'No' vote pushes Greece towards the exit

Following the resounding “No” vote in Greece’s referendum, Europe has given Athens “one last chance" to come up with a credible economic reform plan.

Following the resounding "No" vote in Greece's referendum, Europe has given Athens "one last chance to produce a credible economic reform plan that could underpin a new bailout", says Graeme Wearden in The Guardian. Donald Tusk, the European Council president, described the lead-up to Sunday's summit, which all 28 European leaders will attend, as the "most critical" days in the European Union's history. Failure to secure a deal, he said, would lead to the "bankruptcy of Greece, and painful' consequences for the Greek people, with geopolitical effects across Europe".

Greece's ruling party, Syriza, has "modified its rhetoric" and "shunted aside" its abrasive finance minister, Yanis Varoufakis, said The Daily Telegraph. But Europe's leaders were "furious" at a lack of Greek proposals at an emergency summit on Tuesday, which the new finance minister, Euclid Tsakalotos, attended with only "bullet points scrawled on hotel notepaper", says Bruno Waterfield in The Times. Greece has until Thursday night to submit "detailed plans for a third bailout", or face "being kicked out of the euro". Whether Tsakalotos's proposals, already "roundly rejected by the EU and International Monetary Fund", were "trickery" or "just muddle", they do little to improve relations between Greece and its creditors, say Kerin Hope, Henry Foy and Peter Spiegel in the FT.

Even if the money and determination can be found to keep Greece in the eurozone, trust is in short supply. Eurozone officials will wonder whether the Greek prime minister, Alexis Tspiras, can be relied upon to implement any reform he comes up with. Among Syriza officials there is a similar lack of trust, with a widespread belief that Greece's creditors are "ready to push the country over the brink". So are they? The French PM, Manuel Valls, said Grexit and the "rupture of monetary union must be prevented as the highest strategic imperative", says Ambrose Evans-Pritchard in The Daily Telegraph. The US has called on the EU to put "Greece on a path toward debt sustainability". But most EU governments lean towards Grexit. Germany is already "discussing plans for humanitarian aid and balance of payments support for the drachma".

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Syriza's preferred solution would be to write off its debts without leaving the euro, but that is a "non-starter", says Allister Heath in The Daily Telegraph. Firstly, it would inflict big losses on EU taxpayers. Secondly, other troubled countries would be certain to demand similar treatment. So the most likely outcome is "a Greek departure from the euro, accompanied by a massive default". German taxpayers will be "forced to face up to their massive losses", but at least the Greeks will be out of the single currency. "In the short term, Grexit will be traumatic, wiping out the assets of middle-class Greeks and threatening hyper-inflation." But over time, and under a more sensible government, a more competitive Greece could thrive.

Emily Hohler

Emily has extensive experience in the world of journalism. She has worked on MoneyWeek for more than 20 years as a former assistant editor and writer. Emily has previously worked on titles including The Times as a Deputy Features Editor, Commissioning Editor at The Independent Sunday Review, The Daily Telegraph, and she spent three years at women's lifestyle magazine Marie Claire as a features writer for three years, early on in her career. 

On MoneyWeek, Emily’s coverage includes Brexit and global markets such as Russia and China. Aside from her writing, Emily is a Nutritional Therapist and she runs her own business called Root Branch Nutrition in Oxfordshire, where she offers consultations and workshops on nutrition and health.