Greeks say ‘no’, but what’s next?
What happens if the creditors say no?
Max Fraad Wolff, Chief Economist at ZT Wealth says the creditors are now likely to “put up a big fight”.
“Part of what Greece is doing here is showing another path. The creditors don’t want another path, they’ll fight. Sadly there are fewer creditors who are often better at working together, and many people who owe them money, so that is one of the lessons in history,” he said.“One the other hand, once somebody does it everybody thinks about it, which is what the creditors were scared of.”
Commenting on how events might develop following the Greek referendum, the expert suggested that “there will be more punishment, more pain for the Greeks.”
“Smart people, in the position where the creditors were in, don’t put a country through as much suffering as little tiny Greece has been through. Because if you give someone very little to lose they will begin as to act like it. Part what we saw [on Sunday] is just that,” he added.
The main question now, according to Wolff, is “do we want to rebuilt Greece, do we want to give it a future, do we want to show there’s a union in the EU, or do we want to terrorize other people who don’t like austerity packages into putting up with them.”
“Both have histories. Obviously, we are all better off if we get to a solution as opposed to trying to apportion blame and apportion punishment,” Wolff said.
The vote itself – no matter how hard it was – is the “easy part,” while the hard one – is what happens next, the expert noted.
‘Germany is ready to let Greece go’
Felix Moreno de la Cova, trader from Regions Financial Corporation says that there is a “very high possibility” of Greece exiting the eurozone.
“It’s not inevitable; it’s a very high possibility. I think it’s much more likely that we will see a Grexit within the next few months,” he told RT.
Negotiations might still continue, as it has been the case for the past six month, but “things have changed a lot.”
“Germany is now ready to let Greece go, France might not be, but it’s coming around. It’s a very high probability of a Grexit. After the capital control came on it’s very hard to step back from the brink,” Moreno de la Cova told RT.
Varoufakis resignation – what’s behind it?
On Monday, just after securing a 'no' vote at the referendum on bailout, Finance Minister Yanis Varoufakis resigned, saying it would help Prime Minister Alexis Tsipras negotiate a better deal with foreign creditors.
“Yesterday night he was triumphant and nobody would have expected him to quit, in fact they think a more exact description of what happened is that he was probably fired by the Prime Minister in an attempt to create good will so that he could jumpstart the negotiations,” Stathis Kalyvas, political scientist from Yale University told RT in comments on the surprise move.
According to Kalyvas, it was no secret that the relationship Varoufakis generated with the rest of the eurozone and the creditors “were not good to say the least, and as a result he was basically not in a position to restart the negotiations at this critical moment.”
The minister’s resignation might be an attempt by the PM “to try to resort to some new beginning given the dire situation of the economy here in Athens and in Greece on the ground with banks and the economy at a standstill.”
The week is going to be very critical and Tsipras needs to move very fast, Kalyvas added.
“One thing to keep in mind is that not only Varoufakis burned the bridges and made a compromise impossible by generating such an impossible gap between himself and the rest of the creditors, but at the same time keep in mind that his main strategy was the so-called ‘chicken game’ in game theory,” he said.
“The idea that if Greece threatens to default, the euro would collapse and what we are seeing and we’ve been seeing for the last few weeks is that the markets are not reacting in the way Varoufakis expected. In a sense Varoufakis thought Greece would be the suicide bomber whose threats would actually work to promote a better agreement, a better deal for Greece. At the end of the day it seems that Greece is going to be a kind of suicide bomber that only manages to kill herself and nobody else. So he has failed and as a result of that he has to be replaced. The problem is that maybe coming too late ... It would have been a good move perhaps two months ago but I’m very doubtful that given extreme constraints that exist right now that this is going to be sufficient.”
Ernst Wolff, journalist and author of 'World Power IMF' says the resignation is an indication of the pressure that Athens is under.
“The thing is - it just goes to show the true system of power that Greece is living under at the moment. Greece has been dominated by the institutions that are the ECB, the EU and the IMF since 2010 and the Greek government cannot do anything without the consent of these three institutions. And if they don’t want Varoufakis at the table then Varoufakis has to go.”
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.