JULY 8 — The Greek referendum results are out. 61.3 per cent of Greeks voted “No” to the bailout plan in a thumping victory.

The outcome demonstrates the fact that the Greeks are grossly dissatisfied with the austerity measures introduced. Over the past few years, Athens has been succumbing itself to the demands of creditors to implement strict austerity measures, resulting in steep jobless rate. Moreover, the Greeks also have to compromise with their living standards given the fact that the government has drastically reduced expenses to meet the demands for austerity.

The strong frustration on the part of the general public have been heaped up into a powerful force to reject the creditors’ deals.

The landslide victory of the opponents of bailout plan has served to deliver a very clear and explicit message to the world that the Greeks have squarely rejected the austerity policy.

Soon after the referendum results were released, prime minister Alexis Tsipras said this would give the government a needed boost to negotiate the terms with creditors, while large groups of Greeks took to the street to celebrate.

In realistic world, things may not appear as cheerful as these people have anticipated. More severe challenges are awaiting the Balkan nation after the landmark referendum.

Armed with a strong support for his cause,.Tsipras is back on the negotiation table, demanding the creditors to give in. The question is, the creditors have grown increasingly unhappy with the attitude of Athens of not honoring its debts. The Germans, in particular, are very strong on this.

With the space for negotiation much more confined now after the referendum, there is no cause for optimism in the negotiation outcome. Crisis is looming large and Greece has nothing to its advantage for further bargains.

After the ECB announced not to provide any more emergency funding for Greek banks, the government implemented capital control to prevent a possible collapse of its banking system. But, this is only an expediency plan and the country needs to come up with a more comprehensive long-term solution to ensure smooth and sustained operation of its banking system.

In the meantime, having vetoed the bailout package, chances for a “Grexit” are growing. If Greece is eventually forced to leave the eurozone, the country and the world will be thrown into a financial turmoil. The Greek economy is expected to suffer a further blow, with sky-high inflation and the ensuing social unrest.

The international community is concerned that an imminent “Grexit” would trigger the domino’s effect in the eurozone. Portugal might be the next to fall, eventually leading to the collapse of euro and a global turmoil in the worst case scenario.

The Greek debt crisis has now come to the edge of the cliff but that does not mean there is no prospect of turnaround.

Athens must engage itself in a new round of sincere negotiations with the creditors upon the basis of mutual understanding and respect in a bid to achieve a win-win situation for all. 

* This is the personal opinion of the organisation and does not necessarily represent the views of Malay Mail Online.