BERLIN: German Chancellor Angela Merkel and other European Union leaders awaited with trepidation the outcome of a referendum in Greece on Sunday that is already dividing opinion in Europe and could even shape its future.
After months of fruitless talks with its creditors, Greece’s dramatic bid to place a bailout decision in the hands of its people will have an impact far beyond the heavily-indebted country’s borders, analysts warned.
“Fateful election,” “Nightmare of bankruptcy,|” “No-one’s winning,” “Hardship in Greece,,” “Greek troops and police prepare for street battles” – the crisis grabbed front-page headlines and appeared to galvanize people around Europe.
The closely fought vote on whether to support the terms of Greece’s potential bailout deal with its international creditors is an indicator for future negotiations, said Julian Rappold of the German Council on Foreign Relations.
With fears a “No” vote could lead to Greece exiting the eurozone – a so-called “Grexit” – Pawel Tokarski of the German Institute for International and Security Affairs said its impact would reach much further.
It will “determine the future trajectory of European integration,” he said.
Merkel, seemingly sanguine last week in remarking that Europe could “calmly” await the result of the referendum because the bloc was “strong,” has been at the forefront of efforts to resolve the crisis.
Now, the head of Europe’s biggest economy is “faced with a dilemma,” Rappold said.
If Greece were to leave the euro, it would signify the failure of Europe’s crisis management that Merkel has championed though years of economic turbulence.
“She would not like it to be said that she pushed Greece out of the euro,” Rappold added.
She also fears unforeseen economic consequences, a boost for anti-euro groups in some countries and that a “No” vote would be seen as a sign of weakness by nations such as Russia or China, he added.
But if Greek voters defy Tsipras and vote “Yes,” Merkel must win parliamentary approval for negotiations on a new aid program for Greece amid growing dissent within her conservative party on the Greece issue.
She would also have to win over a bailout-weary public tired of picking up the lion’s share of the bill.
But the referendum is not just dividing Greeks.
In the Latvian capital, Riga, Karlis Muiznieks, 27, a researcher at the University of Latvia, said a united, friendly eurozone was the best option.
But he conceded: “I think the Greeks are acting quite logically.”