What happens if the vote is no?
Alexis Tsipras, the Greek prime minister, has pledged that regardless of the result he will return to the negotiating table with creditors after the referendum. The EU, European Central Bank and International Monetary Fund – the lenders that have propped up the country since mid-2010 – have insisted that a no vote will mean the end of negotiations. That, in turn, would mean the end of financial support for Athens, which has already defaulted on a €1.6bn loan instalment to the IMF and faces a €3bn payment to the ECB on 20 July. Tsipras has said a cash-for-reform deal could be reached “within 48 hours” – just in time to see banks reopen on Tuesday, the deadline announced by the government.
Does the size of the vote matter?
Much would depend on the margin of difference between the yes and no votes. If no prevailed by a very wide margin, rupture with Europe would almost certainly ensue as lenders would take it as a resounding rejection of the wrenching austerity-cum-structural reforms being demanded in return for further bailout funds.
What would exit from the euro mean?
Overnight, banks would become insolvent, the economy’s productivity would drop precipitously and hyperinflation would explode as the reintroduced drachma devalued overnight. Some suggest social unrest would likely erupt with borders being closed to stop hard currency fleeing. The price of imports would skyrocket.
Political turmoil could follow and the far left and far right – both of which have endorsed the no vote – would feel strengthened. Leftwingers in Syriza, trade unions and workers’ associations, backed by the anti-capitalist Antarsya, have long advocated a split from the EU and the write-off of Greece’s monumental debt. Exit from the euro would set in motion the events that would lead to rupture from the EU. Some claim that Greece would quickly become a third-division Balkan state. The rich would fare well, snapping up real estate at rock-bottom prices with the hard currency they had spirited abroad; the poor would be especially hard hit by hyperinflation.
What if there is a ‘light no’ victory?
International creditors might cut Tsipras some slack and agree to a deal with him, ensuring political stability. But with trust between the two sides at an all-time low, appetite for further negotiation with Tsipras is almost nonexistent. No voters would also make it difficult for him to agree to more “recessionary” measures that include budget cuts and tax rises. Very quickly, he would find himself hostage to the demands of creditors and his own anti-austerity constituency. Even if he made concessions, as already signalled, he would push for debt relief – emboldened by the IMF’s announcement that without tackling Athens’s unsustainable debt load, the economy will never return to growth and fully recover.
What happens in the event of a yes vote?
Whether resounding or not, a yes vote would make it impossible for the government to continue as is. Elections might be called or a national unity salvation government formed, possibly led by technocrats. Tsipras has hinted he will resign. The finance minister Yanis Varoufakis has said he will step down in the event of a no camp defeat.
Could talks start again?
A new government would immediately have to relaunch negotiations with lenders. If the referendum resulted in a Yes vote with a wide margin, the hope is that creditors would reward Greece with a financial lifeline that dealt with the issue of its unviable debt load. If the choice is to hold fresh polls – possibly in September – Syriza could easily emerge victorious again. Another cycle of the Greek drama would re-erupt.