The patient is now well on the way to committing suicide. But the patient was suffering what was amounting to a terminal illness in any case. Greece has decided to throw another spanner into the works of world finance, calling a referendum on its five-day-old bailout package. The Brussels brigade are in a state of shock, but should they really be?
It was a bolt out of the blue for Norbert Barthle, ranking member of German Chancellor Angela Merkel’s Christian Democratic Union Party. ‘There’s an enormous amount at stake. Do we know how the Greek people will treat their Government in this referendum? We have a new unknown’ (Bloomberg, Nov 1).
The Germans, along with the French and other architects of the bailout package, feel that this is a remedy the recalcitrant Greeks must have. Should they refuse, the outcome is clear. ‘Greece will have to deal with the consequences – no new aid measures’, intoned Michael Meister, parliamentary finance spokesman for Merkel’s Christian Democrats. With a certain reluctance, Meister had to concede that Greece was ‘a democracy and we have to accept this.’
The chances of a well administered spanking for the Greek government are on the cards. A strict diet of austerity, slashed services and financial mismanagement is one that has made the populace ill. While many voters are not necessarily keen to see Greece default, they will not be keen on the remedies being proposed by the European solution. In other words, we are seeing a referendum not only on the Papandreou government, but the harsh remedial policies of Brussels.
The important thing to remember is that this Greek approach is the first independent decision made by Georgios Papandreou for months. For almost two years, the country has effectively been ruled from the outside, its sovereignty subject to solutions imposed by the EU Commission, the European Central Bank and the International Monetary Fund. Structural reforms have not been formulated in Athens, but by European central authorities keen to keep the structure of their entire existence alive. The euro has become, like the union was to Abraham Lincoln, something of a fetish, a god on earth.
No path will be satisfactory here. The crucifixion of the Greek government will pave the way for an exit from the euro and a return to the drachma. That currency will, however, be heavily devalued. The logical consequences of that will be a reduced value in savings. The debts would still be valued in euros, and paying them off with drachmas will be a massive task that will probably result in bankruptcy.
Domestic politics can often be filled with riddles and untidiness. It will be easy for EU members to point to some degree of selfishness – that Papandreou has undertaken this decision to safe his own skin and that of his Socialist party. ‘This sounds to me like someone is trying to wriggle out of what one has agreed to’, argued Rainer Brüderle of Merkel’s centre-right coalition (Spiegel, Nov 1). But the reluctance of various European politicians to accept the democratic encrustations of the bailout package is a sign of how desperate the situation has become. Bureaucratic authoritarianism has become acceptable.
Cooked books, unstable economies and bad financial returns have a habit of destabilising democratic frameworks. The decision to take this agreement to the Greek voter is a reminder that Brussels is not the arbiter of all, even the most vital issues of finance. ‘We trust citizens, we believe in their judgment, we believe in their decision’, proclaimed Papandreou. After all, it was those wise members who allowed Greece to join the euro-zone in the first place.