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| Version 1 | Version 2 |
|---|---|
| Greece debt crisis: What happens next? | Greece debt crisis: What happens next? |
| (about 14 hours later) | |
| The future of the Greek economy and its existence in the eurozone will be decided over the next few days. | The future of the Greek economy and its existence in the eurozone will be decided over the next few days. |
| A referendum has been called for 5 July, with Greeks being asked to decide whether or not to accept a series of reforms set out by their government's international creditors. | A referendum has been called for 5 July, with Greeks being asked to decide whether or not to accept a series of reforms set out by their government's international creditors. |
| Prime Minister Alexis Tsipras is backing a No vote and a succession of European leaders are describing the referendum as a choice between staying in the euro or leaving it. So what are the main scenarios now? | Prime Minister Alexis Tsipras is backing a No vote and a succession of European leaders are describing the referendum as a choice between staying in the euro or leaving it. So what are the main scenarios now? |
| 1. Last-minute deal | 1. Last-minute deal |
| One route certainly preferred by the creditor side - the eurozone countries, the IMF and the European Central Bank - is a political breakthrough: a deal is done and Greece will stay in the eurozone and pay its debts. | One route certainly preferred by the creditor side - the eurozone countries, the IMF and the European Central Bank - is a political breakthrough: a deal is done and Greece will stay in the eurozone and pay its debts. |
| But a deal that lets Greece receive the funds in time to make the €1.6bn payment due to the IMF by 22:00 GMT on Tuesday now looks virtually impossible. | |
| European Commission President Jean-Claude Juncker was said to have made a last-ditch offer to the Greek prime minister late on Monday on condition that he backed a Yes vote, but the Athens government's initial response was negative. | European Commission President Jean-Claude Juncker was said to have made a last-ditch offer to the Greek prime minister late on Monday on condition that he backed a Yes vote, but the Athens government's initial response was negative. |
| Still, contacts are continuing and there appears to be some possibility of an agreement in the coming days. | Still, contacts are continuing and there appears to be some possibility of an agreement in the coming days. |
| For a deal to go through, the eurozone would have to agree to resuscitate the bailout agreement that also expires on Tuesday. | For a deal to go through, the eurozone would have to agree to resuscitate the bailout agreement that also expires on Tuesday. |
| But if that were the price of keeping Greece in the fold, most eurozone governments would probably grudgingly pay it, though some would have to deal with truculent national parliaments. | But if that were the price of keeping Greece in the fold, most eurozone governments would probably grudgingly pay it, though some would have to deal with truculent national parliaments. |
| 2. A Yes vote | 2. A Yes vote |
| Another possible route to that same destination is a Yes vote in the Greek referendum next weekend. That would raise the same questions about the agreement and it would mean a difficult political problem for Syriza, which is recommending a No. | Another possible route to that same destination is a Yes vote in the Greek referendum next weekend. That would raise the same questions about the agreement and it would mean a difficult political problem for Syriza, which is recommending a No. |
| The leftist party has the backing of its nationalist coalition partner, Independent Greeks, as well as the far-right Golden Dawn. Mainstream opposition parties such as the centre-right New Democracy are backing a Yes vote. | The leftist party has the backing of its nationalist coalition partner, Independent Greeks, as well as the far-right Golden Dawn. Mainstream opposition parties such as the centre-right New Democracy are backing a Yes vote. |
| Two opinion polls suggest more Greeks want a deal than a split from the eurozone, but the surveys were conducted before the referendum was announced. | Two opinion polls suggest more Greeks want a deal than a split from the eurozone, but the surveys were conducted before the referendum was announced. |
| One problem for both these scenarios is that even if the Syriza-led government were to commit itself to an economic policy programme acceptable to the eurozone, would its other 18 members trust Greece to implement it? | One problem for both these scenarios is that even if the Syriza-led government were to commit itself to an economic policy programme acceptable to the eurozone, would its other 18 members trust Greece to implement it? |
| If Prime Minister Alexis Tsipras, who has staked his reputation on a No vote, were to lose the referendum, his credibility would be damaged and he might resign. | If Prime Minister Alexis Tsipras, who has staked his reputation on a No vote, were to lose the referendum, his credibility would be damaged and he might resign. |
| What's the point of the Greek referendum? | What's the point of the Greek referendum? |
| The puzzle of the Greek referendum question | The puzzle of the Greek referendum question |
| 3. A No vote and messy euro exit | 3. A No vote and messy euro exit |
| This scenario would herald a long period of uncertainty and crisis, ending with Greece departing the eurozone and bringing back its own national currency, presumably with the same name as the old one, the drachma. | This scenario would herald a long period of uncertainty and crisis, ending with Greece departing the eurozone and bringing back its own national currency, presumably with the same name as the old one, the drachma. |
