Published on 5 Jul 2015

Is Greece about to call the EU’s bluff?

A NO graffiti is seen next to a Japanese tourist siting at the entrance of the Athens Academy

NO graffiti at the entrance to the Athens Academy (Reuters)

Sunday,  3am. Athens is quiet. People have gone “home” to vote: to islands, to Thessaloniki, to far suburbs beyond the public transport network. But quiet Athens is like Blackpool during the illuminations.

At dawn, the voting will start. But in the hot night there is more than just revelry going on. In a small room, over roll-ups, a team from the No campaign is poring over a spreadsheet. I have it too, screen captured and texted, by someone who cannot be named. It is a comprehensive breakdown of all known polls, public and private.

You can’t report opinion polls on the day of a vote here, so I will only say that it shows last week the momentum shifted: towards Yes early in the week and towards No later.

Polls can, of course, be rubbish, and neither side is sure of victory. But they show a Yes victory is far from certain. If they’re borne out in the results from 1800GMT it is a disaster for the European Union’s political leadership.

Here’s why. The entire who’s who of Europe lined up at the start of the week to warn Greeks that a No vote means a vote to leave the Euro.

Syriza and its coalition partner ANEL said, by contrast, that they wanted a No vote just to strengthen their hand in negotiations with the EC, which were already strengthened by the IMF’s acknowledgement of the need for debt restructuring.

If it’s No, then despite numerous Euro leaders, celebrities and every private news channel in the country trying to stoke up panic and a Yes vote, Greeks have refused to be panicked.

So what then?

One school of thought, prevalent among financial journalists, is that the ECB will cut off funding to the banks, the EC will organise regime change, and Alexis Tsipras will be forced out amid food riots and medicine shortages. Emergency Lending Assistance – which here is pronounced “ella”, the same as the word for “come on!” – would be not just capped but stopped.

To be clear: among sections of the right-wing Athenian middle class this is not a fear – it is a project. To be equally clear: there are cadres within the activist base  of Syriza, and in anarchist movement, who would welcome that scenario like an early Christmas present.

However, finance minister Yanis Varoufakis made clear on Friday, in a combative interview with me, that he expects something different. He expects a deal being discussed in background with the EC to be activated in the event of a narrow No, and for Syriza to do that deal. ELA would have to be quickly boosted, allowing the Greek banks to open.

All week – despite the rhetoric – the Greeks have remained in contact with the ECB over the required ELA limits; they believed more ELA was possible midweek. I have to say, therefore, any analysis you read that says: “No means the Greek banks will collapse – and the Greeks have voted to leave the Euro” is a one-sided reading of the situation, and because it’s Sunday I am putting it politely.

Greek Prime Minister Alexis Tsipras licks ballot envelope before voting in national referendum at a polling station in Athens

Greek prime minister Alexis Tsipras licks his ballot paper as he votes in the bailout referendum (Reuters)

One obstacle to a deal with Syriza has already been removed by the IMF putting s insistence: no deal without debt relief in future, looks enough to frame a narrower fiscal deal as acceptable to Syriza and ANEL.

Whatever happens, I think we are seeing a crisis of conservatism in Greece. While those on the Yes demos have been mainly drawn from conservative business circles, most of the running has been made by activists from the Potami party – a kind of Blairite centre party run by hipsters and doctom types, which polled just 6 per cent last time.

By openly siding with the right, it could put itself in position to become, like Cuidadanos in Spain, a potential modernising force.

Meanwhile, ANEL, the hard-right nationalist part that is a minor coalition partner with Syriza, is looking stronger than ever before: its burly leader, Panos Kammenos went through an interesting moment on Friday night’s rally – popping up to take a brief hug and salute from Tsipras in front of an ecstatic crowd of left-wingers.

He won’t get any votes from that crowd – but ANEL is certain to profit from the stance it’s taken, and the profile Kammenos has carved out.

There are, maybe, people crazy enought to say to the pro-euro right-wing business class in Greece: because you’ve lost a referendum by a few percentage points, your country must be thrown out catastrophically from the Eurozone it wants to stay in. But I cannot belive that reflex is guiding the chancelleries of Europe. Indeed, President Hollande has said just now he will push for Greece to be in the Euro “whether it votes yes or no”.

So if it’s OXI by Sunday night, the European Union has a big problem. The entire EU leadership told Greeks a No meant exit from the Eurozone. The Greek government said: “They’re bluffing.” We will find out who is right within 24 hours of the polls closing.

