02 Jul

Pensioners Will Decide The Outcome Of The Greek Referendum


The future of Greece will be decided on Sunday July 5th, day of the referendum called by PM Alexis Tsipras on whether Greece should accept its creditors’ conditions or not.  

This is a decision fraught with consequences as the repercussions are immense. They do not only affect Greece; they would also have a tangible impact on the rest of the EU and arguably, its future. However, there is one distinctive group of people in Greece who hold the keys to this referendum. They alone can decide its outcome. They are the pensioners.

There is about 2 million of them in Greece. That’s 20% of the country’s total population,  a sizeable share of the Greek people. But why do they matter in particular? They do because they stand the most to lose; in fact, they could lose every penny of their pensions in the short term at the very least if Greeks vote “no” on Sunday.

This obviously ties in with the fact that banks have stopped their remittances to pensioners after they have opened for a short while yesterday. The pathetic scenes of long queues of dismayed pensioners being driven back as only those responding to surnames A to K were handed even less than promised was a dramatic sight to witness in a EU country. Yet, banks are forced to enforce these capital controls by government’s decree but also because their  liquidities are running dry. They are solvent, mind you, but they are completely illiquid, as former Finance Minister Gikas Hardouvelis told Bloomberg this morning. How come?  Here comes the culprit, I name: the ELA.

The ELA, otherwise known as Emergency Liquidity Assistance, is  a package provided by the ECB whose aim is to ensure that Greek banks remain liquid. This lifeline, however, came under review last weekend as negotiations broke down between the Greek government and its creditors and was frozen. The lifeline therefore, if not cut, is becoming too short  for Greek banks and the fear is that in the event of a “no” vote, the ECB will not extend it, causing the Greek banks to slip and fall off the wagon. That, in turn, will create a massive headache for Greek banks’ managers to find liquidities to continue funding their operations and issue cash to their depositors. First in line are pensioners because they rely on these cash handouts to get by.

In this country reduced to an economic backwater, 1 in 4 people are out of work; for some families, their elders’ pension is sometimes the only reliable source of income. That status quo is now in the balance and it will all be decided on Sunday.

It is therefore the seniors who have most at stake in this referendum. Its result hinges on them.  If the ELA is not extended, the consequences are likely to be cataclysmic for the Greek people and the financial sector alike, with the compounded risk of a new banking crisis in Greece.  Fortunately, however, sagacious as they are, many Greek pensioners have withdrawn as much cash as they could as they caught wind of the first whiff of tumult in the rocky negotiations between the Tsipras government and the Troika.  However, these under-the-matrass savings cannot last forever.

With the “no” camp ahead of the “yes” camp in the polls, there is a fear that the worst-case scenario may unfold in Greece. Ironically, another poll indicates that around 70% of Greeks want to remain in the EU and in the Eurozone. Chances that they can get both are deemed very slim, but it shows that Greeks are committed to stay in the EU club. If they do, they will need to make the right choice on Sunday. Pensioners must lead the charge for their own sake. Let us hope that they come to this realisation before then.

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