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Our View: If referendum changed anything it was for the worse

Greeks on a terrace in central Athens

IT IS DIFFICULT to know why Greeks were celebrating on the streets of Athens on Sunday night. Had they really believed the vacuous rhetoric of their prime minister in the run-up to the referendum, claiming that a strong ‘no’ vote would strengthen the country’s negotiating power or were they celebrating their futile gesture of defiance for the sake of it?

After we cut through all the platitudes about the triumph of democracy and the proud stance of the majority of the Greek people, it is obvious there is no tangible gain from the referendum and if it changed anything, it was for the worse. This was evident as early as yesterday morning when his hard-line finance minister Yanis Varoufakis, who had been in charge of the bailout negotiations and accused the lenders of ‘terrorism’, announced his resignation, just a few hours after his triumphant, post-referendum comments.

His explanation was that there was “a certain preference by some Eurogroup participants and assorted partners for my absence from its meetings, an idea that the prime minister judged to be potentially helpful to him in reaching an agreement.” Greece was in such a strong position after the referendum that it agreed to get rid of the minister that was supposedly holding out at negotiations for a better deal. In fact Varoufakis’ departure is a recognition by Prime Minister Tsipras of the weak position his government is now in.

For the lenders, the referendum result was not a rejection of the last proposal they had made but a rejection of a bailout agreement and an indication that Greeks were not that concerned about keeping the euro. This was how most of the European interpreted Sunday’s result, with the head of the Eurogroup Jeroen Dijsselbloem saying that “when proposals are rejected that only makes things more difficult.” The Germans were less diplomatic with the Vice Chancellor Sigmar Gabriel stating that with the referendum Tsipras had “torn down the last bridges on which Greece and Europe could move towards a compromise”.

The message from Berlin yesterday was that Greece needed to improve on its previous proposals if it wanted to keep the euro, while the German finance ministry dismissed the idea of a debt restructuring, which Tsipras wanted part of a deal. The Europeans have put the onus on Tsipras, asking him to submit a proposal for a deal at today’s summit, the implication being that it could not diverge too much from the last Eurogroup proposal that was rejected and led to the referendum. It is entirely possible European leaders would demand a tougher agreement today and offer Tsipras an orderly exit from the euro as an alternative if he does not accept it.

The referendum, despite the mindless rhetoric, could prove Tsipras’ biggest mistake yet. He fought it on the promise that a ‘no’ vote would secure a better deal, but today he may be offered something worse than the last proposal he rejected and put to the vote, because the situation is even worse now. Would he now accept a worse deal than the one that was rejected in the referendum?

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