon.

Anupam Manur is a Policy Analyst at Takshashila Institution. He tweets @anupammanur

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