Greek referendum no vote signals huge challenge to Euro zone leaders

 Greece Rejects Austerity

Greece delivered a landslide no vote to the eurozone’s terms for the country remaining in the single currency on Sunday night, unleashing a seismic political shift that could derail the European project. The verdict confronts the EU’s leadership with one of its most severe -crises of confidence and leaves Greece facing potential financial collapse and exit from the euro.

In a polarising referendum called by the radical leftist government of Alexis Tsipras at only eight days notice, Greeks voted by more than 60% to 40% in support of the prime minister, spurning the extra austerity demanded mainly by Germany and the International Monetary Fund in return for an extension of bailout funds. As people gathered to celebrate in Athens’s central Syntagma Square, the Interior Ministry reported that with more than 90 percent of the vote tallied, 61 percent of the voters had said no to a deal that would have imposed greater austerity measures on the beleaguered country.

The NO votes carried virtually every district in the country, handing a sweeping victory to Prime Minister Alexis Tsipras, a leftist who came to power in January vowing to reject new austerity measures, which he called an injustice and economically self-defeating. Late last month he walked away from negotiations in frustration at the creditors’ demands, called the referendum and urged Greeks to vote no as a way to give him more bargaining power.

While Mr. Tsipras now appears to have his wish, his victory in the referendum settled little, since the creditors’ offer is no longer on the table. There remains the possibility that they could walk away, leaving Greece facing default, financial collapse and expulsion from the eurozone and, in the worst case, from the European Union.8 os

Greece Votes on Bailout Referendum

Mr. Tsipras went on television briefly to say he would resume negotiations immediately. He said that the vote was not a mandate for “rupture” with Europe and that it would strengthen his ability to negotiate a “viable’’ future for Greece in the eurozone. “The people today replied to the right question,” he said. “They did not answer to the question in or out of the euro. This question needs to be taken out of the discussion, once and for all.” At stake, however, may be far more than Greece’s place in Europe, as experts have offered wildly differing opinions about what the referendum could mean for the future of the euro and the world’s financial markets.

Even before the voting was over, some European leaders began making efforts to contain the potential damage. Chancellor Angela Merkel of Germany said she would travel to Paris on Monday to meet with the French president, Fran?ois Hollande, for a “joint assessment of the situation after the Greek referendum.” Later, the two leaders called for a European Union summit meeting on Tuesday.

To some, the vote was virtually a point of no return. Germany’s economy minister, Sigmar Gabriel, who is also the leader of the Social Democrats, said it was now hard to see how talks could resume on a bailout deal. “Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness,” he told the daily Tagesspiegel, adding that they have “torn down the last bridges on which Greece and Europe could have moved toward a compromise.” The vote took place under what some analysts called a financial carpet bombing. The European Central Bank severely limited financial assistance to Greek banks, forcing them to close a week before the referendum, making it hard for retirees to get their money and raising widespread fear here that people would lose their deposits.

The news media, dominated by Greek oligarchs, saturated the airwaves and the newspapers with stories about losing gasoline and medicines, while the plight of elderly pensioners was afforded far more attention than in the past, media experts said. Nonetheless, many voters, tired of more than five years of soaring unemployment and a collapsing economy, said they could not accept the terms of the European offer, which imposed yet more pension cuts and tax increases, without any hint of debt relief. As word spread of a likely victory for the no vote, people began gathering in Syntagma Square. They streamed out of the metro — which is free in this week of capital controls — and drove by, honking horns. Vendors sold Greek flags, and there was a peaceful, celebratory atmosphere.

People made speeches. Some remembered that at the beginning of the crisis in 2011 Syntagma became a gathering place for protesters. But in those days it was a scary place, they said, in contrast to Sunday night. While there had been speculation about Mr. Tsipras stepping down in the event of a yes vote, the man he succeeded as prime minister, Antonis Samaras, the leader of the New Democracy Party, announced his resignation, saying “I understand that our great party needs a new start.” For some voters, the week of hardship — they could withdraw only 60 euros, or about $67, a day from A.T.M.s, and already some pharmacists were refusing to fill prescriptions — only strengthened their sense that Greece needed to stand up for itself.

After five years in which unemployment soared beyond 20 percent and the country’s economy contracted by 25 percent, many said that a no vote was at least a vote for hope, the possibility of a new deal, rather than following the mandates of creditors who had failed to set Greece on a course to recovery.