Wednesday, November 02, 2011


"Greece plans to hold a referendum on whether it should remain in the euro, sources close to the ruling party said, in the latest twist in Europe’s sovereign debt crisis ahead of a summit of world leaders in France.... Markets have seen sharp falls since George Papandreou, Greece’s prime minister, stunned his fellow European leaders by announcing on Monday that he would offer hard-pressed Greeks a plebiscite in the wake of the agreement between EU leaders and Greece’s creditors.

Sources close to the ruling Pasok socialist party told the Financial Times on Wednesday that voters would be asked not to approve or reject the terms for Greece’s next financial rescue but to vote on a broader question centred on support for Greece’s membership of the European Union and 17-nation eurozone. The government plans to hold the referendum in mid-December. However, it will go ahead only if the government survives the confidence vote, expected to be held late on Friday.

European policymakers fear that the referendum plan could undermine efforts to avoid a disorderly default on Greek debt, potentially worsening the pressure on other heavily indebted eurozone countries, partiularly Italy. One senior European official said: “I have no words to describe what I feel regarding Greece. A country in this kind of situation and they are making politics. Not only are they putting at risk their country, which I think is incredible, but they are putting at risk the euro area stability, and this is too much.”'

FT Reporters, "Greece to vote on Euro membership." The Financial Times. 2 November 2011, in

"My instinctive response last night, confirmed by reading the newspapers, is that Greece's decision is a fearful, desperate gamble, which could so easily go horribly wrong and impoverish, not just Greeks, but all of us.

More than that, it is a shameful dereliction of duty by a government elected to take decisions, not pass the buck back to voters who put them in power and cannot sensibly be asked to resolve what are usually highly technical questions. Let's be generous to George Papandreou, the US-born Greek prime minister, leader of the Pasok socialist party of the left. His act of "unprecedented brinkmanship" - Guardian Athens correspondent, Helena Smith's description – may force angry and frightened citizens to face up to hard choices and accept that, as ministers put it overnight, they must take their collective medicine and stay inside modern Europe – or slip back into the long Levantine past.

Greeks tell pollsters they want to stay in the eurozone, but they don't want to pay off their debts, they want to have their baklava and eat it. Neither option is attractive, but the temptation to opt for debt default and a return to the drachma will be huge for voters who are suffering job losses, pay and pension cuts, the loss of public services and hope. Opposition parties – the politicians most responsible for Greece's plight before 2009 – may play fast and loose again. Soft options are usually repented at leisure.

It was Greece's past – its long Ottoman inheritance, as some commentators put it – which allowed successive governments to fiddle the books, play patronage politics, allow business to run on similar lines and the rich to avoid their taxes (around 30% goes uncollected). It also allowed ministers to fiddle the books in order to qualify for eurozone membership in 2002, compounding their subsequent difficulties.

As with Enron or Lehman Brothers, the dodgy accountancy should not have been believed in northern Europe, but it was. I well remember being assured at a press conference of pro-euro British politicians of all parties that Italy would not be allowed to join the new currency either. But in the spirit of the moment it was. As in Athens, Rome's government too is now tottering on the brink of collapse (a good thing too, if Silvio Berlusconi is finally driven out) with no clear political alternative or credible policy options.

But what if Papandreou's gamble fails"?

Michael White, "Greek Referendum: an abdication of responsibility." The Guardian. 1 November 2011, in

The Greek - Euro sovereign debt crisis rumbles on, with this week's headlines about Greek Prime Minister Georges Papandreou's va banque policy of putting before the Greek electorate the option of a referendum on the EU and the Bail-out plan. A political manoeuvre which has absolutely shocked his fellow European Union and Eurozone members. Given the harshness of the proposed austerity measures on the table, it would not surprise anyone that the electorate will vote emotionally to turn-down the proposed measures. I for one, while not in the least a believe in any types of referendum / referenda, can understand the rationale of the Greek premier's decision. With all of the protests, strikes and political arguments, with his own Socialist Party divided and increasingly unpopular, and an absolutely irresponsible opposition party, it is not very surprising to my mind, that Papandreou decided to turn the tables on his opponents by unleashing the referendum option. The fact that the bien-pensant elites of the Eurozone are horrified by Papandreou's decision points up to the fundamental lack of legitimacy of the entire Euro project. A project, which au fond required that the various electorates be ignored and or not consulted when key decisions needed to be taken. The upshot is the current crisis where political leaders are prevented from taking difficult decisions because it requires consulting their populations on making unpopular and thus difficult decisions. Hence the political schizophrenia which has been on display in Berlin & to a lesser extent Paris, during the entire crisis. Au fond, the 'great and the good' of the European Union & the Eurozone are one with the DDR official, whose disquiet at the East Berlin uprising in the Spring of 1953, caused Bertolt Brecht to comment:

"Some party hack decreed that the people had lost the government's confidence and could only regain it with redoubled effort. If that is the case, would it not be be simpler, If the government simply dissolved the people and elected another"

1. "The Solution" ["Die Lösung"] (c. 1953), as translated in Brecht on Brecht : An Improvisation (1967) by George Tabori, p. 17


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