The three choices facing the troika

Well, as it turns out, the Greeks did indeed say όχι. The size of the victory, especially (60/40), has undoubtedly brought great joy to those who care about democracy and good economics. It has also, for the same reasons, undoubtedly annoyed the troika even more, as they now have to go through their options.

As I see it, they can go one of three ways.

1) Ignore

This is the option where the troika simply continue to offer the same 'deal' to the Greeks as though no referendum had ever happened. 

Currently, it seems to be the favoured option of the northern economies in the Eurozone. Jeroen Dijsselbloem, head of the Eurogroup, has said today that "regardless of the outcome, difficult measures are necessary in Greece." The Finnish foreign minister, Timo Soini, has been more unequivocal: "If they want to hang on in the euro, which I think they do, they must obey the rules and play by the rules. It is a big moral hazard if they can vote in Greece and send the bill of that result to Finland."

That phrase, 'moral hazard', is often used in such arguments. The claim being that by agreeing to negotiate with Greece to bring down their debt (that they can't pay), they are paving the way for Greece to be profligate in the future, as they know that they will be rescued. But what is the alternative? That the Greek people are weighed further down by a debt imposed on them and austerity measures that have only shrunk the economy? That seems to be more of a genuine moral issue, rather than the hypothetical of the greedy Greeks. Furthermore, has the initial moral hazard not already been pushed through anyway? The initial bailout was not of Greece. It was of their lenders. So, way back in 2010, the moral hazard of saving the various banks that had lent out money they shouldn't have was apparently not that important.

This scenario is entirely political, as the hardliners cannot be seen to back down domestically, lest their approval ratings plummet. It uses the underlying assumption that because Greece is wedded to the idea of remaining in the Euro, they will have no choice but to agree to the demands being put forward, no matter how much they dislike or disagree with them.

2) Spin

This option was dependent on the strength of the result. Had turnout been lower and the result been closer, we may have heard language along the lines of 'Greece has not really voted no,' such as was used when France and the Netherlands voted against the European Constitution.

Because of the strength of the result, it cannot be spun this way. Instead, there may simply be spin of a different kind. With Yanis Varoufakis gone, some of the more conciliatory creditors may seek to at least offer to resume 'extending and pretending' for a little while longer, in order to see if the two groups at loggerheads will come to an agreement. 

Other spin that will continued to be used will be the idea that the Greek people are the ones to blame for this crisis, another politicised claim that takes advantage of some of the backwards parts of the Greek economy to suggest that it is those parts of the economy that caused Greece to enter into a debt that is 180% of their GDP. This is, of course, simply not true, but it has been a politically useful tale to tell. Just look at the opinions on the BBC live updates blog to see how widespread the idea is.

3) Accept

This option may well be in the realm of pigs flying. The Eurogroup, in particular, seems most unwilling to accept that the Greek people deserve a say over something they have never had a say over. But fractures may be emerging amongst the troika. The release by the IMF of a document which clearly states that debt relief is necessary was the first indication. The second indication(s) can be seen in the responses of the governments of other southern European nations. While the northerners are taking a hard line of austerity and rules, the French, Spanish and Italians (amongst others) have indicated a greater openness to meeting Greece part way. Why? Partly, as with the previous options, it is political. These nations do not have such fiscally conservative governments in place. For those that see politics in the old left vs right spectrum, the southern countries currently lean towards the left, just like Syriza.

The other reason is economic. These nations are the ones that will be affected the most by Greece exiting the Eurozone. Once the Euro ceases to be an indissoluble monetary union and instead becomes a currency peg, the question will become not "will it survive?" but instead "who is next?" This means that attention will turn to the other PIIGS - Portugal, Ireland, Italy and Spain - and if they, too, are sent flying out of the Eurozone, the future of not merely the Euro, but the European Project too, is at stake. National sovereignty has already played a vital role in the most recent part of this crisis, and it could well totally re-establish itself on the continent if the dominoes fall one by one.

So, which of these is most likely? I don't think spin is a realistic possibility any more, as it seems like its time has been and gone. Ultimately it will depends on who gets their way. Greece holds the moral card of referendum, but it is the Eurogroup who will have the final say. If they do not budge, the ECB will do nothing. If neither of those troika members do anything, the IMF will be loathe to go it alone. If none of the troika members do anything, it's off to the Drachma. This may well be a decade defining moment.