Many Greeks were celebrating on Sunday night after the nation voted to reject the terms of a bailout offer from its international creditors, which would have provided further loans to bolster the country’s flailing economy in exchange for additional austerity measures. With all precincts reporting, “No” won a higher than expected 61.31 percent of the vote, with “Yes” taking 38.69 percent, according to the Associated Press. About 6.16 million Greeks, or 62.5 percent of eligible voters, took to the polls. The referendum is seen as a sharp rebuke of the policies imposed on Greece by other European leaders and the International Monetary Fund over the past few years — though since the bailout in question expired last week, it’s unclear what exactly they were voting for.
Greek prime minister Alexis Tsipras, who was elected in January, shocked the nation’s European creditors last weekend when he walked away from negotiations over extending emergency funds and declared the issue would be put before his people. He campaigned against the bailout deal, arguing that a “No” vote would give him leverage to press for debt forgiveness and less painful austerity measures. “Given the unfavorable conditions last week, you have made a very brave choice,” Tsipras told Greeks in a televised address after the referendum, adding, “You gave me the power not to break away from Europe but to achieve an agreement with Europe that will take us away from austerity and bring us into a new era.”
Many European leaders claimed those who cast a “No” ballot would be voting to leave the eurozone. Sigmar Gabriel, Germany’s vice chancellor and economic minister, said Tsipras has “torn down the last bridges, across which Europe and Greece could move toward a compromise,” and following the vote, said, “It’s difficult to imagine negotiations over an aid package for billions.” Julia Klöckner, the deputy chairwoman of Germany’s ruling party, tweeted, “The E.U. is not a make-a-wish club in which a single member sets the rules and the others pay the bill.”
It appears that Greeks agreed with Tsipras’s assessment of the situation and weren’t signaling that they want to stop using the euro. In a poll conducted last week by ALCO for To Ethnos newspaper, Greeks were evenly split on the confusing question that appeared on the ballot, but 74 percent said they want to remain in the eurozone. “The message from the ‘No’ is that we’re not scared after all the pressure that we faced from both Europe and within,” Stathis Efthimiadis, a 47-year-old teacher, told Reuters. “We want to live fairly and freely within Europe.”
Tsipras claimed he would be able to reach a new bailout deal with Europe within 48 hours, which many consider doubtful, but eurozone leaders have agreed to gather for an emergency meeting on Tuesday evening. They don’t have much time to hash out a new agreement. Last week Greece became the first developed country to miss a debt payment to the IMF, and it faces another major deadline on July 20, when it must repay a €3.5 billion to the European Central Bank.
The even more pressing issue is whether Greek banks will run out of money. For months Greek banks have been kept afloat by emergency loans from the European Central Bank, but the ECB capped the amount of emergency cash available to Greek banks after negotiations fell apart last weekend. Greek banks have been closed since last Monday with ATM withdrawals limited to €60 in cash per day. Louka Katseli, the head of Greece’s banking association, said on Friday that Greek banks only have about €1 billion on hand and may not be able to reopen on Tuesday as promised.
ECB officials plan to meet on Monday to determine whether they’ll continue to support Greek banks. According to the New York Times, the central bank’s rules say it cannot continue funding Greek banks if they are not solvent. The ECB’s leaders may try to find a way to continue providing emergency support to prevent further chaos in Greece, but if the nation is cut off it will likely be forced to return to the drachma or print another form of currency.
That would make Greece the first nation to exit the eurozone since it was established 16 years ago, and it would leave the Greek people in an even more painful situation, at least in the short term. The risk that Greece could drag down other European banks has been greatly reduced in recent years, but there would also be consequences for markets around the world — though that’s uncertain as well. “It’s fair to say we can expect a few surprises in the next few days,” Nicolas Véron, a senior fellow at Bruegel, a Brussels research organization, told the Times. “Clearly, we are in uncharted territory.”
This post has been updated throughout.