With Bailout Referendum Rejected, What Happens To Greece Now?

Transcript

RENEE MONTAGNE, HOST:

It was always going to be hard to rescue Greece from financial disaster, but yesterday's Greek referendum on austerity - which seemed to have made things even harder. In the run-up to the vote, European creditors had sent a clear message - a no vote would be tantamount to a decision to leave the euro currency, yet that's exactly how Greeks voted by a wide margin. Gabriele Steinhauser of The Wall Street Journal is monitoring European Union reaction from Brussels. Welcome.

GABRIELE STEINHAUSER: Good morning.

MONTAGNE: What has then been the reaction so far from European leaders?

STEINHAUSER: It's been quite terse, and a little bit conflicted, I think. Some of them are already talking about negotiations again, but all of them that I've seen are still emphasizing that if Greece wants more money, they will have to implement the kind of reforms that they've just rejected.

MONTAGNE: Well, Greece is running out of cash - I mean, so much so that the banks were closed all last week - and it has made an emergency request for more assistance.

STEINHAUSER: Well, the request wasn't actually made to the European Central Bank, but to other eurozone governments. Once there's more money flowing to the government from the eurozone rescue fund, that would then allow the ECB to start funding the Greek banks again. Whether either of these requests will be granted any time soon is very, very unlikely. The European Central Bank is holding talks today to decide whether to increase or indeed lower the emergency funding that has gone to the Greek banks. The eurozone has been very clear that they're not going to give any money unless Greece implements reforms. It's going to be very hard to make more concessions toward its creditors.

MONTAGNE: Also, Greece's very outspoken finance minister has resigned following the no vote and saying creditors don't want him at the negotiating table. And seeing as how he was using words like terrorism to describe the deal that was being offered, that's probably correct - they don't want to see him at the table.

STEINHAUSER: Yeah, I think there's going to be very few other eurozone finance ministers who are going to be sorry to see Yanis Varoufakis leave. But of course there's more to this government than the finance minister, so it's not going to be easy either way, even with him gone.

MONTAGNE: Is it inevitable now that Greece will abandon the euro and go back to its old currency, the drachma?

STEINHAUSER: I think the likelihood has certainly gone up. This is the central project of European unity and integration after the Second World War, and by letting Greece go its own way and potentially plunge into misery is going to be a very, very tough decision to make. At the same time, if they now relent to some of Greece's demands, they're setting a very dangerous precedent for other countries that have also been asked to implement very tough austerity measures and who also have upstart parties on the left or the right who are not very happy with what's being asked from them.

MONTAGNE: Gabriele Steinhauser is a reporter for The Wall Street Journal speaking to us from Brussels.

Thanks very much.

STEINHAUSER: Thank you. Transcript provided by NPR, Copyright NPR.