Greek Drama Won’t End With Vote as Polls Show Tight Race

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What Is Greece Really Voting For?

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’s 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, policy makers are studying scenarios that suggest the ballot is only another chapter in a prolonged saga rather than the endgame. 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 a Bloomberg Television interview. “We are going to win on Sunday.”

If they don’t, Tsipras said he’ll respect the people’s will and fly to Brussels the day after to sign a deal. His 54-year-old finance chief said he’d rather cut off an arm than capitulate to an accord that fails to restructure Greece’s debt.

Poll Numbers

A GPO poll cited by euro2day.gr said 47 percent leaned toward a “yes” vote, an endorsement of austerity and the international bailout. The “no” camp, the government’s position rejecting those terms, was 43 percent. The margin of error in the survey of 1,000 people was 3.1 percentage points.

“It is too tight to call,” Nikos Papastergiadis, director of the University of Melbourne’s research unit in public cultures, told Bloomberg Television. “There are people turning out in large numbers for the ‘yes’ and the ‘no’ sides.”

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.

Lost Trust

A changing of the guard in Athens to restore lost trust would probably speed up the process, according to several German officials and lawmakers. 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 euros ($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 policy making in Berlin.

Tsipras for his part 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.

Wrong Gamble

If Tsipras called the plebiscite and walked away from aid talks with the aim of winning more concessions from Greece’s 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. European stocks declined Thursday for the third time in four days, with the Stoxx Europe 600 Index falling 0.4 percent.

“We would buy Greek government bonds,” Danny Gabay and Yiannis Koutelidakis, of Fathom Consulting, wrote in a note to clients. “Yields are too low for a Grexit, but too high if a comprehensive deal is done.”

Greek bonds rose Thursday, with the yield on the 10-year benchmark bond falling 25 basis points to 14.73 percent.

Calmly Waiting

“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 euros ($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.

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