Greece says “No”

The opinion polls are truly having a shocking year. Queensland, Britain, Poland, Denmark – and probably others that I’ve forgotten – and now the Greek debt/bailout referendum, which a succession of pollsters over the last week assured us would be very close. (See yesterday’s preview here.)

It wasn’t. With 97.3% of the vote counted, the “no” vote has won clearly with 61.3%, a proportion that has stayed constant since early in the count. For leftist prime minister Alexis Tsipras and his Syriza party it is a stunning triumph. Turnout was an impressive 62.5%, similar to January’s election despite the short notice. Opposition leader Antonis Samaras, who had advocated a “yes” vote, has announced his resignation.

The vote has sent shock waves through the European Union. German chancellor Angela Merkel and French president François Hollande conferred after the result became clear, with the outcome being another eurozone summit called for Tuesday. Meanwhile Tsipras himself has been on the phone to them and other European leaders, apparently assuring them of his eagerness to reach a deal.

Yet despite the drama, there’s a sense in which nothing has changed. Commentators refer to a massive vote in favor of debt relief, but of course getting debtors to support debt relief is not a difficult task. The problem is to come up with a plan that the creditors are willing to accept: Tsipras has so far been unable to do that, but he now has a renewed mandate to keep trying.

The creditors also have some hard thinking to do. They tried telling Greek voters that a “no” vote would mean leaving the euro, but it had no effect. Tsipras did not seek, and does not have, a mandate to give Greece its own currency (which some economists say would be the best way out). Greeks want debt relief combined with continued membership of the eurozone, and it will be up to the creditors to decide whether, and on what terms, they can have it.

The Guardian’s Larry Elliott explains the situation clearly:

Almost every European leader of note sought last week to put the frighteners on the Greek people, warning them that a victory for “no” meant leaving the single currency. [They] now have to put up or shut up.

More than likely they will shut up, at least for now. Emergency assistance for Greece will continue while the troika of the European commission, the [European Central Bank] and the International Monetary Fund sees how events in Greece unfold.

I think he’s right to say that the creditors “should try a bit less stick and a bit more carrot,” by offering a package with explicit debt relief. But Merkel and the rest have their own political pressures to contend with. The Greeks are not popular in northern Europe, and yesterday’s vote will not have helped – a point that Syriza’s invocation of “democracy” invariably neglects.

Elliott also refers to the temptation for the creditors to play hardball and “see if a couple of weeks of a cashless economy can do what the referendum could not: effect regime change.” But in light of Tsipras’s referendum triumph, it seems sheer fantasy to suggest that a creditor-induced collapse of the Greek economy would produce a swing against Syriza. On the contrary, fresh elections in the foreseeable future would most likely hand Tsipras a landslide victory.

When a leader enjoys that much domestic support, the rest of the continent needs to stop plotting his demise and work out a way to bring him within the tent. That will be the task for Tuesday – and probably some time to come.

 

 

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