Two choices, many possible results for Greece’s landmark vote

LONDON: The Greek people are voting on a future in which they face two painful prospects: the slow grind of years more of austerity cuts or the country’s potentially catastrophic exit from the 19-nation eurozone.

The question is whether their vote today can help them escape either.

‘Yes’ to more budget cuts demanded by creditors in exchange for a financial aid package for the country? Or reject it in the hope it will not lead the country out of the euro?

A ‘yes’ vote backing the reform proposals creditors had made would likely see Greece turn immediately to talks on a new rescue package

For the radical left-led Greek government, the proposals are unacceptable. It’s urging a ‘no’ vote and says that will have no impact on Greece’s euro status.

Proponents of a ‘yes’ vote, including a parade of former prime ministers and the main opposition party, say backing the government will jeopardise Greece’s place in the euro. Instead, they argue that by voting ‘yes’ Greece would get a new deal quickly to shore up the economy.

In fact, what might happen in each case is unclear. Here’s a look at each possibility:


A ‘yes’ vote backing the reform proposals creditors had made would likely see Greece turn immediately to talks on a new rescue package. Whether that leads to a swift deal that might allow Greece to reopen its banks and restore a semblance of normality is another question.

The government has said it will respect the verdict. Greek Finance Minister Yanis Varoufakis has said he’ll resign in the event of a ‘yes’ vote and Prime Minister Alexis Tsipras has hinted as much. If the government does not collapse, it could try to build a new coalition with other parties, Varoufakis hinted.

It’s not clear, however, if that would involve new elections. That would take time and without financial assistance, Greece would surely go bankrupt.

Greece is no longer in a bailout programme since its previous package expired. So it would have to negotiate a new one with its creditors that involves more money for the government and the banks and new economic austerity measures. That is unlikely to be agreed on overnight, meaning the banking restrictions on money withdrawals and transfers may remain in place for longer than anticipated.

Varoufakis says banks will reopen on Tuesday whatever the referendum’s outcome. That’s unlikely to happen unless the European Central Bank (ECB) agrees to increase the credit to Greek banks.

An additional difficulty is that the International Monetary Fund has said it will not get involved in a third bailout unless it includes substantive debt relief for Greece. The Europeans, on the other hand, have ruled out debt relief until Greece makes its reforms.


Despite the Greek government’s assertion that a ‘no’ vote will not lead to a euro exit, most people agree it would open up more uncertain outcomes, especially if the ECB halts its life-support measures to Greece’s banks.

A number of European politicians, including Jeroen Dijsselbloem, the top eurozone official, have said a ‘no’ vote would jeopardise Greece’s place in the euro. Others, such as the leaders of France and Italy, appear to be holding the door ajar for further talks.

But investors are likely to believe that a ‘no’ vote increases the chance of a Greek exit from the euro, or ‘Grexit’.

The word ‘Grexit’ has dominated the past months of negotiations on Greece. But the country will not return to the drachma — Greece’s former currency — immediately. Rather, the risk increases the longer there is a deadlock in talks. Without a deal and without money, Greece will default on more of its debt repayments and will not be able to pay salaries or pensions. The banks will run dry, even with the cash withdrawal limits.

In such a case, printing a new currency may be the only option available, which almost everyone thinks will be a short-term disaster for the Greek economy.