Amidst all the drama of the ‘No’ vote in Sunday’s referendum, it is important to remember Greece is still a member of both the Eurozone and the European Union, even if it rejected the latest offer. The vote does not mean that Greece must leave the Eurozone and it certainly does not mean that Greece has to leave the European Union. It is now time for the politicians to find a way forward that can allow the economy of Greece to recover and pay off its debts. Angry politicians can turn the Greek vote into all sorts of disasters, but all the Greek government asked was for a ‘Yes’ or ‘No’ answer to the following impenetrable question: “Should the proposal that was submitted by the European Commission, the European Central Bank and the International Monetary Fund at the Eurogroup of 25 June, 2015, and is comprised of two parts, which make up their joint proposal, be accepted? The first document is titled ‘Reforms for the Completion of the Current Program and Beyond’ and the second ‘Preliminary Debt Sustainability Analysis.”
The Greek people answered ‘No’. This means that the Greeks rejected a proposal to handle Greece’s debts that even the International Monetary Fund has described as “unsustainable”. In a report released the day before the vote the IMF admitted that there was no way Greece could ever pay back its debt, which ever way the vote went. The IMF report said “At the last review in May 2014, Greece’s public debt was assessed to be getting back on a path toward sustainability... But significant changes in policies since then... are leading to substantial new financing needs. Coming on top of the very high existing debt, these new financing needs render the debt dynamics unsustainable...”
Greece is close to economic meltdown but the IMF and others have handled much worse situations, although very rarely in a developed economy. Greece will not be left on its own, and if Athens and Berlin get it right, it can still be an associate member of the Eurozone for some time and it should certainly remain a member of the EU.
