Bailout Program for Greece Amounts to 'Economic Version of Dante's Hell'

Wolfgang Münchau compared the bailout program the troika of international lenders offered Greece to "an economic version of Dante's hell," which would have ended with the "total economic destruction" of the country.

The German journalist praised Greece for refusing to accept the bailout proposal, calling it the only rational decision the Tsipras government could make and the most important news of the weekend. In his eyes, it certainly overshadowed the referendum announcement.

On Saturday, Alexis Tsipras said that the latest offer he referred to as an "ultimatum" would be put to the national vote. The Greek prime called on the people to "say an emphatic No" to the deal the government declined to take.

Münchau believes that there is currently no reason to carry out the July 5 plebiscite. The rejected bailout program is gone, the current agreement will expire on June 30 and the creditors are unlikely to offer anything new.

Holding a referendum is like turning a drama into a farce, the journalist said in an article published in the Financial Times.

What's next for Greece?

The European Central Bank is likely to begin to reduce the liquidity lifeline for Greece and may eventually cut the Greek access to it completely.

This will force Athens to introduce a parallel currency so that the government could come through on its obligations and pay wages and pensions, Münchau explained. This could lead to a Grexit and a return to a national currency.

The journalist doubts that there is a plan to deal with a default inside the Eurozone, meaning the situation is heading to "a rupture."

Although it would not be the best outcome for Greece as there are better ways to deal with this crisis, it is not the worst outcome either, according to the journalist. "But for the rest of the Eurozone, the nightmare is only just starting," Münchau concluded.