ATHENS, Greece — On Saturday I sat with a group of Greeks who were war-gaming the various possible outcomes of Sunday’s referendum. And there don’t seem to be any good ones.
The vote is a complicated mess. It asks Greeks to give a single vote on two official bailout deal documents that few will have read, and even fewer will have understood. It’s not even clear that the deal being voted on is still on offer.
Polls have been split pretty much straight down the middle. Nobody is sure who will win today.
The opposition to the bailout deal, including the government, argue that a “No” vote against the document will empower them in negotiations. Those in favour of the deal say the referendum is really a choice between the euro and Greece leaving the eurozone (a so-called Grexit).
Less than a day before the referendum, none of the people I spoke to could think of any particularly positive scenarios ahead, whether there’s a “Yes” or “No” vote. The impasse Greece is currently in — with no solution seemingly acceptable to both the country’s European creditors and the current government — won’t end on Sunday.
It’s extremely difficult to gauge how important the referendum is to the future of Greece. Some people think it’s a choice between the euro and Grexit. Others think Greece will stay, or leave, regardless of the result.
Some have businesses which are already starting to have problems — especially those reliant on internet banking, and transactions from other countries. Others haven’t been paid recently, or have started stocking up on more food than they usually would have.
Slightly earlier in the week I talked to both “Yes” and “No” campaigners who were optimistic about the future for Greece. But they spoke in broad strokes — the more you dig into the potential outcomes, the more it looks like every possible one is grim.
None of the group I spoke to on Saturday seem to believe finance minister Yanis Varoufakis’ claim that he has a deal which could pretty much immediately be signed if the country voted “No”.
If the country votes “Yes”, Varoufakis has already said he will step down. The government might also resign — though that’s not been confirmed or promised. Another set of elections, if they were called, would take at least a month. And based on current polls, it’s hard to say how anyone but Syriza could triumph.
For readers in the UK, a good parallel is the Scottish independence referendum. Even though the Scottish National Party (SNP) didn’t get the result they wanted, they still solidified their position as the country’s dominant political force, smashing every other party in the 2015 general election.
Unlike in Scotland, where even a “Yes” referendum result would have been followed by a smooth transition, a Grexit would likely be chaotic and make the country’s already tense politics a nightmare.
The pro-European or pro-bailout parties in Greece could form a grand coalition and run as a single party. But according to recent polls, the three parties that would likely make up that bloc (New Democracy, Potami and PASOK) don’t even match Syriza’s support level when they’re added together.
In the month after the referendum, Greece’s banks will be in critical condition. Unless the European Central Bank (ECB) increases its emergency liquidity assistance (ELA), the cash they hold will continue to dwindle. They may have just €500 million (£356 million, $US555 million) left for Greece’s 11 million people and banks have already warned that ATMs will be empty on Monday unless Europe steps in.
On top of that, the government has payments to make: A €3.5 billion debt repayment (£2.5 billion, $US3.8 billion) to the ECB on July 20 and the normal monthly pension and wage packets. If it defaults on an ECB loan, it’s hard to see how the institution can justify propping up the country’s banking system.
One of the country’s few hopes for some sort of deal is on geopolitical and security grounds.
A Grexit may end up costing the finance ministers of Europe much more than a bailout, if civil strife “allows a beachhead for increased Russian influence,” as the Eurasia Group has suggested. Greece’s islands are also currently the arrival point for tens of thousands of migrants crossing from Syria — if the apparatus of government weakens significantly, and migrants cross undocumented into the rest of Europe, that will be a problem for Berlin, Paris, and other centres of government in the EU.
The rest of the eurozone seems to no longer fear “contagion” in financial markets, but there are many more ways for the country’s problems to be felt in other European capitals.
There might be no good scenarios for Greece ahead — but for the rest of Europe, none of the outcomes look too rosy either.
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