BERLIN/ATHENS – Germany and the rest of the euro region are bracing for more Greek political upheaval followed by tortuous negotiations, even if the country votes for more austerity in Sunday’s referendum.
There is no quick fix to the crisis because European Union rules make talks on financial aid difficult to restart, according to an official in Chancellor Angela Merkel’s government.
Adding to the murky landscape are polls showing the outcome of the referendum on austerity was too close to call.
From Berlin to Brussels, policymakers are studying scenarios that suggest the ballot is only another chapter in a prolonged saga rather than the denouement.
Greek Prime Minister Alexis Tsipras is campaigning for citizens to vote “no,” while the rest of the 19-nation bloc says a clear “yes” could get Greece back on the path to reform.
“We desperately want to stay in the euro,” Greek Finance Minister Yanis Varoufakis said in an interview. “We are going to win on Sunday.”
If they don’t, Tsipras says, he will respect the people’s will and fly to Brussels the day after to sign a deal.
His 54-year-old finance chief said he would rather cut off an arm than capitulate to an accord that fails to restructure Greece’s debt.
A GPO poll said 47 percent leaned toward a “yes” vote, an endorsement of austerity and the international bailout. The “no” camp was 43 percent. The margin of error in the survey of 1,000 people was 3.1 percentage points.
A “yes” vote vote could lead to the fall of the government, with Varoufakis saying Thursday he wouldn’t remain finance minister if the Greeks vote in favor of the creditors’ plan. Tsipras has also indicated he might throw in the towel on a yes vote.
“The bizarre twists of events since the referendum was called has clearly caused the rest of the euro area to now seek regime change in Athens,” said Jacob Kirkegaard, a senior fellow at Peterson Institute in Washington.
A changing of the guard in Athens to restore lost trust would probably speed up the process, according to several German officials and lawmakers.
But that alone won’t be enough.
Two days after Greece missed a payment to the International Monetary Fund, the Washington-based global lender of last resort said the country needs at least another 36 billion ($40 billion) from the euro region over the next three years and easier terms to make the debt sustainable.
The IMF report is “a confession of the failure of bailout,” Greek government spokesman Gabriel Sakellaridis said in e-mail.
While communications haven’t broken down, months of conflicting signals by Greece’s government have left the German chancellery unsure of Tsipras’s intentions, according to an official involved in policymaking in Berlin.
Tsipras remains defiant, saying in an interview with ANT1 TV that the country has been facing “unprecedented blackmail” by creditors for five months. While he was willing to sign a deal, any agreement would have to make the country’s debt — currently about 1.7 times the size of the economy — sustainable, he said.
If Tsipras called the plebiscite and walked away from aid talks with the aim of winning more concessions from creditors, he miscalculated, the German official said.
The question becomes whether Germany, as a founding member of the EU and the biggest contributor to Greece’s bailout, is prepared to see Greece go. While Merkel is leaving the door open to talks after the referendum, she says Greece no longer poses a threat to Europe’s future.
So far, the market reaction to the possibility of a Greek exit has been limited.
“We can calmly wait” for any Greek aid request, Merkel said in a speech to parliament Wednesday. “Overcoming Europe’s sovereign debt crisis requires time and staying power.”
Time is a luxury Greece doesn’t have. With the country under capital controls and depositors barred from withdrawing more than 60 ($67) a day from ATMs, liquidity reserves will probably only last until Monday, according to people familiar with the matter.
Scenes of the long lines of pensioners collecting reduced retirement benefits capture the sense of despair.
“The people who are struggling, standing in queues at banks & ATMs, know that we’re fighting for a viable and dignified solution,” Tsipras posted on Twitter.