What European dynamic can be expected after the announcement of the greferendum?

A pdf format version of this note is available Greferendum-28juin2015_EN

The framework of the euro zone has changed spectacularly this weekend.
This is because on the night between Friday and Saturday, Alexis Tsipras, the Greek prime minister, announced that a referendum would be held in Greece on the measures desired by the troika (European Union, ECB and the IMF) as part of the negotiations on the Greek bailout.
This option was not expected, since Greek negotiators learned about it via Twitter. The break implies the end of negotiations, at least temporarily. These, before the announcement of the referendum, had become pointless, as the points of view were no longer compatible.

Faced with this sudden change, the Eurogroup had an emergency meeting on Saturday. It considered that the deadline of Tuesday for the end of the protocol on the commitments between the troika and Greece was maintained. There is no deadline extension, as requested by Greece, if there is no major change. The head of the Eurogroup, Jeroen Dijsselbloem, left the door partly open to discussions, in case of a Greek change of mind. (Jean Claude Juncker and Angela Merkel have said the same thing on Monday)

This implies that on Tuesday evening, beyond the negotiation, it is the entire process that is weakened and compromised.

On this point, there are three factors to be considered: Continue reading

Remarks by Eurogroup President at the final Eurogroup press conference on 27 June 2015

Text is available here and below

Good evening everyone. I would like to report back to you about the informal ministerial meeting we had following the break-up of negotiations with the Greek authorities last night and the Eurogroup meeting earlier today. This informal meeting was held at the request of a number of ministers. We were informed by the institutions; we discussed the forthcoming expiration of the current EFSF financial arrangement with Greece and any consequences that may come from that. We discussed the strength and the preservation of the monetary union. Coming out of the financial crisis, a lot of measures have been taken, frameworks put in place, institutions have been built, which have strengthened and deepened our cooperation, and strengthened our monetary union. We are in a much stronger position, certainly more than before the crisis. Also, I would like to stress the point that all of us, euro area member states intend to make full use of instruments available to preserve the integrity and stability of the euro area, to complement any actions the ECB will take in full independence and in line with its mandate. The EFSF and ESM remain strong instruments with our full backing, as they have always been. We will take any necessary measures to further improve the resilience of our economy as an ongoing process.

I would like to stress that the expiry of the EFSF financial arrangement with Greece without a prospect of follow-up arrangements will require measures by the Greek authorities. The institutions stand ready to provide technical assistance to safeguard the stability of the Greek financial system.

The Eurogroup – and that consists of 19 members, I would like to stress – will monitor very closely the situation in Greece, stand ready to reconvene, to take appropriate actions when and where needed in the interest of both Greece and the Eurozone. We also, and this goes also for the Commission and the other institutions, stand ready to support and assist Greece and the Greek people if and when required following the expiration of the financial arrangement with Greece. This is all I have to say. The institutions will provide any technical information you want from them, on risks or possible measures. It is not up to me to communicate on a technical level.

Ministerial statement on 27 June 2015

Text available here and below

Ministers from eighteen euro area Member States and the institutions held an informal meeting to discuss the forthcoming expiration of the current EFSF financial arrangement with Greece, after the break-up of the negotiations with the Greek authorities.
The strengthening of EMU has been instrumental in helping the euro area to overcome the legacy of the financial crisis. We have notably advanced fiscal consolidation, implemented ambitious structural reforms, improved our fiscal and economic governance, deepened financial integration and established efficient firewalls. We are in a much stronger position than during the crisis.
Euro area Member States intend to make full use of all the instruments available to preserve the integrity and stability of the euro area. This will complement any actions the European Central Bank may take in full independence and in line with its mandate. EFSF and ESM remain the strong instruments with our full backing that they have always been.

We commit to take all necessary measures to further improve the resilience of our economies. We stand ready to take decisive steps to strengthen the Economic and Monetary Union.
We stress that the expiry of the EFSF financial arrangement with Greece, without immediate prospects of a follow-up arrangement, will require measures by the Greek authorities, with the technical assistance of the institutions, to safeguard the stability of the Greek financial system. The Eurogroup will monitor very closely the economic and financial situation in Greece and the Eurogroup stands ready to reconvene to take appropriate decisions where needed, in the interest of Greece as euro area member.
We stand ready to assist and support Greece and the Greek people as required, following the expiration of the EFSF financial arrangement.

[The statement is adopted by ministers from the euro area Member States, except Greece].

