With low odds of anything written about Greece having any residual value 12 hours after posting, we venture a brief update and posit a few questions.
First,
any of us who come from countries that prefer some kind of controlled
political process have to be impressed by the intensity of Greece’s
dramatic pivot to call a Snap Referendum for July 5. The government has
stated the Referendum will be a straight yes/no vote on the proposals
(actually they are counterproposals) delivered to Greece by the
Eurogroup on Thursday.
At this point, Greek government sources have indicated this is the question to be voted upon:
“Greek people are hereby asked to decide
whether they accept a draft agreement document submitted by the
European Commission, the European Central Bank and the International
Monetary Fund, at the Eurogroup meeting held on June 25 and which
consist of two documents:
The first document is called Reforms for
the Completion of the Current Program and Beyond and the second document
is called Preliminary Debt Sustainability Analysis.
– Those citizens who reject the institutions’ proposal vote Not Approved / NO
– Those citizens who accept the institutions’ proposal vote Approved / YES.”
(Neither of these English-language documents are currently available in Greek)
Nobody knows however whether the Eurogroup
will move to withdraw those proposals later Saturday so that there is
no document/basis for a Referendum.
Second, debate on the proposed referendum
has just started in the Greek Parliament, and a roll call vote is
expected around midnight Athens time. Expect a long night. President
Provopoulos has indicated he will review the proposal on Monday, June
29th and has otherwise made no comment. The issue under debate at the
moment is whether the matters for the Referendum are “Crucial National
Matters” (fair game) or so called “Fiscal Issues,” which are not
permitted to be submitted for referendum under the Constitution (Article
44). A few procedural loopholes exist for voting on “Important Social
Issues,” which might conceivably be re-interpreted to allow this
Referendum. No matter of constitutionality, we do not expect the
substance to sway the debate which will clearly be voted strictly along
party lines.
Europe’s reaction will clearly be
multifaceted. The Eurogroup meeting decision Saturday will clearly feed
into the ECB’s ELA (Emergency Liquidity Assistance) calls Monday and
higher-level decisions in Frankfurt, which is why a high-level Greek
delegation is planning to meet Mr. Draghi on Saturday. It takes little
imagination to conclude that capital controls are close, and that Greek
banks may not make it to July without them.
Conditions in Athens as of Saturday
afternoon: It’s messy in some places but life goes on. Yes there are ATM
lines when the machines are dispensing (replenishment is a private
logistical issue for each bank) and we have seen small waits at those
gas stations operating on weekends, which is not all of them. People
seem to be topping off their fuel tanks, encouraged by media reports of
spot shortages. Otherwise there are no reports of panic buying anywhere
at this time. Let’s hope we can say the same thing on Monday.