Greece cannot win from Sunday’s referendum. Rejection of the terms demanded by the country’s creditors would accelerate the slide into economic chaos and, more than likely, exit from the euro. A vote of no-confidence in the Syriza government’s negotiating strategy — a “Yes” vote as framed by obscure language of the referendum — would maroon Greece in political no-man’s land. Greek Prime Minister Alexis Tsipras would be stripped of all authority, but it is not at all obvious how, or by whom, he would be replaced.
Even by the eccentric standards of Syriza, Tsipras’ latest antics have been extraordinary. Rejection of the Eurozone’s bailout conditions was followed by the coup de theatre of the referendum. As the government defaulted on an International Monetary Fund (IMF) payment and banks began to run out of money, an abrupt reversal saw Tsipras suggest he could call off the vote and accept the creditors’ terms with only small adjustments. No deal. So in a second volte-face he denounced his interlocutors as “sirens of destruction” and blackmailers.
Which is it Tsipras? An argument between borrower and creditors about the detail of pension cuts and tax increases or an attempt by “extremist conservative forces” in Berlin and beyond to shackle Greece in permanent penury? Even now, the prime minister struggles to make up his mind. As one weary European official has been heard say, negotiating with hardline ideologues is always challenging; finding common ground with adolescent ideologues is impossible.
Those who want to see Greece return to prosperity within the European Union (EU) will hope for a ‘Yes’ vote in today’s plebiscite, even if it is not much more than the lesser of two evils. Syriza claims that a ‘No’ vote would force the Eurozone back to the negotiating table. Wrong. Other Eurozone governments do not feel in any way bound by it. Why should they? Trust has evaporated. Tsipras has never quite grasped that other nations too have democracies. A ‘No’ would be taken as a decision to return to the Drachma. Europe, as well as Greece, would be greatly impoverished by the emergence of another failing state in the Balkans.
No one, though, should imagine that by defying Syriza and voting ‘Yes’ Greece will be mapping out a shortcut back to sustainable growth and rising living standards. Greece’s destiny is in its own hands. Sure, it needs debt relief. Only last week the IMF said that, at a minimum, sustainability requires significant extension of debt maturities. But none of this can be unconditional. Debt write-offs might provide immediate relief, but ultimately would be worthless without radical reform of the state. So the real argument should be about sequencing.
Above all else, a sustained Greek recovery requires the application of the rule of law. Curiously, before this year’s election, Tsipras was promising just that: A drive against the oligarchs, cartels, clientelism and corruption that have long disfigured Greek society and suffocated enterprise. As things have turned out, Syriza has preferred to look after its own clients. His many twists and turns have driven Tsipras’ interlocutors to despair, but what has most dismayed them has been the absence of a serious effort to clean up governance.
The striking thing about the conditions set out in the Eurozone’s last, rejected, bailout plan was how many of them were about governance: Measures to improve transparency in decision-making, confront price-fixing, deter corruption, stamp out fraud and, to put it simply, enforce the law. These are reforms calculated to serve the people of Greece. Is it really blackmail to ask Athens to clamp down on tax evasion or to ban the price-rigging that forces citizens to pay at least twice as much as need be for vital medicines?
The rest of Europe can take no comfort from Greece’s predicament. Fair as it may be, blaming Syriza does not solve anything. German Chancellor Angela Merkel says she cannot recall when Europe last faced such challenging times. She is right. The threats are not just from Grexit, from the waves of immigrants crossing the Mediterranean or the terrorists making Europe their target. The continent has been witnessing at once a collapse of confidence and a deep erosion of what used to be called solidarity.
Travelling around Europe these past few months I have heard finance ministers and central bankers insist that the Eurozone would ride out a Greek exit. They would say that, of course, but I think they believe it. What such judgements miss is the cumulative impact, the psychological shift that would follow even a partial failure of the EU’s most ambitious integration project.
Among most of the political elites there remains a conviction that the future belongs to the EU’s model of shared sovereignty. And yes, Grexit may well accelerate the pace of integration within the Eurozone so as to create an economic alongside the monetary union. But public moods across the continent have soured. Cooperation has become consciously transactional and governments far more reluctant to locate their national interests in broader mutual advantage.
For all that Tsipras has sought to make the precise question incomprehensible, today’s referendum is first, second and third about whether Greece wants a chance to save itself. The consequences of its choice, though, will reach well beyond Athens.
— Financial Times