Prime Minister Alexis Tsipras’ address concerning the referendum to be held on the 5th of July

Alexis Tsipras’ speech calling for a referendum is available here and below

Greek citizens,
For the last six months, the Greek government has been waging a battle under conditions of unprecedented economic asphyxiation, in order to implement your mandate, that of January 25th.
The mandate to negotiate with our partners to bring about an end austerity, and for prosperity and social justice to return to our country once more.
For a sustainable agreement that will respect democracy, as well as European rules, and which will lead to a definitive exit from the crisis.
During the negotiations, we were repeatedly asked to implement memoranda policies agreed to by the previous governments, despite the fact that the memoranda were unequivocally condemned by the Greek people in the recent elections.
We never considered giving in—not even for a moment. Of betraying your trust.
Following five months of tough negotiations, our partners submitted a proposal-ultimatum at the Eurogroup meeting, taking aim at Greek democracy and the Greek people.
An ultimatum that contravenes Europe’s founding principles and values. The values of our common European project.
The Greek government was asked to accept a proposal that will add new unbearable weight to the shoulders of the Greek people, and that will undermine the recovery of the Greek economy and society–not only by fueling uncertainty, but also by further exacerbating social inequalities.

The institutions’ proposal includes measures that will further deregulate the labor market, pension cuts, and further reductions in public sector wages–as well as an increase in VAT on food, restaurants and tourism, while eliminating the tax breaks of the Greek islands.
These proposals–which directly violate the European social acquis and the fundamental rights to work, equality and dignity–prove that certain partners and members of the institutions are not interested in reaching a viable and beneficial agreement for all parties, but rather the humiliation of the Greek people.
These proposals mainly illustrate the IMF’s insistence on harsh and punitive austerity measures. Now is the time for the leading European powers to rise to the occasion and take initiative to definitively end the Greek debt crisis, a crisis affecting other European countries as well, by threatening the very future of European integration.

Greek citizens,
We are facing a historic responsibility to not let the struggles and sacrifices of the Greek people be in vain, and to strengthen democracy and our national sovereignty—and this responsibility weighs upon us.
Our responsibility for our country’s future.
This responsibility obliges us to respond to the ultimatum based on the sovereign will of the Greek people.
Earlier this evening, the Cabinet was convened and I proposed holding a referendum, so that the Greek people can decide.
My proposal was unanimously accepted.
Tomorrow, the Parliament will hold an extraordinary meeting to ratify the Cabinet’s proposal for a referendum to take place next Sunday, on July 5th. The question on the ballot will be whether the institutions’ proposal should be accepted or rejected.

I have already informed the French President, the German Chancellor, and the ECB’s president of my decision, while tomorrow I will ask for a short extension of the program -in writing- from the leaders of the EU and the institutions, so that the Greek people can decide free of pressure and blackmail, as stipulated by our country’s Constitution and Europe’s democratic tradition.

Greek citizens,
I call on you to decide –with sovereignty and dignity as Greek history demands–whether we should accept the extortionate ultimatum that calls for strict and humiliating austerity without end, and without the prospect of ever standing on our own two feet, socially and financially.
We should respond to authoritarianism and harsh austerity with democracy–calmly and decisively.
Greece, the birthplace of democracy, should send a resounding democratic message to the European and global community.
And I personally commit that I will respect the outcome of your democratic choice, whatever it may be.
I am absolutely confident that your choice will honor our country’s history and will send a message of dignity worldwide.
In these critical times, we all have to remember that Europe is the common home of all of its peoples.
That in Europe there are no owners and guests.
Greece is, and will remain, an integral part of Europe, and Europe an integral part of Greece.
But a Europe without democracy will be a Europe without an identity and without a compass.
I call on all of you to act with national unity and composure, and to make a worthy decision.

For us, for our future generations, for Greek history.
For our country’s sovereignty and dignity.

Eurogroup statement on Greece

Since the 20 February 2015 agreement of the Eurogroup on the extension of the current financial assistance arrangement, intensive negotiations have taken place between the institutions and the Greek authorities to achieve a successful conclusion of the review. Given the prolonged deadlock in negotiations and the urgency of the situation, institutions have put forward a comprehensive proposal on policy conditionality, making use of the given flexibility within the current arrangement.  
Regrettably, despite efforts at all levels and full support of the Eurogroup, this proposal has been rejected by the Greek authorities who broke off the programme negotiations late on the 26 June unilaterally. The Eurogroup recalls the significant financial transfers and support provided to Greece over the last years. The Eurogroup has been open until the very last moment to further support the Greek people through a continued growth-oriented programme. 
The Eurogroup takes note of the decision of the Greek government to put forward a proposal to call for a referendum, which is expected to take place on Sunday July 5, which is after the expiration of the programme period. The current financial assistance arrangement with Greece will expire on 30 June 2015, as well as all agreements related to the current Greek programme including the transfer by euro area Member States of SMP and ANFA equivalent profits. 
The euro area authorities stand ready to do whatever is necessary to ensure financial stability of the euro area.

 
 
[1] Supported by all members of the Eurogroup except the Greek member.