After failing to meet another deadline to pay back its creditors, Greece is now feeling pressure from its European lenders to implement austerity measures such as pensions cuts and tax hikes. Greek Prime Minister Alexis Tsipras took a vote on the issue last Sunday and campaigned for a “no” to the measures. However, despite the campaign, it is reported that Tsipras still expected the vote to be a “yes”.
Greek citizens answered with an overwhelming 61% voting “no” to the austerity measures.
Despite winning the support of their people, the Syriza government in Greece is now put into a difficult situation. According to Ambrose Evans-Pritchard of the Telegraph, “What should have been a celebration on Sunday night turned into a wake”. Following the landslide vote, Prime Minister Tsipras now has to decide between arguing a case to remain within the Eurozone or to yield to the austerity measures set forth by Greece’s many creditors.
Yanis Varoufakis, the Greek Finance Minister resigned shortly after the results of the vote were announced. His replacement, Euclid Tsakalotos met for an emergency talk in Brussels, Belgium without a plan.
The effects of these political issues are now being felt in Greece. After citizens were restricted to 60-euro ATM withdrawals per day from the local banks, Reuters reported Tuesday that the Greek banks will have funds for only two more days. To make matters worse, the European Central Bank has recently cut off emergency lending to Greece. Without any help from the ECB, it is still unsure how the banks will have the ability to open again.
Although a majority of Wall Street banks imagined the next step would be to remove Greece from the euro, any action has yet to be taken. It is reported that Tsipras turned down a plan that was devised before the referendum to help avoid a ‘Grexit’. This plan would have involved developing a parallel currency, taking cash from central bank branches and firing the governor of the Bank of Greece.
As yet another deadline looms over Greece’s head, Tsipras and other government officials are pressured into making a decision before other members of the UN decide for them. Already, the latest news indicates that all members of the European Union are set to meet for a summit on Sunday.