Merkel, Hollande to Determine Europe Response to Greek ‘No’ Vote

by Brian Parkin

July 5, 2015 — 1:24 PM originally published at bloomberg.com
German Chancellor Angela Merkel will travel to Paris on Monday for talks with French President Francois Hollande to map out the way forward for Greece after voters upended more than five years of crisis-fighting by rejecting creditors’ terms for rescue aid.

The trip, announced Sunday shortly after polls closed in Greece, is “to jointly assess the situation after the Greek referendum and to address the continuation of Franco-German close cooperation in this matter,” the chancellery in Berlin and the Elysee in Paris said in separate e-mails.

The leaders of Europe’s two biggest economies will help shape the euro-area response to one of the greatest challenges to face the common currency region after projections showed Greeks had said “No’ to the conditions set by creditors for aid. The European Central Bank’s Governing Council is also due to talk on Monday with a decision pending on what to do about Greek lenders that are dependent on its emergency credit.

The ‘‘unequivocal” referendum result “carries consequences not only for Greece, but also for the people in creditor countries and for the whole European project,” Maltese Prime Minister Joseph Muscat said in a statement. “The Greek government has sought to protect its people’s interest using the method it deemed best. People in creditor countries now expect their representatives to protect their interest and the European interest too.”

Existential Dilemma

The euro dropped in early trading on Monday on the result. If confirmed after all votes are tallied, it will strengthen Prime Minister Alexis Tsipras and repudiate leaders such as Jean-Claude Juncker, the European Commission chief who urged Greeks to vote “Yes” or risk tumbling out of the euro.

By unraveling more than five years of crisis fighting, the referendum result poses an existential dilemma for Merkel and fellow leaders over how to resolve an increasingly acrimonious standoff with Greece’s Syriza-led government without alienating domestic voters in Germany and elsewhere.

Ingrid Arndt-Brauer, who chairs the finance committee in Germany’s lower house, said that she had expected the committee to be summoned Tuesday to begin the process of helping Greece with a new bailout package. The “No” vote upends any such move.

“Nobody wanted to torture the Greeks — we’re not terrorists — but to help them,” said Arndt-Brauer, a lawmaker with Merkel’s Social Democratic coalition partner. “A ‘Yes’ vote would have signaled a readiness to cooperate — some reforms at least for fresh help. I see no credible basis to help Greece right now, none at all.”

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