Debt dispute: greek parliament votes for referendum

The crisis day for Europe ended with another signal of confrontation: the Greek parliament voted in the night for the controversial referendum on the reform demands of the European donors, Prime Minister Tsipras called for the "big no". The ECB will probably advise today whether there are still emergency loans for Greece’s banks. The Eurogroup had previously decided to phase out aid to Greece.

The Greek parliament has approved the government’s planned holding of a referendum on the claims of the creditors of the heavily indebted country. According to the parliamentary census, 178 members of parliament voted for the referendum that night in Athens.

Prime Minister Alexis Tsipras had previously campaigned for the referendum and called on the population to say a "big no" to the demands of the creditors. At the same time, the Greeks should say "a big yes to Europe and solidarity". The head of government was convinced that a "proud no" would strengthen Greece’s negotiating position vis-à-vis the creditors. "The referendum will take place whether the partners want it or not," Tsipras said in parliament.

"The Greeks are supposed to vote on July 5th on an offer that no longer exists – that is completely absurd," a diplomat in Brussels had previously stated.

Consultations on euro stability

In the evening, the finance ministers of the Eurogroup discussed how the stability of the monetary union can be guaranteed after the failure of the negotiations with Greece and the consequent end to the aid program. Germany’s Finance Minister Wolfgang Schauble emphasized after the meeting that the euro countries would do everything to "prevent any conceivable risk of infection".

Eurogroup leader Jeroen Dijsselbloem made a similar statement. Athens must now take financial emergency measures, he said after the ministerial meeting, in which the Greek finance minister Yanis Varoufakis no longer attended. To implement these measures, Greece is receiving technical assistance from the donor institutions in order to ensure the stability of the Greek financial system.

However, the Eurogroup leader did not say exactly how these measures should look. From negotiating circles, however, it was reported that the Eurogroup had been talking about temporary bank closings and capital controls in Greece. Capital controls designed to prevent further cash outflows can only be decided by Greece itself.

"Return to the negotiating table possible"

Schauble affirmed that Greece would remain a member of the euro zone and part of the EU. However, Greece is heading for acute difficulties in the coming days, because it will now be difficult for Athens to meet obligations. Dijsselbloem also emphasized that the Greeks could return to the negotiating table despite the decision to let the aid program expire. "The process is not over and probably never will be," said Dijsselbloem.

Worried looks at the ECB

How the European Central Bank (ECB) reacts will now also be decisive. Because it approves emergency loans every day to prevent a collapse of the Greek banking sector as the Greeks clear billions from their accounts. If she finally turns off the tap, the situation will come to a head again. According to EU diplomats, the ECB is still deliberating precisely on this today.

It’s over on Tuesday

The euro countries had previously refused to extend the current aid program beyond June 30. This means that billions in aid still available for Greece will expire on Tuesday. Dijsselbloem cited the rejection of the creditor proposals by the Greek government and the referendum planned by Athens on the proposals as the reason for the decision. The donors had reacted with maximum flexibility and were ready to react to the economic situation, he said. The Greek government broke off the process.

The Greek Prime Minister Alexis Tsipras announced a few hours before the decision that the Greek people would be in just over a week by referendum to vote on the reform and savings proposals of the donors. This angered many Eurogroup finance ministers. Even if the Greeks should vote for the austerity and reform package in a referendum, the question still arises, according to Dijsselbloem, with whom we should then trustfully cooperate.

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