Greece is to hold a national referendum to decide whether the country will accept a deal offered by creditors over the country’s debt obligations and tax, spending and pension policies.
Caught between his government’s promises to pay its debts and his own campaign promises to oppose fiscal reforms demanded by creditor institutions, Greek Prime Minister Alexis Tsipras announced today that he will let the people decide the fate of the country.
“Our responsibility is for the future of our country. This responsibility obliges us to respond to the ultimatum through the sovereign will of the Greek people,” Tsipras said.
While it seems like a lot is riding on the national referendum, scheduled to take place Sunday, July 5, the vote might come too late.
Greece owes a debt payment of €1.5 billion to the International Monetary Fund on Tuesday, June 30. A missed payment would be disastrous for Greece, as well as Europe. Greeks are already withdrawing money from their banks and ATM machines.
Default and subsequent capital controls, if not expulsion from the Eurozone, appear imminent.
After five months of negotiations, multiple missed deadlines and a week of intense meetings with European finance ministers, the International Monetary Fund and the European Central Bank, Tsipras ultimately rejected a proposed fiscal reform needed to release €7.2 billion in bailout aid.
Tsipras argued that the fiscal plan put forward by creditors would have added “unbearable weight” to the Greek people and thwarted economic recovery. He called on Greek voters to speak up for democratic tradition with “sovereignty and dignity.”
“We should respond to authoritarianism and harsh austerity with democracy–calmly and decisively. Greece, the birthplace of democracy, should send a resounding democratic message to the European and global community,” Tsipras said.
He had asked creditors for debt relief; they had asked his country for austere fiscal reforms.
In the end, it appears the sides were too far apart to agree to anything.
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Photo Credit: John D. Carnessiotis (www.flickr.com/photos/aster-oid/3383912837), Licensed under the Creative Commons Attribution 2.0 Generic | Flickr
