As it turns out, the Greek crisis ends not with a bang, but with a referendum.
It has been easy to ignore the doings in Greece for the past few years, with the perpetual series of summits in Brussels that never seem to resolve anything. But it’s time to pay attention. These next few days are shaping up to become a transformational moment in the 60-year project of building a unified Europe. We just don’t yet know what sort of transformation it will be.
The immediate headlines that got us to this point are these: After an intractable series of negotiations over a bailout extension with Greece’s creditors, the nation’s left-wing government left the table Friday and said it would hold a referendum July 5. Greek leaders think the offer on the table from European governments and the International Monetary Fund is lousy, requiring still more pension cuts and tax increases in a depressed economy, and intend to throw to voters the question of whether to accept it.
Whatever the exact phrasing of the question (and assuming the referendum goes forward as planned), it really boils down to this simple choice:
A “Yes” vote means that Greece will continue the grinding era of austerity that has caused so much pain to its citizens over the past five years, in exchange for keeping the euro currency and the monetary stability it provides.
A “No” vote almost certainly means that the country will walk away from the euro and create its own currency (which will surely devalue sharply), bringing financial chaos in the near term but creating the possibility of a rebound in the medium term as the country becomes more competitive with its devalued currency.
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