On Sunday, Greek voters rejected the terms of an international bailout proposal. The decision was made in the hopes of creating leverage for a new proposal with less harsh taxes and pension cuts than have been in place in the past. Though there was a large majority that voted to reject the bailout, there is a significant number of citizens upset with the decision.
Supporters of the decision voted “no” to push for less austerity in their bailout, while many in Greece and around the world still fear that this could cause them to lose their place in the eurozone. As a result of the vote, the leaders of the eurozone have called an emergency summit to decide what to do next. However, strong opinions on both sides could cause a delay in negotiations. Many leaders have taken the vote as a sign that Greece is being uncooperative, while others seem more willing to soften the terms of the bailout to avoid forcing Greece out of the eurozone. Additionally, Greece appointed a new finance minister to allow for a fresh face in the upcoming negotiations. The European Central bank is still making loans to Greece, but not all countries are as sympathetic. Germany, for example (to whom Greece owes 56 billion euros), has made it clear that it won’t let Germany get away so easily. Either way, all the world can do now is wait—and see whether Greece can make its next payment (3.5 billion euros!!) to the European Central bank on July 20th.
If a decision is not made soon, Greece may default on its debts and be forced to print its own currency. As of now, Greek banks are closed to avoid a bank run and there is a withdrawal cap of 60 euros for all citizens. In light of the decision to reject the proposal, the European Central Bank decided on Monday to not give Greece additional money until after the eurozone summit. At this rate, Greece could run out of money as soon as Wednesday.
Contributors: Mira Bajaj and May Huang