Following the referendum on July 5th where the Greek people overwhelmingly voted against the bailout terms and austerity, special talks were held in both Brussels and in Strasbourg for a Eurosummit with EU leaders and a debate at the European Parliament, respectively. Within both talks, Tsipras appeared to be open and determined to keep Greece in the Eurozone and mentioned that he will ensure that the country does not face a Grexit, as many analysts have pointed to. These comments were faced with support from similar leftward leaning parties such as the Spanish ‘Podemos’ party along with other extremist groups like France’s ‘Front National’, led by Marie Le Pen. At the same time, Tsipras did plead the EU Parliament to keep any potential deal just. These comments came after European policy-makers gave Greece 5 days to come up with a set of proper reforms to deal with issues that are plaguing the country. Overall, the Prime Minister’s tone seemed both confident and with a certain degree of humility. He did not hesitate to point out that part of the issue was due to the radical government’s handling of the situation. Greece’s PM also voiced his pride of the Greek people for ‘standing up’ to austery, words he has been repeating constantly following the referendum results. On the opposite side, European Council President, Donald Tusk stressed the importance of submitting a convicing reform plan, as not doing so could lead to the “insolvency of the Greek banking system” and could ultimately lead to Greece’s “bankruptcy”.

The Reforms

Questions are being posed on how the Greek reform plan will be structured given that the people of Greece already voted against a tax hike as well as spending cuts by choosing “No” in the referendum. Given the bank shutdowns and the freeze in the banking system, such effective reforms might be more gruelling than previously-thought.

Looking at the Past

In the past few years since the crisis began, many of the past administrations’ decisions are being dissected to verify for any misteps. Part of the problem was due to the government’s lack of implementation of structural reform. For example, plans to privatize the state’s assets were never fully carried out and the country failed to ameliorate its tax collection system. Furthermore, the IMF has heavily criticized the country for employing anti-competitive practices in certain industries and product markets that keep prices high.

Next Steps

The situation in Greece is extremely volatile and is prone to change on a daily-basis. Tsipras’ comments that the government is commited to keeping Greece in the Eurozone are sure to be met with optimism by reassured stakeholders. In the coming days, the focus will be on the reform plans that are expected to be submitted along with a formal application for a medium-term loan alongside the European Stability Mechanism (ESM). If all goes well and both the European Central Bank (ECB) and the International Monetary Fund (IMF) approve the plan, an extraordinary summit where all EU-member states would gather would be organized on Sunday 12th of July to approve an aid plan for Greece.