Whipping up nationalism accusing the European Union of “blackmail,” 40-year-old Greek Prime Minister Alexis Tsipras urged Greek citizens to reject a kind of tyranny or slavery by Greek’s creditors. Refusing to make needed austerity reforms over the last five years, taking some 240 billion euros from the European Central Bank, International Monetary Fund and EU, Tsipras asks for more debt relief without the painful reforms needed to prevent another economic crisis. Refusing to cave in to EU demands, Tsipras threw the Eurogroup for a loop June 28 calling for a July 5 national referendum on whether or not Greece should remain on the euro. Since joining the Eurozone in 2001, Greece’s economy has been in steady decline, racking up more debt than any member of the 19-member trade bloc, joining Somalia, Sudan, Zimbabwe to become the first EU country to default on an IMF loan.
Threatening to quit as prime minister July 5 if Greeks vote to stay in the Eurozone, Tsipras made his preference clear that he wants out of the euro. Tsipras was elected Jan. 26, 2015 on an anti-EU platform, accusing the common currency bloc of enslaving the Greek economy. With the IMF’s Christine Lagarde, German Chancellor Angel Merkel and Eurozone finance minister chief Jeroen Dijisselbloem all saying that there can be no negotiations until after the July 5 vote, Tsipras threatened to resign if Greeks vote “yes” to stay in the Eurozone. Complicating the picture are Tsipras’s imposition Nov. 30 of capital controls, closing banks and limiting ATM cash withdrawals to only 60 euros for Greek citizens. Tsipras wants a “no” vote to pressure the EU for a third bailout of at least 60 billion euros. Without the bailout and debt restructuring, Greece would continue to hemorrhage
Gambling that a “no” vote on the current bailout plan would force the EU into acquiescing to Greek demands, Merkel and Lagarde hinted there are limits to the Eurogroup’s patience. Speaking July 1 to the Deutsch Bundestag (Germany’s lower house) Merkel told lawmakers that the Eurozone could not compromise its principles or, more importantly, the health of the common currency bloc by backing a plan that weakened the Eurozone. Greece’s demand for another bailout offers the Eurozone nothing in the way of future security. “Europe wants to help Greece. But cannot help anyone against their own will. Let’s wait for the results of the Greek referendum,” said European Council President Donald Tusk. Tsipras hopes that a “no” vote puts him in the driver’s seat to squeeze the EU, Eurogroup, IMF and ECB of the cash needed to restructure Greece’s $107 billion debt, both public and private.
Tsipras wants the European Stability Mechanism, the EU’s rainy-day fund, to bail out Greece one more time before agreeing to come back into the Eurozone. “We will come back to your request for financial stability support from the ESM only after, and on the basis of the outcome of, the referendum,” said Jijsselbloem. Jijsselbloem failed to mention that once Greece’s 2012 bailout contract expired June 30, it’s a whole new ballgame. Tsipras wants some 30-50 billion euros in debt relief before he’s wiling to sign on to any new debt deal. “This government has done nothing since it came into office,” said German Finance Minister Wolfgang Schaeuble, winning cheers in Bundestag. “You can’t in all honesty to expect us to talk with them in a situation like this,” skeptical of Tsipras’s strategy. Threatening to resign and telling Greeks to vote “no” July 5 raises serious doubt in the Eurozone.
Talking about the EU’s “blackmail,” Tsipras gambled that the beaten down Greek public would direct its collective ire at the EU and Eurozone. Tsipras hoped closing banks and imposing capital controls would secure his “no” vote July 5. “We have received so many ‘latest’ offers, which themselves have been validated, invalidated, changed, amended, over the course of the last few days, that’s quite uncertain exactly where the latest proposal stands,” said Largarde, skeptical that Athens would make the necessary changes to value added taxes, income taxes and cuts to government salaries and pensions to get control of Greece’s exploding deficit. Talking fast-and-loose, Tsipras has blamed all of Greece’s financial woes on the Eurozone, hoping to get his “no” vote on the July 5 referendum. Greek voters must cut through Tsipras propaganda to figure out what’s best for the country.
Before Greeks decide how to vote July 5, they must search their memories of what life was like under the drachma before joining the Eurozone Jan. 1, 2001. Dealing with a history of inflation, currency devaluation and downgraded credit, returning to the drachma won’t come without trade-offs. Whether or not exiting the Eurozone would be good for Greece is anyone’s guess. Tsipras either looks to take Greece in that direction or drives the world’s hardest bargain with the Eurozone. Playing hardball with the EU, Eurogroup and ECB, it’s uncertain if Tsipras’s strategy worked. ECB officials said they’d continue emergency lending until the July 5 referendum to keep Greek banks in euros. Tsipras and his Finance Minister Yanis Varoufakis have pushed hard to influence a “no” vote on July 5. If Greeks vote “yes,” Tsipras and Varoufakis should pack their bags and get out Athens.
