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The main players in Act II of Greece’s debt tragedy

Aris Messinis, AFP | Greek voters overwhelmingly rejected the terms of an aid package from international creditors in a referendum on June 5, 2015

From the European Central Bank and the International Monetary Fund, to France and Germany, each player has a particular role in post-referendum Greece, but what exactly? FRANCE 24 takes a look at what’s at stake for each.


Among all the contradictory signals, it’s hard to comprehend exactly what’s going on in Europe following Greece’s referendum this past weekend. To help understand Act II of Greece’s debt tragedy, FRANCE 24 breaks down the roles of the main players and what’s at stake for each.

European Central Bank (ECB). The ECB holds Greece’s future in its hands. The country’s banks have been able to survive up until now thanks to a string of emergency loans from the financial institution.

The ECB decided on Monday that it will continue to support Greece’s banking system. The move couldn’t have come at a more critical moment: after Greeks voted overwhelmingly against more austerity in Sunday’s referendum, Prime Minister Alexis Tsipras made shoring up the country’s banks his No. 1 priority and pledged that the banks would open again within 48 hours of the referendum.

But Greece’s banking system, which has only about €500 million left in its reserves, wouldn’t have lasted long without the ECB’s help. If the financial institution had decided to cut Greece off instead, the possibility of Greece leaving the eurozone, in a so-called “Grexit”, could have become a reality. In order to save the country from insolvency, Greece’s central bank would have had to provide emergency funding to banks, which would require printing cash – something the country can’t do as long as it remains in the eurozone.

In any case, the ECB alone cannot force Greece to choose between bankruptcy and leaving the euro. What’s more, the financial institution demonstrated that it is unwilling to take on such a responsibility during Ireland’s banking crisis in November 2010. Which means Greece will have to wait and see what happens during Tuesday’s emergency eurozone summit before it makes a decision.

France. With Greece and Germany at loggerheads, France has found itself caught in the middle. The country’s role is a pivotal one: it must bring Greece and Germany to the negotiating table by helping them to look beyond their past disputes.

In an effort to re-establish dialogue between the two countries, French President François Hollande met with German Chancellor Angela Merkel on Monday evening. France has sought to mediate the situation by adopting a conciliatory tone towards Greece while also appearing to be on the same page as Germany. “In this Europe, there is room for solidarity… but also responsibility,” Hollande said.

French Finance Minister Michel Sapin has followed a similar tack. On Monday, he told Europe 1 radio that while Greece’s rejection of Sunday’s referendum was not a threat to negotiations, “there’s not much room to maneuver”. Sapin has indicated that he is open to “lightening” Greece’s debt load, but on the condition that the country come up with “serious and solid propositions”.

Germany. German Chancellor Angela Merkel is in a tricky situation. On the one hand, she can’t ignore the fact that most German politicians and a portion of the public are tired of hearing about Greece. On the other hand, she risks going down in history as the chancellor that oversaw Greece’s exit from the eurozone if she continues down the path she’s on.

This is not the legacy Merkel wants to leave behind, having stood up to hawks within her own government, like Finance Minister Wolfgang Schaüble, on more than one occasion since 2010 to help Greece.

Following her meeting with French President François Hollande on Monday, Merkel was firm on the issue of Greece, but said that the “door remained open to discussion”. She added that the conditions to launch new “negotiations” had not yet been met, saying that it was up to Greek Prime Minister Alexis Tsipras to make “precise” proposals.

Earlier in the day Vice Chancellor Sigmar Gabriel, who is also head of the Social Democratic Party of Germany (SPD), adopted a more intransigent tone. He said that Tsipras had “burned the last bridge” with the European Union, adding that he found it “difficult to imagine” new negotiations.

Even the resignation and replacement of Greece’s combative Finance Minister Yanis Varoufakis – largely seen as a conciliatory gesture forced by Tsipras – did little to assuage Germany’s government, which let it be known that the problem “wasn’t a question of personnel, but of conviction”.

International Monetary Fund (IMF). For the time being, Greece and the rest of Europe have little interest in the IMF getting involved in post-referendum negotiations.

The financial institution has been unpredictable ever since Christine Lagarde took it over 2011, its interests sometimes aligning with Greece, other times with its creditors.

Some European leaders are still angry with the IMF for publishing an internal analysis just two days before Sunday’s referendum signaling that debt relief should be a key component of any bailout package to rescue the Greek economy. Greece’s government used the report to justify voting “No” in the referendum.

But the IMF is no friend of Greek Prime Minister Alexis Tsipras either. The institution launched an administrative procedure to evaluate whether Greece should remain a part of the IMF and how it can it repay its debt after the country officially fell into arrears on June 30. The Greek government can now expect to face greater pressure to reform pensions or increase the VAT – two of the IMF’s pet issues.

European Commission. European Commission President Jean-Claude Juncker had little to say in the wake of Greece’s referendum. He had campaigned hard for a “Yes” vote, so the outcome was in some ways a personal defeat. Juncker is expected to break his silence on the issue on Tuesday.

In the meantime, there are some who have questioned whether the Greek debt crisis has undermined the European Commission instead of reinforcing its role at the heart of Europe’s institutions. When asked on Monday whether the Greek referendum could result in Juncker’s resignation, Jeroen Dijsselbloem, who presides over an informal body of eurozone finance ministers known as the Eurogroup, declined to comment.

The European Commission appeared to lose all control over the Greek debt crisis after German Chancellor Angela Merkel called for an emergency eurozone summit on Tuesday. In this context, it looks as though Juncker is the referendum’s main victim.

This article has been translated from the original in French.

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