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Country Report Estonia

  • ID: 2114012
  • July 2015
  • Region: Estonia
  • 67 Pages
  • The Economist Intelligence Unit

In a vindication of Greek prime minister Alexis Tsipras, and in line with our forecast, Greeks voted "No" by a stunning 61% to 39% in the July 5th referendum on whether to accept the terms of the bailout deal presented to Greece on June 25th. Despite his strengthened domestic position, Mr Tsipras will face some tough challenges in coming weeks and the risk of Grexit remains high.

The referendum result is an extraordinary vindication of Mr Tsipras and solidifies his position in his party, Syriza Unifying Social Front, and more broadly in Greece. It is a remarkable achievement in the face of unrelenting external political pressure and the difficulties presented by the imposition of capital controls and the closure of Greek banks last week. The Economist Intelligence Unit was the only research organisation to forecast a victory for the "No" camp as soon as the referendum was called. Our call was based on several assumptions:

The decisive result in the government's favour will have caused consternation and dismay in the chancelleries of Europe. Europe's leaders will need to absorb the shock and decide how to respond before a special European leaders' summit on Tuesday July 7th. The referendum result raises the stakes for both sides. It makes it more difficult for Mr Tsipras to make big concessions in order to reach agreement with the country's creditors. It also makes it more difficult for German chancellor Angela Merkel and other euro zone leaders to make concessions to Greece because of the moral hazard arguments. If euro zone creditors were now to make concessions to Greece it would embolden other opponents of austerity and reform in the event of future crises.

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Country Report Estonia

Greek "No" vindicates Tsipras, but tough decisions ahead
"No" vote raises the stakes for both sides
Can the banks open and can Greece pay?

Note: Product cover images may vary from those shown
Note: Product cover images may vary from those shown

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