There are two schools of thought on today’s referendum in Greece: either that a No vote will signal an end to its membership of the eurozone or that it is an attempt by Greek Prime Minister Alexis Tsipras to save his own skin.
The latter is probably closest to reality, but what is not in doubt is that Mr Tsipras has taken his country to the brink of bankruptcy as a result of his hardline approach in the bailout negotiations and this referendum is, as Joseph Muscat said, irresponsible given its timing.
Mr Tsipras’s claims that a No vote will strengthen Greece’s hand has been rubbished. Dutch Finance Minister Jeron Dijsselbloem said a rejection of the current bailout terms by Greek voters today would make it hard for the two sides to bridge “fundamental differences” and would place Greece and Europe in a “very difficult position”.
The prevalent feeling among eurozone governments is that negotiations with Greece would immediately resume if the country votes Yes but a rejection would make the situation more difficult and have negative consequences for the euro area and most especially for the Greek economy.
The situation in Greece is indeed dire. Last week Athens missed the deadline for its $1.7 billion loan repayment to the IMF (a new record of a missed payment) joining Somalia, Sudan and Zimbabwe in defaulting, and became the first advanced economy not to pay its debts. Furthermore, the European Central Bank has frozen Greek banks’ liquidity lifeline, the Greek government has put in place capital controls and Greeks can only withdraw €60 a day from ATMs.
Eurozone ministers, fed up with the Greek left-wing government’s unreliability, unpredictability and last-minute ‘new offers’, refused to extend bailout funds beyond last Tuesday’s deadline, as requested by Athens.
Perhaps IMF chief Christine Lagarde summed up the creditors’ frustration with the Greek government when she told the media: “We have received so many ‘latest’ offers, which themselves have been validated, invalidated, changed, amended, over the course of the last few days, that it’s quite uncertain exactly where the latest proposal stands.”
There is no doubt that the Greek people have suffered over the past five years as a result of harsh austerity measures and an economy that has collapsed by 25 per cent.
The poor state of that economy is less the fault of the Greek people (though tax evasion has been a perennial problem) as much as corrupt and incompetent past governments, whether of the right or the left. Greece, therefore, needs Europe’s help and solidarity, but as Dr Muscat said, with solidarity comes responsibility.
The only way Greece can emerge from its crisis is by remaining in the eurozone and carrying out much needed structural and fiscal reforms, as well as austerity measures. Such a course is no doubt painful, but the alternative – exiting the single currency – would be far worse. It is important that the Greek people understand this when they cast their vote today.
It is encouraging to note that opinion polls have consistently shown that a majority of Greeks are in favour of remaining in both the eurozone and the EU, and therefore this might encourage a Yes vote today.
On the other hand, the anti-austerity parties together polled almost 56 per cent of the popular vote in January’s election, so nothing can be taken for granted.
Whatever the outcome, time is certainly running out for Greece. On July 20, the country must redeem €3.46 billion of bonds held by the European Central Bank. If it fails to do so, the ECB can cut off Greece’s access to emergency loans, which will only make a difficult situation even more dismal. That’s an outcome nobody wants.