Becoming the first developed country to default on a loan in IMF history, Greece failed to repay a 1.6 billion euro debt on June 30.
The default is the culmination of failed negotiations among Greece, the EU, and the IMF, regarding terms of Greece’s financial bailout and consequent austerity impositions. In early June, Greece had missed a scheduled payment, opting to defer all its payments into one monthly sum.
After the missed end-of-month payment, Greek Prime Minister Alexis Tsipras called a July 5 referendum on the terms offered by creditors for the latest bailout aid package, invoking the democratic spirit the country is credited with creating millennia ago.
Polls show the Greek people are split, with a recent poll giving a slight lead to the “yes” side, endorsing the latest international package and further austerity, over the government-endorsed “no” side, rejecting the terms.
Regardless of the outcome, it is doubtful that this will be the end of Greece’s negotiations with the EU and IMF.
“Come Monday, the Greek government will be at the negotiating table after the referendum, with better terms for the Greek people,” Tsipras said in a Twitter message posted as he spoke on national television. “A popular verdict is much stronger than the will of a government.”
Strict austerity measures, including further pension cuts, have been refuted by Tsipras’ recently elected anti-establishment Syriza party and have caused difficulties in Greece’s debt negotiations.
Greece’s Finance Minister Yanis Varoufakis said he would resign if the country votes “yes.”
With the missed payment and the prospect of Greece voting against the international package, many observers are speculating that the country could ditch the euro as its currency or even leave the EU entirely.
If Greece ever did leave the EU, it would likely have to be on its own accord (though, this is not the question being presented on the ballot for the July 5 referendum). The Lisbon Treaty, which forms the legal basis of the European Union, actually makes no provision for a member’s expulsion.
Many Greeks are rushing the banks, trying to withdraw their money while they still can, which can be a struggle. Greeks are limited to daily withdrawals of 60 euros. As many struggle to put food on their table, EasyJet founder, billionaire and Greek native Stelios Haji-loannou has handed out free food to 2,500 people each day, no questions asked, through his charity, the Stelios Philanthropic Foundation.