Greek debt is hovering at around €340 billion, with a payment of €1.6 billion scheduled for the IMF on June 30th. Greek Finance Minister Yanis Varoufakis met with his Eurozone counterparts this week in an effort to extend Greece’s bailout program-a request that was ultimately rejected. Now Greece only has a few days remaining to pay its next bill or risk defaulting, which could lead to a collapse of both the Eurozone and Greece’s economy.
That still seems unlikely however, as the European Central Bank should be against forcing Greece to abandon the euro. Nonetheless, a lack of progress over talks seems to have prompted Prime Minister Alexis Tsipras to call a referendum for July 5th, asking the public if they support the austerity measures asked for by creditors. These measures, which would include significant tax increases and cuts for pensioners, are certain to be unfavourable among voters, in a country where a third of people are already at or below the poverty line and unemployment is at 25%. Thus a no-vote is all but guaranteed, giving Tsipras a better hand in further negotiations.
It has indeed become a waiting game, with either side hoping to be the last one standing. On one side is Tsipras, counting on fears of the Eurozone’s demise, and on the other are the creditors, doubting that Greece will allow itself to fall into further chaos. Already in the country, long queues of people are waiting to cash out at ATM’s while others were filling their vehicles up with fuel, amid fears that the government will impose capital controls as soon as Monday.
The Greek people have been facing immense hardships for years, and striking them with austerity will make things worse, not better. Forcing it upon them will be humiliating to a country already on its knees. Simply put, there is nothing left to lose.
The ECB can’t say the same, and so everyone in Greece waits for the inevitable better deal.