In the ever surprising, ever ongoing saga that is Europe’s debt crisis, few expected it would be a referendum, announced by the country at the centre of the storm, that would supplant all the twists and turns of the drama so far.
But when MPs of Greece’s ruling Pasok party gathered in the Athens parliament and heard the announcement by George Papandreou, many could scarcely believe their ears. They thought the prime minister would wax lyrical about Greece’s luck in being resuscitated from near economic collapse by last week’s decision by the EU and the IMF to write off half of Greece’s debt and prop it up with further aid.
Instead, Papandreou, in an act of unprecedented brinkmanship, upped the ante. The deal clinched at the marathon European summit when banks bowed to an ultimatum by Chancellor Angela Merkel, would, Papandreou said, be put to popular vote; for all the doubters who had met the deal with disdain, there was a simple answer: let the people speak.
“Citizens are the source of our strength. Citizens will be called upon to say a big ‘yes’ or a big ‘no’ to the new loan arrangement. This is a supreme act of democracy and of patriotism for the people to make their own decision … we’ve faith in the people. We believe in democratic participation. We’re not afraid of it,” he said.
With his two-year-old government’s popularity at its lowest ever in the wake of relentless austerity, Papandreou clearly hopes that the referendum, expected in January, will allow voters to let off steam.
Hostility to Pasok MPs over wage, pension and benefit cuts is such that many daren’t be seen in public. “We can’t even leave our homes to go to a taverna any more,” said one, insisting on anonymity. “You’re called a pig or a traitor for passing measures none of us wanted to pass. It’s not a life.”
On Friday, Greece’s octogenarian Pasok president, Carolos Papoulias, joined those booed when protests prevented a parade commemorating Greece’s entry on the allied side in the second world war.
But with so much resting on the deal, it is unclear whether Greece’s international creditors see the referendum the same way. Haris Kastinides, the interior minister, said that if the referendum was rejected the bailout accord would “obviously” not be enforced.
Eurozone states spent months over the agreement, which will see private banks and insurers accepting a voluntary 50% loss on Greek government bond holdings – now seen as vital if Athens is to stave off default. As the second bailout for Greece since it was rescued with €110bn in May 2010, Merkel and other leaders had a tough time selling it to their countries and bankers. Within hours of the deal, the French president, Nicolas Sarkozy, conceded it was “an error” that Greece, which clearly cooked the books, was allowed in the eurozone. After the Papandreou announcement the Dow Jones dropped 221.75 points, or 1.81%, to 12,009.36. “This is just the latest twist in the unfolding tragedy,” said Sony Kapoor of London thinktank Re-Define. “With an irresponsible opposition that is promising Greek voters the moon, it’s very difficult to see how this referendum could be won under the gut-wrenching austerity.”
And there was an angry reception from some people in Athens for the referendum, the first since the collapse of military rule in 1974. Across the board, politicians denounced a “dirty trick” to avoid early elections. Many expressed disbelief the prime minister had remembered to put the country’s fate “in the hands of the people” after ignoring protests over austerity for two years.
“This is absolutely insane,” Antonis Samaras, the conservative opposition leader told the Guardian. “The man is trying to stay in power at any cost … posing the dilemma that Greeks either vote for him to stay in power or they forget Europe … for Greeks to be in Europe is a long-standing strategic position, and he is putting it in jeopardy. We will do whatever it takes to stop such a development.”
Top conservatives did not rule out MPs from Samaras’ New Democracy party resigning en masse, forcing elections.
Evangelos Venizelos – the finance minister who is also a law professor and Greece’s most talented politician – said the referendum was precisely because the opposition were so unsupportive in negotiations with eurozone members. New Democracy has repeatedly called for Greece’s bailout terms to be improved arguing that last week’s deal will condemn the country to even more austerity and deeper recession. “Greece is living through a drama from which it must be released by asking the people to express its will,” he told parliament.
“Do Greeks want to remain in Europe, in the eurozone with the euro in a country that belongs to the developed world, or do they want to return to the 1960s? Do they think it is good to owe €100bn to the banks, or do they not think it’s good to live with such debt? Each citizen will make their own decision, with responsibility, in a process that’ll give a national sense of relief and recovery.”
Source: http://www.guardian.co.uk/business/2011/nov/01/greek-leader-referendum-bombshell?newsfeed=true
