The Slatest

Greece Called Europe’s Bluff. Will Europe Really Let Greece Crash Out of the Euro?

A man holds a Greek national flag as he celebrates in front of the parliament on July 5, 2015.

Photo by Iakovos Hatzistavrou/AFP/Getty Images

Now that the Greek people have spoken, rejecting proposed European bailout terms by a much larger margin than had been suggested by polls, triumphant Prime Minister Alexis Tsipras says he will now return to negotiations with a strengthened hand. He will likely meet with Greek opposition leaders tomorrow, perhaps to recruit some new members to form a negotiating team that doesn’t inspire the same loathing among the country’s creditors as his own Syriza party.

In a confusing referendum over a potential bailout package that hasn’t actually existed for several days, many voters in the “no” camp seem to have been motivated less by specific economic concerns than by a desire to end the humiliation of having unpopular policies forced on them by foreign governments, resulting in dire economic conditions. They’ve won a victory today, and have been cheered on by anti-establishment figures around the world ranging from Britain’s far-right UKIP leader Nigel Farage to Bernie Sanders.

For Europe, the path forward is less clear. Chancellor Angela Merkel of Germany and President François Hollande are meeting tomorrow, and current European Council president Donald Tusk of Poland has called for an emergency summit on Tuesday to discuss the crisis. But at least some European leaders—German Deputy Chancellor Sigmar Gabriel for instance—are already saying that new negotiations with Greece are impossible under the current circumstances. While not a foregone conclusion, a Greek exit from the eurozone is a lot more likely after Sunday.

In the days leading up to the vote, senior European leaders including Hollande and Gabriel had issued dire warnings that a “no” vote would be a vote to leave the euro. Tsipras said they were bluffing, and Greek voters—who by and large want to remain in the euro even if they oppose European-mandated austerity policies—seem to have believed him. The question now is whether the Europeans will make good on their threat to let Greece crash out of the euro, risking fallout for the wider European economy and the overall political project of European integration. There are disagreements, even within governments, over how far governments should go to keep Greece within the euro. Merkel, for instance, is thought to want Greece to stay, though not at any price, while her finance minister Wolfgang Schäuble has argued that a Grexit might be the least bad option. (Schäuble has been a little tough to read in recent days, surprising many this week by suggesting that it might be possible for Greece to be “temporarily” without the Euro.)

But while European governments may feel flummoxed today, they’re still likely to be under less pressure than the triumphant Tsipras in the days to come. The Bank of Greece is expected to ask the European Central Bank for more liquidity, a request that is likely to be rejected—a move that the country’s chief debt negotiator says would be “pretty close to trying to bring down the government.” Greece’s finance minister says that in the days to come, the country is considering printing IOUs to pay salaries and pensions, as California briefly did during the worst days of its debt crisis. Even if the country’s creditors are willing to return to the negotiating table, as Yale political scientist Stathis Kalvyas notes, they seem unlikely to agree to terms that Tsipras can sell to voters, especially after his assurances to the “no” camp over the past week that the referendum could bring an end to austerity without financial ruin.

Despite Sunday night’s celebrations, that’s still going to be a tough promise to keep.

Read more Slate coverage of the Greek financial crisis.