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Here's What It Means Now That Greece Voted "No" On Its Bailout Plan

In a victory for Prime Minister Alexis Tsipras' government, Greeks voted on Sunday against the EU and IMF's bailout plan.

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Greeks rejected a series of proposals from Greece's lenders on Sunday in a 61%–39% vote, throwing into further chaos the status of negotiations over the funding Greece desperately needs to keep from basically going bankrupt.

Ahead of a June 30 deadline, the International Monetary Fund, the European Commission, and the European Central Bank offered up a set of proposals that Greece would have had to agree to in order to the receive $8.1 billion in loans it needs to stay solvent.

Following the global financial crisis of 2008, the three lending bodies — often referred to as the "troika" — have provided Greece with 220 billion euros in loans over the last five years. Most of that, however, has gone towards repaying Greece's previous loans and public spending.

In response, the government announced that it would put the proposals before the Greek people, calling for a referendum vote — the first since the country abolished the monarchy in 1974.

Milos Bicanski /AFP / Getty Images

The hastily organized vote was framed by supporters as the only way to stay within the eurozone, the 19 countries that use the euro. Opponents, including the Greek government, saw the terms that the troika had set as unacceptable and urged a "No" vote to allow Athens to set better terms at the negotiating table.

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Should the draft agreement submitted by the EC, ECB, IMF to the eurogroup on June 25, which consists of two parts that make up their full proposal, be accepted? The first document is titled 'Reforms for the completion of the current programme and beyond' and the second, 'Preliminary debt sustainability analysis'
Do you think that the thing the European Union, the European Central Bank, and the International Monetary Fund suggested on June 25 should be a thing that we accept? It's full of a bunch of things we have to do, like more spending cuts (i.e. austerity) and whatnot in order to get more money in order for us to not be totally broke.

The result is a major win for Greek Prime Minister Alexis Tsipras — leader of the left-wing Syriza coalition — who had campaigned hard for people to reject the proposal.

Greek Prime Minister's Office / Via Getty Images

"We ask you to reject it [the proposal] with all the might of your soul, with the greatest margin possible," Tsipras said on Monday night.

He also said then that he wanted Greece to remain within the eurozone: "The financial cost of the dissolution of the eurozone and the cost of bankruptcy of the European Central Bank is huge — enormous. This is my evaluation."

The outcome is a victory for Greeks who believed that the banks and lenders had set a set of terms too harsh for Greece to accept. What this means for negotiations over Greece's fiscal future, however, remains unclear.

Odd Andersen / AFP / Getty Images

German Chancellor Angela Merkel previously said that Greece's counterproposals wouldn't be debated prior to the referendum's outcome. Now that Greeks have resoundingly rejected the troika's proposal, Athens hopes to return to the table with a better position, to increase the amount of debt relief built into the plan and other concessions. But whether negotiations resume at all, as Tsipras' government hopes, is not set in stone, based on how firmly European leaders insisted the vote was also a referendum on Greece staying within the eurozone. And soon after the vote, German Vice Chancellor Sigmar Gabriel said that in holding the vote Tsipras had "torn down last bridge of compromise."

Greece has already opted to miss the most recent payment on the $1.8 billion that it owed the IMF as of last Tuesday, and it owes the ECB another 3 billion euros on July 20.

The result is also sure to increase chatter about just what a Greek exit from the euro (or "Grexit") would mean. (As of now, nobody knows what it would mean for the euro, let alone global markets.)

This is what The Guardian has predicted would happen, though, and it isn't pretty:

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.

Hayes Brown is a world news editor and reporter for BuzzFeed News and is based in New York.

Contact Hayes Brown at hayes.brown@buzzfeed.com.

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