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Debt crisis: Options for Greece as it heads to referendum

business Updated: Jun 29, 2015 12:52 IST


Greek Prime Minister Alexis Tsipras's plan to hold a referendum on July 5 on creditors demands for austerity has all but killed off talks for aid leaving the country in a financial crisis that could pave the way for a euro zone exit.

The shock move triggered a sharp backlash from pro-euro opposition parties, and a flurry of meetings between various political party leaders have spurred talk of various scenarios to pull Greece back from the brink of a euro exit.

Here are some of the options being speculated:

President steps in

The president is a largely ceremonial role in Greece, but can step in case of a national emergency - by stepping down.

If the president were to resign then a referendum would be suspended until a new president is elected, which requires the candidate win with three-fifths majority in parliament.

This option remains highly unlikely at the moment, and presidency officials have said Prokopis Pavlopoulos will not resign. But the former conservative politician, who normally stays clear of politics, was quoted by Greek newspaper Real News this month as saying that he would not be prepared to serve as president if the country left the euro.

Since the Syriza-led government does not have a three-fifths majority in parliament to elect a president in such an event, it would likely lead to new national elections, according to Greek constitutional expert Nikos Skoutaris, lecturer of EU law at the University of East Anglia Law School.

Low referendum turnout

Referendums are not legally binding in Greece, and are viewed as a 'consultative process'. A minimum turnout of 40% is required. Should it fail to pass muster, it will not be considered consultative, and simply be shelved.

"Yes" vote to bailout terms

Greece's government has said it will respect the outcome of the referendum even though it is urging Greeks to say 'no' to the bailout proposal from creditors. But analysts say it would be politically almost impossible to implement a programme the government has so strongly opposed and that in such an event Prime Minister Alexis Tsipras would likely resign and call new elections.

Asked if the government would resign if Greeks voted 'yes', Energy Minister Panagiotis Lafazanis - a senior minister close to Tsipras - said: "Yes, there would be political developments."

"National unity" government

A 'yes' from voters does not automatically mean early elections even if it triggered the government's collapse.

If Tsipras were to resign, the president could call opposition party leaders and try to form a minority, cross-party government of pro-euro parties like the centrist To Potami, the centre-left PASOK and the conservative New Democracy to implement the bailout programme accepted by Greeks.

The last time Greece flirted with a referendum - in 2011 when former Prime Minister George Papandreou sought one before scrapping it and being ousted - a technocrat government replaced him until elections were held the following year.

"Technocrat governments here do not last long," said political analyst Theodore Kouloumbis.

"No" vote in referendum

Greek government officials say a "no" vote would strengthen its negotiating hand with creditors although euro zone officials have said their offer expires when Greece's bailout ends on June 30. A "no" vote would almost certainly shut the door on the prospect of further aid from creditors, leaving the country in uncharted territory and hastening its exit from the euro.

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