Referendum Result Takes Greece, and Eurozone, Into the Unknown

The Wall Street Journal The Wall Street Journal

The only certainty now is uncertainty.

However Greeks had voted on Sunday would have heralded a period of turmoil. But with a resounding victory for the “no” vote, Greece and the eurozone are taking a leap into the unknown.

Jeroen Dijsselbloem, the Dutch finance minister who presides over meetings of eurozone finance ministers, said the outcome is “very regrettable for the future of Greece.” He added: “Difficult measures and reforms are inevitable.”

Whether Greece actually leaves the euro, many Greeks and others will assume that it will. That means that amid the uncertainty, some predictions are a sure thing.

ANALYSIS

Greece won’t secure a rapid deal with its government creditors, as Finance Minister Yanis Varoufakis has claimed could happen following a “no” vote.

It isn’t clear what the rest of the eurozone will do, but whatever its course, it probably won’t do it rapidly, even though the strength of the referendum’s outcome seemed to come as a shock to European leaders.

German Chancellor Angela Merkel, the central player in crafting a response to the referendum, plans to fly to Paris on Monday to consult with French President François Hollande. Mr. Hollande’s government has been consistently the most sympathetic to Greece in the currency bloc.

After a phone call in which they agreed “that the vote of the Greek citizens is to be respected,” according to the chancellor’s spokesman, Ms. Merkel and Mr. Hollande called for a summit of European leaders on Tuesday.

Eurozone governments are wary of delivering a quick sweetheart deal to the victorious left-wing government of Greek Prime Minister Alexis Tsipras. Such a deal would risk creating incentives for insurgent movements elsewhere in the bloc to follow suit.

Last week, senior European leaders said privately that Greek expectations of substantial debt relief in the event of a “no” vote were delusional. Sunday’s overwhelming vote will make it harder to spurn Mr. Tsipras’s demands entirely.

Playing hardball with Greece by calling it into default on its loans to bailout funds that are financed by other eurozone economies could backfire on creditors and increase losses faced by those governments.

Germany alone is owed more than €60 billion ($66 billion) through its bailout loans. Its exposure through other conduits, such as German banks and the European Central Bank, is much larger. The next key date is July 20, when €3.46 billion of bonds to the European Central Bank come due.