Greece: The morning after
- By Sumantra Maitra
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E-mail China.org.cn, July 7, 2015
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New Greek Finance Minister Euclid Tsakalotos (R) attends the swearing in ceremony with Greek President Prokopis Pavlopoulos (L), at the Presidential Palace in Athens, on July 6, 2015. Following Sunday's referendum the Greece and its membership in Europe's joint currency faced an uncertain future Monday, with the country under pressure to restart bailout talks with creditors as soon as possible after Greeks resoundingly rejected the notion of more austerity in exchange for aid. [Xinhua/Marios Lolos] |
The unthinkable happened. Greece voted an overwhelming No in a nationwide referendum which was incredible to think about even a week back. Ever since Prime Minister Alexis Tsipras stalled a negotiation and hurriedly called for a national referendum, much to the shock and dismay of its euro partners and other creditor countries, there was speculation of a tie vote, or even a win for the Yes faction. Greeks after all wanted to be a part of the EU and the Eurozone, they are the original Europeans. The name Europe is itself derived from a Phoenician princess named Europa, it is unfathomable that Greece won't be a part of the super-nation, which owes much of its existence including the idea of democracy, from Greece.
But there has been a sense of foreboding over the last few days, as the swing was shifting, Greeks are angry, and back to back rallies took place, where the No side was dwarfing the Yes side. Greeks want none of the European rules. The faces of the European leaders changed from disbelief to shocked reservation when the results started pouring in. Greece has voted No, with over 60 percent of the votes in a high turnout referendum. A giant gesture was shown to the West and north Europe.
The Greek vote now takes us into a completely uncharted and unprecedented situation. The debate between Europe and Greece was not just about how much money should be given and what fiscal principle to follow, it was also about how to spend the money.
Greece and Europe both ideally agreed to austerity as a matter of fiscal discipline. After all, austerity is what helped Iceland and Ireland to get back on their feet. But Syriza wanted to raise tax on the wealthy. The Europeans were having none of it, given Greece's history of tax evasion. According to OECD sources, the uncollected tax receipts of Greece are 89.5 percent, compared to 2.3 in Germany. Europeans naturally wanted to rely on cutting down on the bloated bureaucracy, social spending and benefits. Well, in the current Greek mindset, that is not going to happen any time soon.
The markets already started crashing, first the Asian market, then the Indian. Speculations are rife as to what is going to be the immediate reaction if Greece leaves the euro, which now seems highly likely. On July 3, Oxford Economics, a research group, posted the odds of Greece leaving the euro zone at 85 percent with a No vote. Immediately after the referendum vote, top banks including JPMorgan Chase and Barclays said a Greek exit from the euro zone is now predictable. "This result is very regrettable for the future of Greece," Euro group President Jeroen Dijsselbloem said in a statement, a concern which was shared by European Parliament President Martin Schulz, and the majority of the German, Finnish and north European leadership.
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