Greece overwhelmingly rejects EU austerity bailout plan

Greece held its referendum today on the European Union bailout plan for more austerity, and voters overwhelmingly rejected the plan. Greece is facing a brave new world this week.

The Wall Street Journal reports, Greeks Set to Reject Creditors’ Bailout Terms, Projections Show:

Greek voters were set to resoundingly reject the terms of an international bailout on Sunday, an outcome that would set the country on a collision course with the rest of the eurozone.

With more than 87% of votes counted, preliminary results showed more than 61% of voters had cast ballots against creditors’ demands in the historic referendum—a heavier-than-expected victory for the “no” campaign against the austerity policies demanded by Greece’s lenders: the rest of the eurozone and the International Monetary Fund.

Voter turnout, based on the partial counting of votes, was reported at about 62%. Opinion polls conducted during Sunday by private broadcasters had pointed to a narrower majority for the “no” camp.

The projected outcome would strengthen the domestic standing of Greek Prime Minister Alexis Tsipras, who campaigned vehemently for Greeks to reject lenders’ terms for further bailout funding.

But Mr. Tsipras might soon find it difficult to deliver on his promise to secure a more lenient bailout deal from Europe, where other governments, led by Germany, are in no mood to offer Greece more generous terms.

The country’s government faces a race to secure financing before a major bond held by the European Central Bank falls due on July 20. Default could precipitate an escalation of Greece’s already severe financial and economic paralysis.

German Chancellor Angela Merkel will fly to Paris on Monday for talks on Greece with French President François Hollande, her spokesman said after polls closed in Greece.

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“The Greek people are sending the message that they are taking their lives into their own hands,” Mr. Tsipras said. “One can ignore a government’s will. Nobody can ignore a nation’s will.”

The crisis is also rattling nerves outside the eurozone. U.S. Treasury chief Jacob Lew in a May visit to Europe urged policy makers to find a swift resolution. British Prime Minister David Cameron plans to lead a meeting Monday with the governor of the Bank of England and other top officials to assess the fallout from the vote, U.K. Treasury chief George Osborne said on Sunday.

The New York Times adds, Greeks Reject Bailout Terms in Rebuff to European Leaders:

As celebrants gathered in Athens’s central Syntagma Square, the Interior Ministry reported that with almost 90 percent of the vote tallied, 61 percent of the voters had said no to a deal that would have imposed greater austerity measures on the beleaguered country.

The no votes carried virtually every district in the country, handing a sweeping victory to Prime Minister Alexis Tsipras, a leftist who came to power in January vowing to reject new austerity measures, which he called an injustice and economically self-defeating. Late last month he walked away from negotiations in frustration at the creditors’ demands, called the referendum and urged Greeks to vote no as a way to give him more bargaining power.

While Mr. Tsipras now appears to have his wish, his victory in the referendum settled little, since the creditors’ offer is no longer on the table. There remains the possibility that they could walk away, leaving Greece facing default, financial collapse and expulsion from the eurozone and, in the worst case, from the European Union.

At stake, however, may be far more than Greece’s place in Europe, as experts have offered wildly differing opinions about what the referendum could mean for the future of the euro and, indeed, the world’s financial markets.

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The vote took place under what some analysts called a financial carpet bombing. The European Central Bank severely limited financial assistance to Greek banks, forcing them to close a week before the referendum, making it hard for retirees to get their money and raising widespread fear here that people would lose their deposits.

The news media, dominated by Greek oligarchs, saturated the airwaves and the newspapers with stories about losing gasoline and medicines, while the plight of elderly pensioners was afforded far more attention than in the past, media experts said.

Nonetheless, many voters, tired of more than five years of soaring unemployment and a collapsing economy, said they could not accept the terms of the European offer, which imposed yet more pension cuts and tax increases, without any hint of debt relief.

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While there had been speculation about Mr. Tsipras stepping down in the event of a yes vote, the man he succeeded as prime minister, Antonis Samaras, the leader of the New Democracy Party, announced his resignation, saying “I understand that our great party needs a new start.”

For some voters, the week of hardship — they could withdraw only 60 euros, or about $67, a day from A.T.M.s, and already some pharmacists were refusing to fill prescriptions — only strengthened their sense that Greece needed to stand up for itself.

After five years in which unemployment soared beyond 20 percent and the country’s economy contracted by 25 percent, many said that a no vote was at least a vote for hope, the possibility of a new deal, rather than following the mandates of creditors who had failed to set Greece on a course to recovery.

For others, the hardship only proved that Greece, like it or not, was in the hands of its creditors and could do little but take whatever terms were being offered — the alternative of default, financial collapse and withdrawal from the euro being unthinkable. In many cases, they blamed Mr. Tsipras’s young government for having returned the country to recession when it had shown small signs of recovery just before the January elections.

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Yet others felt that the referendum was not about staying in the eurozone but simply part of the long negotiations between Greece and its creditors, which broke off more than a week ago when a frustrated Mr. Tsipras left Brussels and called for the referendum.

Greece, and the world’s economy, are about to find out starting this week.