Uncertainties deepen after debt deal rejected in Greek referendum

by Maria Spiliopoulou

ATHENS, July 6 (Xinhua) — Greek voters responded with a resounding No to the creditors’ debt deal offer in Sunday’s referendum, increasing uncertainties over the country’s default and possible exit from eurozone.
Greek Prime Minister Alexis Tsipras emerged as a winner ready to renegotiate with the international lenders and strike by Wednesday a “viable” agreement to deal with the five-year crisis.
His top priority is to restore liquidity in the country, which since his surprise call for the referendum a week ago was teetering closer to the brink of default and a possible Greek exit, or “Grexit.”
Despite Tsipras’ reassurances that Sunday’s “No” vote does not mean No to Europe and euro, challenges ahead for the Greek government are great.
In Sunday’s critical referendum, 61.3 percent of voters were against the debt deal, compared with 38.7 percent who voted in favor.
The outcome may determine whether Greece will remain afloat and stay in eurozone with creditors’ further assistance or head to a disorderly default and possible Grexit should lenders interpret the answer as No to Europe.

The clock is ticking. Tuesday’s emergency eurozone summit may well become the moment of truth.
“We are a step from sudden death. Tsipras’ new high-stake gamble now is to win a good debt agreement swiftly. That is the first scenario. If he fails to do so, he is left with limited options. The first step could be a ‘haircut’ on deposits and the next return to drachma,” Yannis Tsamourgelis, professor of international finance and economics at the University of the Aegean, commented after the referendum’s outcome.

Should Europeans respond with their own No to a debt restructuring and Athens’ requests in coming hours and claim the 140 billion euros in loans granted to Greece since 2010, the country faces a double default, since last Wednesday it defaulted on its loans to the International Monetary Fund.
The initial reactions of European officials to Sunday’s referendum results did not indicate that they were ready to dramatically soften their positions, as Athens had expected.

European Commission President Jean-Claude Juncker said that respecting the Greek vote has an ambiguous meaning: it could mean a better deal was feasible or that a Grexit was closer.
Even after Sunday’s resounding No, analysts warned that the next debt agreement will be tough and soon the leftist prime minister may face a backlash within his party and outside on the streets by citizens, in particular if the liquidity problem does not ease adequately soon.

In the event of no consensus with lenders, with state coffers running empty and ATMs running dry, Greece will rapidly sink into financial, political and social chaos, analysts have warned.

“Finding himself in a dead end 10 days ago, Mr. Tsipras passed his responsibilities on to the people. They, by giving overwhelming support to the ‘No’ that he wanted, passed the responsibility back to him. Now he and only he has the responsibility for what happens from now on. Just as he did 10 days ago,” Nikos Konstandaras, managing editor of the Kathimerini daily, wrote in the paper.

“After all the shouting, the division and the humiliation suffered by citizens in the past week, what did the Greeks gain? How do we get out of the impasse? That’s still unknown,” he said.

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