After much speculation that the Greek referendum was about to be cancelled, Alexis Tsipras has just appeared on Greek television to confirm that it is going ahead and to urge people to vote No. He said that those saying a No vote would mean Greece leaving the Euro were telling lies. He argued instead, that a No would strengthen his negotiating hand and allow him to achieve a ‘social deal’ which would be easier on the poor and pensioners.
Everything now turns on the result of the referendum. If it is a Yes vote, the Syriza-led government will almost certainly resign and one can see how the country’s creditors could do a deal with a new government.
But if it is a No, then it is not clear what will happen. It is hard to imagine the Germans and other Eurozone countries suddenly offering the Greeks a better deal in these circumstances. But would the ECB really cut off its emergency lending assistance to Greece, cratering the financial system there and forcing the country back to drachma?