On referendums and freedom

Despite winning the confidence vote, Prime Minister George Papandreou has no other option but to step aside. In seeking to let the people express their opinion on the bailout package offered by the eurozone through a referendum, he completely misjudged the consequences, at home and abroad. We will probably never know whether Mr Papandreou’s move was motivated by good intentions or sheer political brinkmanship but he surely got the timing wrong.

In itself, the idea to have a referendum was a good one. After all, the bailout is expected to change the Greek way of life in the foreseeable future.

Unfortunately, it came at least one year too late and is illustrative of the fact that, since the overthrow of the military junta in 1974, Greece has not managed to develop the political and economic institutions of a modern state. Opinion polls indicate that some 60 per cent of the public is against the deal offered by the eurozone. Is this because the Greeks are living in Wonderland or is it because they perceive themselves to be some sort of “sacrificial lamb”? While the whole world is pointing fingers at them, the Greeks seem to have a different perspective of the situation.

They felt detached from the debt accumulated by consecutive governments. Little did they believe that, one day, they would have had to make good for their government’s debt. They were complacent and welcomed the goodies bestowed upon them by their government. This was their most serious mistake. Now many of the politicians responsible for the financial mess have gone and it is the people who will have to pay. It is justified that the Greek people ask: Where were the EU and the eurozone during all this time?

Mr Papandreou has had to drop the idea of the referendum, which, as things stand, would have really presented the Greeks with a Hobson’s choice. Opting out of the euro is as painful as accepting the eurozone’s deal and both will lead to Greece sliding into (becoming) a Third World country.

Another serious misjudgement by Mr Papandreou was the financial markets’ reaction to the announcement of the referendum.

Was he misled by the initial buoyant reactions of the financial markets? Or did the eurozone agreement make him believe that Germany was prepared to do all that it takes to ensure the euro’s survival? Did he not realise that announcing the holding of the referendum would give the impression that no one was really in control of the euro’s future? His decision rocked the financial markets and unleashed fears of contagion, putting new pressures on eurozone countries such as Italy and France.

Mr Papandreou must have also misinterpreted the political mood in Europe. The eurozone leaders, in particular Angela Merkel and Nicolas Sarkozy, were content that they had managed to hammer out some sort of agreement that placated the financial markets, stabilised the euro and lessened the chances of the world economy going back into a recession. Europe’s top political tandem had been under heavy pressure from the G20 leaders and, especially, Barack Obama, to get their act right before the November summit.

They had been urged to terminate their “muddling through” strategy and to come up with a comprehensive solution. Writing in the Financial Times (October, 28), President Obama stated that Europe had laid “a critical foundation on which to build” and now needed a “firewall to stop Europe’s crisis from spreading”. Mr Obama knows that his chances of being re-elected next year will largely depend on the recovery of the US economy.

His spirits have been boosted by the latest US data showing that private sector jobs have increased by 110,000 in October. The last thing that he desires at this stage is having to import Europe’s problems.

Mr Papandreou’s referendum decision announced on the eve of the G20 summit seemed like blackmail to Chancellor Merkel and President Sarkozy. They decided that they had had enough and made it clear that they expected a fast answer as to whether Greece wants to stay within the eurozone or opt out. They insisted that their priority was to save the euro and that until such time that Greece made a decision it would not receive any more bailout money from the EU and the IMF.

In practice, this means that it is a question of a few weeks before Greece goes bankrupt as the country awaits the next €8 billion tranche to be able to pay public sector wages, pensions and redeem maturing debts. The Guardian (November 3) reported Mr Sarkozy as stating that Greece is a “great civilisation, independent, and we trust them to fix the choices of their future, we leave them free in their decision”. In such circumstances. there is little “freedom” in deciding.

The referendum and Mr Papandreou’s fates are sealed. Finance Minister Evangelos Venizelos, who is expected to take over from Mr Papandreou, is desperately seeking to negotiate with opposition parties so as to form a broad-based transitional government that will work to approve the aid-package and, hopefully, placate the EU and financial markets.

So the euro saga goes on. One thing is for sure: irrespective of how it ends Europe will not be the same again. Too many rifts have been opened and these will leave deep scars that will take years to heal. Many EU member states have shown that in times of crisis their national interest comes first.

fms18@onvol.net