The Greek Referendum: the Next Steps
NO vote demonstration in support of Greece in Madrid

As I predicted in my previous article, the NO vote prevailed in the Greek referendum with an astounding 61.31%. The Greeks defied all the warnings against the consequences of an “OXI” vote simply because they have had enough. The referendum is likely to become a landmark for the future of the EU by acting as a catalyst in the negotiation process and shaping future policies in Europe.

Post R-day finds the Greek Prime Minister being entrusted  with a mandate to relaunch the negotiation process in search of a new bailout deal. This means that the No vote was essentially a Yes vote, mandating Tsipras to negotiate with Greece's creditors a more palatable deal. The popular mandate is not a carte blanche for Alexis Tsipras since he is now expected to secure a better agreement than the one proposed by the Troika last week.

The aftermath of a referendum that has been highly divisive throughout the whole campaign saw former Greek PM Antonis Samaras, the leader of New Democracy, resigning from his post. Samaras's forced resignation was a tactical victory for Tsipras, who after Sunday’s results reinforced his position domestically.

It seems like Tsipras had his next step planned in advance with Yanis Varoufakis, the Greek finance minister much loathed by some of his European counterparts.  In the wake of the referendum Varoufakis was replaced with Euclid Tsakalotos, an Oxford educated economist and moderate figure of the negotiations team, who will take the lead in the negotiations for a new bailout package with the international lenders. By sacrificing his queen, in chess terms, who was unwelcomed at the negotiations table, Tsipras took a step back and showed Greece’s lenders his willingness to initiate a new negotiation process on new terms.

Then on Monday, Tsipras called for a meeting with the leaders of all political parties, except for the Golden Dawn, to seek consensus among all political parties for the following round of negotiations. This is an attempt to build bridges across the political parties after the tense campaigning in the run up to the referendum. His move also enhanced his negotiation position by showing that he has a popular mandate and wide political support to seek a new bailout deal.

On Tuesday all the eyes turned to the emergency meeting of the Eurogroup with Greece, where the Greek side did not submit its proposal, as many had hoped to. It is imminent that the Greek side brings forward its own bailout plan, which will be based on the last proposal send by the Greek government, with a number of amendments. Yet, the clock is ticking. A failure to reach an agreement by Sunday could push the situation towards a Grexit. Either way, the negotiations will be tough, and Tsipras will not be offered the deal he expected, as the Troika has withdrawn its previous proposal.

Circles within Brussels insist that Greece should be ready to accommodate a new 70 bn Euro bailout deal with worse terms, and the chunks of monetary installments being send to Greece on an quarterly basis only after it has achieved the goals and reforms set by the creditors. Otherwise, a plan B could follow whereby Greece would have to switch into a parallel currency tied to the Euro, which would lead to a Grexit.

In the meanwhile, Greece is in need for a new “bridging” loan in order to pay its 1.5 bn Euro IMF loan that was due on June 30, and a 3,5 bn Euro loan to the European Central Bank scheduled for July 20. Thus, a deal has to be struck as fast as possible, otherwise a failure from Greece to meet the deadline could force the ECB to cut off funding of Greek banks forcing the country into bankruptcy.