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12 reader comments

  1. Michael says:

    Thanks so much for your diligent reporting and analysis, absolutely fascinating.

  2. mervyn johnson says:

    It’s taken 5 years, since the first bailout, to arrive at this junction. It was ultimately inevitable this ‘Greek’ scenario would happen. During this period the Greek government have received further bailouts, to which they already knew they would never be able to repay. Yet continued to hold out the ‘begging’ bowl. Today the situation hasn’t changed, they will still demand not only more funding but a total debt re-structuring. In other words they don’t want to repay any of the monies they owe yet expect more. Regardless of the outcome of the Greek vote, the EU along with the ECB and IMF, will agree a new debt relief program coupled with new long-term loans. Yanis Varoufakis has suggested that the EU will loose around 1 trillion Euros if there is a Grexit. More scaremongering as they are simple clutching at straws, in the hope that they can out bluff the EU hierarchy. The Greeks will remain within the Eurozone, even if they run a dual currency option, but there is no way that the founders of the Euro will allow any participating nation to exit, regardless of their monetary circumstances.

  3. VN Gelis says:

    Unless of course a narrow NO win is what is required to go for a 2nd Referendum Irish style.
    When dealing with the EU rejection always equals acceptance NO usually means YES.

  4. Guillem says:

    Great piece. Just a minor typo on the name of the Spanish lib-dem-like party, it’s “Ciudadanos”.

  5. Chris Piché says:

    I was sitting on my deck Saturday morning reading a news story about the Greek Referendum here in Eugene, Oregon, USA, when an earthquake (4.2) rattled the
    apartment. It’s epicenter was nearby but it was felt over a hundred miles away.

    Kudos to Tsipras, Varoufakis, Syriza and the Greek people for standing up for dignity.
    May your victory (Sunday AM) rattle the plutocrats and technocrats of Europe. After an earthquake like this, others are sure to follow.

  6. Cameron Moore says:

    So it looks like OXI is the winner today. Both Syriza and the the EU-IMF technocrats want a deal but will struggle to get anything through creditor countries parliaments. Can anybody think of a way they could fudge a deal through without a vote in Germany, Netherlands ect?

    If it can’t be sneaked through I can’t see Greece staying in the Eurozone. Maybe the best option now would be the “velvet exit” with the IMF granting short term assistance to Greece with the unspoken agreement that if the EU and IMF don’t treat Greece well then they will turn to Russia as a fairer partner.

  7. william says:

    Looks like the eu’s bluff has just been called. And not only that, but an almost two thirds majority for “oxi”! Looks like the “beginning of the end” for neoliberalist austerity. Neither does it look good for Merkel! The rise of the left has begun; and the next country to protest against the technocrats, will be Spain. There worst nightmare is about to unfold!

  8. william says:

    I have an idea on how money can be saved. Practice “austerity” on the eurocrats! Why not! They are the ones who are “derelict in their duty”. If an organisation in the business world was as inept as these eurocrats, they would lose their jobs. And therein lies the problem with the eu. There is no accountability. The technocrats espouse capitalism; but, when they mess up, nothing happens to them! That’s not capitalism. That’s cronyism!

  9. william says:

    Dear Paul, I don’t like to say I told you so. But; I told you so! Roll on Spain. Roll on Portugal. Roll on Eire. Roll on Italy. ” your boys took a helluva beating!”- Mrs Merkel

  10. Leo says:

    The question is what this will change in the balance between Greece and the other 18 EZ countries.

    Syriza has let the bailout expire and missed the IMF payment. This means it will have to renegotiate from a weaker position by falling out of the existing bailout package. Meanwhile any further ELA has been blocked by the No vote as the ECB can’t legally support the Greek banks any further.

    This means that the real hardship for the average Greek will now commence. The banks can’t reopen, the first supermarkets are reportedly running out of food and fuel shortages will intensify. The EU will probably come with a programme of humanitarian aid as Martin Schultz has already called for.

    If anything, the pain for the average Greek will intensify the coming weeks putting more pressure on Tsipras to strike a deal. Not a desirable position for Tsipras.

  11. mervyn johnson says:

    Regardless of this ‘no’ outcome the Greeks will be offered a new deal. The other Euro leaders cannot afford the Greeks to exit. The fear is contagion, so much as a prelude to the beginning of the end of the EU?
    With so much unrest throughout parts of Europe the Greeks will have to be brought back into the fold to endorse a sign of stability and strength throughout the Union.

  12. william says:

    A 320 billion euro “debt overhang”. Light the “blue touch paper”, and stand back!

Comments are closed.