The next 12 hours on Greece

There are three major story lines to watch as Europe responds to the resounding No vote.

Greece’s overwhelming No vote against austerity measures shocked many European leaders and policymakers, leaving them scrambling Monday for a way to avoid a Greek exit.

Here is a roadmap of what to watch over the next 12 hours:

1. The ECB decides whether to keep the banks afloat

The most immediate problem is how to prevent a collapse of the Greek banking system. Banks have been closed for the past week, a €60 daily cash withdrawal limit has been imposed and capital controls are squeezing Greek businesses.

The European Central Bank will decide Monday afternoon whether to continue its €89 billion liquidity program for Greek banks. Without it, Athens will have to issue IOUs or a parallel “scrip” currency to keep the economy moving, which would further hasten its exit from the euro.

Greece faces a €3.5 billion ECB bond repayment on July 20. Defaulting on that would prevent the ECB from accepting collateral from Greek banks and the liquidity lifeline would be over.

Athens said on Sunday that the Bank of Greece would request more ECB assistance and nervous financial markets were looking to the ECB’s response for clues to how much contagion there might be from the Greek referendum. ECB Executive Board member Benoît Coeuré tried to provide reassurance, saying the bank would “find the necessary instruments” to deal with the Greek fallout.

2. Merkel settles on a strategy

German Chancellor Angela Merkel and France’s President François Hollande meet on Monday night to thrash out a common German-French position ahead of Tuesday’s emergency summit in Brussels of eurozone leaders.

The central question: whether to accept a restructuring of Greek debt that would penalize its creditors — an option that Germany has so far ruled out.

“Now we have to wait and see what the Greek government does next,” Merkel spokesman Steffen Seibert said Monday in Berlin. “We have to wait and see what proposals they will approach their negotiating partners with.”

Merkel faces increasingly loud calls from within Germany to have Greece ejected from the euro, though there is no mechanism for leaving on a voluntary or obligatory basis as membership was never meant to be reversible.

Germany’s Social Democrats, who are Merkel’s coalition partners and once took a softer line alongside Hollande’s  Socialists, now say Athens has “torn down the last bridges on which Greece and Europe could have moved towards a compromise.”

Merkel’s own conservatives say Greece has chosen isolation and her hardline finance minister, Wolfgang Schäuble, has suggested Greece could leave the common currency on a temporary basis.

But some members states, especially more exposed to contagion from a Grexit, such as Italy and to some extent France, urge a more conciliatory approach and an immediate return to negotiations between Greece and the eurozone, which ended when Greece’s second bailout program from the European Commission, ECB and International Monetary Fund expired last Tuesday.

3. EU leaders take steps to save face — and the union

European Commission President Jean-Claude Juncker and Parliament President Martin Schulz were among the most outspoken critics of the Greek referendum. 

The resounding No vote leaves them little room to spin the loss.

The leaders failed in one of the EU’s most important challenges to date: to prevent a major setback for the euro project, which has broader implications for the unity of the European Union, especially ahead of another fateful referendum — on Britain’s future in the EU — by 2017.

European Commission Vice-President Valdis Dombrovskis told reporters that the Commission “takes note” of the referendum results.

“We respect the democratic choice of the Greek people,” Dombrovskis said. “The No result, unfortunately, widens the gap between Greece and other eurozone countries. There is no easy way out of this crisis. Too much time and too many opportunities have been lost.”

He added: “One thing is clear, the position of Greece is and remains in Europe.”

Frenetic negotiations by Juncker and by Jeroen Dijsselbloem, who chairs the Eurogroup of finance ministers from eurozone member states, failed to convince Tsipras or the Greek public that the sacrifices required for staying in the common currency were worthwhile.

Juncker has yet to speak publicly about the referendum, though he is scheduled to address the European Parliament in Strasbourg on Tuesday, where there will be an emergency debate about the Greek No vote.

Brussels will be desperate to avoid a potential Greek exit from the currency zone unraveling into talk of a Greek exit from the EU itself.

There were promises of continued solidarity with the Greek people: Schulz called for humanitarian aid for Greece to cope with the paralysis affecting its economy.

Click Here: All Blacks Rugby Jersey