| This would be a very messy series of events. It would probably involve the European Central Bank deciding to pull the plug on all or most lending to the Greek banks on the grounds that it considered them insolvent. | This would be a very messy series of events. It would probably involve the European Central Bank deciding to pull the plug on all or most lending to the Greek banks on the grounds that it considered them insolvent. |
| In the run-up to that it is likely there would be a considerable period of restrictions on access to and use of bank accounts - more of what started this week. It would be very disruptive for the Greek economy, which is already back in recession. | In the run-up to that it is likely there would be a considerable period of restrictions on access to and use of bank accounts - more of what started this week. It would be very disruptive for the Greek economy, which is already back in recession. |
| The government would decide to start supplying national currency - electronic and hard cash - to get the banking system up and running. | The government would decide to start supplying national currency - electronic and hard cash - to get the banking system up and running. |
| What would happen to the restored drachma? The general assumption is it would lose value. | What would happen to the restored drachma? The general assumption is it would lose value. |
| That would also pose a danger of inflation as import prices would rise. There would be disputes about financial aspects of contracts: which currency would apply - euros or drachmas? Perhaps the government would legislate quickly in an attempt to settle the question. | That would also pose a danger of inflation as import prices would rise. There would be disputes about financial aspects of contracts: which currency would apply - euros or drachmas? Perhaps the government would legislate quickly in an attempt to settle the question. |
| What are capital controls? | What are capital controls? |
| Greek debt jargon explained | Greek debt jargon explained |
| 4. A No vote and negotiated exit | 4. A No vote and negotiated exit |
| Another scenario is a negotiated exit from the euro. That might be somewhat less disruptive. But it would still leave bank customers looking at their money being converted into drachma. | Another scenario is a negotiated exit from the euro. That might be somewhat less disruptive. But it would still leave bank customers looking at their money being converted into drachma. |
| One issue with both no-vote scenarios is what happens to Greece's European Union membership. | One issue with both no-vote scenarios is what happens to Greece's European Union membership. |
| According to one of the ECB's lawyers, writing in 2009, "a Member State's exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable". | According to one of the ECB's lawyers, writing in 2009, "a Member State's exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable". |
| But what if Greece did not want to leave, as currently seems likely? There's no expulsion procedure and in any case might the others at least want it inside the EU even if they have given up on keeping it in the eurozone? | But what if Greece did not want to leave, as currently seems likely? There's no expulsion procedure and in any case might the others at least want it inside the EU even if they have given up on keeping it in the eurozone? |
| They could change the EU treaties, but that is a very difficult process with all sorts of bear traps, including referendums in some member states. Or they could just muddle through with a situation that has no legal basis. | They could change the EU treaties, but that is a very difficult process with all sorts of bear traps, including referendums in some member states. Or they could just muddle through with a situation that has no legal basis. |
| If Greece does leave, what are the implications for the integrity of the rest of the eurozone? | If Greece does leave, what are the implications for the integrity of the rest of the eurozone? |
| In 2012, when the possibility was in the air, other countries with stretched government finances felt the impact through the bond market, where government debt is traded. | In 2012, when the possibility was in the air, other countries with stretched government finances felt the impact through the bond market, where government debt is traded. |
| Their borrowing costs rose to painfully high levels. | Their borrowing costs rose to painfully high levels. |
| Would it happen this time? The risks are probably less, due to actions taken by the governments concerned, eurozone governments collectively and especially by the European Central Bank. | Would it happen this time? The risks are probably less, due to actions taken by the governments concerned, eurozone governments collectively and especially by the European Central Bank. |
| In the longer term the significance might be that a Greek departure would send the message that membership of the euro is not forever, as it was intended to be. | In the longer term the significance might be that a Greek departure would send the message that membership of the euro is not forever, as it was intended to be. |
| So a country getting into difficulty in the future might then find the pressure in the financial markets on their borrowing costs more severe because of what had happened in the case of Greece. | So a country getting into difficulty in the future might then find the pressure in the financial markets on their borrowing costs more severe because of what had happened in the case of Greece. |
| Will Europe catch Greek 'flu? | Will Europe catch Greek 'flu? |
| Is Grexit inevitable? | Is Grexit inevitable? |