D-day for Greece and the European Union
Andrew Hammond says the outcome of Greece's vote signals a critical moment not just for the country, but also for the future of the euro zone itself
The Greek referendum on whether to approve reforms and fiscal measures proposed by the International Monetary Fund, European Commission and European Central Bank represents a monumental gamble by the government as the country faces its most critical moment since at least 1974, when democracy returned to replace military rule.
Austrian Finance Minister Hans Jörg Schelling has asserted that a Greek exit from the currency is "almost inevitable".
Given the sharp deterioration in relations between Greece and its creditors, as well as some of its EU partners, the country may be at a fundamental crossroads. Indeed, some in Brussels believe Sunday's referendum is not just about the future of the Greek economy, but also the country's continued membership in the EU, which it joined in 1981.
In calling the referendum, the Greek government has, in effect, given its people the key decision on the country's immediate economic future. While this contains some advantages for the leading Syriza party, it also has multiple political and economic risks. Syriza wants the people to vote "no" on the reforms, and if they don't, the government could be fatally undermined.
The prospects for a rupturing of the euro zone, with the possible economic earthquake this could bring, appear to be growing by the day
But if the voters do say no, the issue becomes whether the government has a clear and comprehensive plan for what would come next. And with no new source of international credit, the administration appears unlikely to be able to make a repayment to the European Central Bank on July 20.