By: Marie Julien, Kate Millar, Agence France-Presse
July 6, 2015 2:47 AM
BERLIN, Germany – German Chancellor Angela Merkel and other EU leaders awaited with trepidation the outcome of a referendum in Greece Sunday that is already dividing opinion in Europe and could even shape its future.
After months of fruitless talks with its creditors, Greece’s dramatic bid to place a bailout decision in the hands of its people will have an impact far beyond the heavily-indebted country’s borders, analysts warn.
“Fateful election”, “No-one’s winning”, “Hardship in Greece”, “We won’t leave Greek people in the lurch”– the crisis grabbed front-page headlines and appeared to galvanize people around Europe.
The closely fought vote on whether to support the terms of Greece’s potential bailout deal with its international creditors is an indicator for future negotiations, said Julian Rappold of the German Council on Foreign Relations.
With fears a ‘No’ vote could lead to Greece exiting the eurozone — a so-called “Grexit” — Pawel Tokarski of the German Institute for International and Security Affairs said its impact would reach much further.
It will “determine the future trajectory of European integration,” he said.
Merkel, seemingly sanguine last week in remarking that Europe could “calmly” await the result of the referendum because the bloc was “strong”, has been at the forefront of efforts to resolve the crisis.
But, the head of Europe’s biggest economy is “faced with a dilemma”, Rappold said.
If Greece were to leave the euro, it would signify the failure of Europe’s crisis management that Merkel has championed through years of economic turbulence.
“She would not like it to be said that she pushed Greece out of the euro,” Rappold said, adding she also feared unforeseen economic consequences and a boost for anti-euro groups in some countries.
But if Greek voters defy Tsipras and vote ‘Yes’, Merkel must win parliamentary approval for negotiations on a new aid programme for Greece amid growing dissent within her conservative party on the Greece issue.
Start talking again
A “Grexit” would send a “devastating” signal to EU partners such as China, India and the US, German Foreign Minister Frank-Walter Steinmeier said in Sunday’s Tagesspiegel newspaper.
Italian Prime Minister Matteo Renzi said that regardless of the referendum result, “we must start talking to each other again — no one knows that more than Angela Merkel.”
Spanish premier Mariano Rajoy said he hoped Greece would stay in the euro but warned the future “will not be easy”, while European Parliament chief Martin Schulz said Europe would not “desert” the Greek people.
Athens argues that the referendum is about saying ‘No’ to new austerity measures proposed by creditors in return for aid.
But this proposal has in the meantime expired, leaving others to interpret the referendum as a vote for or against the euro.
“Whatever the result, it will be interpreted differently by political forces in Greece and in the eurozone,” Tokarski warned.
And it is not just dividing Greeks.
In the Latvian capital, Riga, Karlis Muiznieks, 27, a researcher at the University of Latvia, said a united, friendly eurozone was the best option.
But he conceded: “I think the Greeks are acting quite logically.”
Inese Berziņa, a 50-year-old school security guard, called the Greek crisis a “double-edged sword”.
“If we don’t give money to (the) Greeks, they will turn to Russia, and I don’t want that. But if we do give them money, they’ll never give it back.”
Lesson in democracy
Thousands of Greece supporters have rallied in Barcelona, Paris, Dublin and Frankfurt.
In Lisbon, Isabel Pedro, 48, said she was worried about the “domino effect” of the crisis, while Nelson da Rocha, 61, said Greece had given “a lesson in democracy to all Europe”.
If Italians were called to vote like the Greeks, 51 percent would support tough measures imposed by Europe to avoid crashing out of the euro, a recent Ipsos poll showed.
But some were already looking beyond Sunday’s cliffhanger.
UniCredit analyst Erik Nielsen said the referendum was “virtually irrelevant” for the financial markets.
Instead they are fixed on whether there will be a new Greek government and a July 20 deadline for Athens to repay a big loan to the European Central Bank, he said.