Greeks overwhelmingly voted “No” in the July 5^th austerity referendum. The referendum asked whether the government should accept the conditions attached to the final EU offer of financial assistance to the indebted nation. Critics of the referendum complained that the text of the question was overly technical, and that it asked citizens about an offer that had expired.

While most have framed the dispute as primarily concerning austerity, the gap between the two sides is quite narrow. The substantive disagreement on fiscal policy covers only a reduced Value Added Tax rate for hotels on Greek islands and minor differences over the extent of pension reform. The two sides are mainly divided over the question of debt relief, which has been an issue simmering just under the surface of negotiations until the end of last week.

At present, conditions are bad. Last week’s bank holiday has been extended through at least Wednesday. Banks and ATMs are running short on cash, as people have been unable to withdraw even the 60 euro daily limit. Pensioners, too, are finding cash hard to come by, with banks only issuing funds to those who had not already made withdrawals during the closure.

Many fear that banks will fail shortly after reopening, and rumors that the government is considering a one-time 30% tax on deposits in excess of €8,000 have done nothing to ease those suspicions.

Greek leaders have been adamant that economic growth and any amount of debt repayment depend on significant restructuring to reduce the debt load that measures 177% of Greek GDP. A July 2^nd International Monetary Fund report supported the Greek position. In his statement after the referendum Matteo Renzi, Prime Minister of Italy, added his voice to those suggesting debt reduction, explaining that both Greece and Europe need a “definitive” solution to the ongoing fiscal crisis.

Eurogroup finance ministers – without Greece’s Yanis Varoufakis, who resigned Monday under pressure from Tsipras – will meet on July 7^th to consider the latest Greek proposal. Euclid Tsakalotos, Varoufakis’s successor, is widely considered to be more conciliatory. His emergence over the course of negotiations may have helped bring the two sides closer together.

Negotiators have until July 20^th to make a deal before Greece must pay the European Central Bank (ECB) €3.5 billion. The ECB, which sets monetary policy for the eurozone and is one of Greece’s major creditors, has been opposed to debt restructuring, claiming it would constitute monetary financing of a government and thus violate the bank’s charter.

A deal, however, remains possible. In 2013, the ECB agreed to a restructuring of Irish debt, lowering interest payments to 3% from 8%. The ECB also owes Greece approximately €2 billion in deferred profits from bond issues promised as a result of already instituted reforms. This means that Greece may be able to make a restructuring deal, replacing current debts with a more manageable payment schedule.

Without an agreement, the ECB will likely end its support of Greek banks when the government misses the July 20 deadline; Greece would then have to print its own currency in order to save the domestic financial sector, making it the first country to depart the eurozone.

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