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Greece's referendum: The big question mark

The Greek referendum is likely to widen the gap between Europe and Greece, as well as dangerously dividing the country itself. Nonetheless, it is also a profoundly democratic reflex

Miro Guzzini , Saturday 4 Jul 2015
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(Photo: Reuters)
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Much of the world will be holding its breath as Greeks head to the polls Sunday to vote on a proposal from the country's creditors. All the more so after German Chancellor Angela Merkel insisted early week on awaiting the outcome of the Greek poll before resuming negotiations, the Eurogroup following suit and adjourning talks Wednesday. 
 
With French President Francois Hollande and Italian Finance Minister Gian Carlo Padoan the only major EU figures still pushing for dialogue, this ostensibly gives the Greek people full responsibility for their fate.
 
European leaders have been openly critical about the referendum. President of the European Commission Jean-Claude Juncker openly speaks of betrayal, feeling "wounded" and "saddened" according to Reuters. From the Greek perspective, however, there is arguably quite some good in this manoeuvre. 
 
The Greeks have had to endure difficult times and a severe recession during their long crisis and resulting austerity policy. The "troika" (the EU, the European Central Bank, or ECB, and the IMF) now seems to wish to offer them more of the same medicine that, in the eyes of many Greeks, made things go from bad to worse in recent years.
 
The election of Alexis Tsipras in January was a clear sign of frustration with austerity measures. This is the current Greek government's reason to exist. Accepting the current proposals of the troika would be an acceptance of the very policies it was elected to end. In this light, it is perhaps understandable to see a government declining to take further responsiblity in the matter. The referendum, rather, appears to be a healthy, democratic reaction. 
 
This seems further necessary in light of the EU's loud warning to the Greek people of the consequences of a "No" vote. "The whole planet would take a Greek 'No' ... to mean Greece wants to set itself apart from the Eurozone and from Europe," Juncker told Reuters Monday. In spite of EU leaders' assurances to the contrary, this can be seen as direct campaigning in a member state. In this light, giving voice to the people of Greece, instead of a merely indirectly democratic EU, seems in itself a democratic victory. 
 
An experimental "fast-track" referendum
 
Such an exercise in democracy only remains healthy if its functionality is assured, however. And there are worrying signs that the referendum could be flawed in its inception. The Tsipras government is, in effect, attempting to re-create the policymaking process of a government on a national scale; once again very noble from a democratic perspective, but with obvious logistical limitations. Ballots must be printed and distributed, polling stations set up in roughly half the time allotted in a normal election.
 
The ballots themselves have been the source of much controversy. "We don't even know what the Greeks will be voting on," German Finance Minister Wolfgang Schäuble lamented in the Bundestag Wednesday. 
 
He was only partially wrong. We know that the ballots for the referendum, printed Sunday, contain a Greek translation of the offer from the troika received by Greece 25 June, followed by a simple question on whether Greece should accept these terms. The rushed printing of the ballots was necessary, as Tsipras only gave the country 10 days to prepare with his announcement 26 June.
 
The lack of clarity comes from the fact that because of this early printing, the referendum technically does not take into account subsequent turns of events, with the troika submitting a new set of offers earlier this week and Tsipras himself cutting down his objections to five points on Tuesday, ahead of the IMF payment deadline. 
 
European leaders have further argued that the old bailout programme has now expired, making a new programme necessary anyway, which would mean an entirely new round of negotiations, with new conditions, according to The Wall Street Journal.
 
Moreover, many observers have objected to an error spotted in the translation of the proposal now printed on the ballots. This, compounded with the complexity of the matter being debated, pushed the Council of Europe to declare Wednesday that the referendum fails to meet European standards.
 
A "Yes" to the EU, or to the troika?
 
Aside from such technical issues, the main source of confusion for many Greeks is likely to come from the deep uncertainty around the referendum's outcome. George Katrougalos, Greek alternate minister of administrative reform, brushed aside concerns that the Greek public might not have enough time to inform itself: "We haven't been discussing this issue for five months, but for five years," he told Zeit Online.
 
Like Schäuble, Katrougalos only told half the truth. While the Greek people has certainly had ample opportunity and incentive to inform itself, the debate about the crisis is still ongoing and has gained in strength in the past few weeks under the shadow of a possible default, to the point that even journalists now struggle to pinpoint precisely what the possible outcomes entail.
 
A "Yes" in the referendum will concretely mean that the Greek people accept the continuation of talks, a new bailout plan and concede to further austerity measures. The Tsipras government's reason to exist would be levelled, and it would have to resign, as Tsipras and Varoufakis have assured they would.
 
But beyond that, a "Yes" would not be the end of the road. As mentioned, the whole negotiating process would have to restart, with Greece now in a weaker position than ever after its default to the IMF and elections for a new government pending. Furthermore, assurances from leaders in Brussels and in Berlin that a "Yes" would be a yes for Europe will be of little consolation for the Greeks, if that same yes will mean that this very Europe is to prolong their suffering under austerity.
 
Several prominent economists have therefore come out strongly against continued austerity. Paul Krugman, a Nobel laureate in economics, claims in a commentary for The New York Times that "most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false," and that Greece's current situation equates to an "economic straitjacket."
 
His fellow Nobel laureate Joseph Stiglitz, writing for The Guardian, slams the undemocratic posture of the troika and welcomes a "No" in the referendum as a way for Greeks to "shape a future ... far more hopeful than the unconscionable torture of the present."
 
"We must never forget that the main people suffering from all of this will be the Greek people," Schäuble reminded the Bundestag Wednesday. Yet as long as austerity keeps coming, such words of compassion risk sounding hollow to many Greek citizens. Worse, it could easily sound hypocritical. As the famous economist Thomas Piketty (author of Capitalism in the Twenty-First Century) reminded Zeit Online in interview last week, "Germany is the prime example of a country that has never, throughout history, repaid its public debt."
 
A "No" to austerity, or to the Eurozone?
 
In spite of this, the outcome of a "No" does not seem crystal clear. The current government will remain in power, and they themselves expect a stronger negotiating position. However, what the world media and markets seem to expect is a collapse of those same negotiations, the failure to reach another bailout programme and, ultimately, "Grexit" (Greek exit form the Eurozone). As EU funds stop arriving, the Greek government would be forced to introduce its own currency to pay its bills, the reasoning goes.
 
The Greek government itself has maintained it is vehemently opposed to a "Grexit", which the EU cannot legally enforce. Yet they may well be forced to do so economically, as a no could isolate Greece within the EU. Without a new bailout programme, Greece's liquidity problems would increase, especially since the emergency liquidity assistance (ELA) granted by the ECB will run out. And with the next ECB payment due 20 July, Greece's economic outlook is likely to remain bleak.
 
It is this fear of isolation that has prompted representatives of the country's main economic sectors to call for their countrymen to vote yes, as outlined in a joint declaration Wednesday. They point to the fact that the country is receiving significant sums from the EU to finance projects in various sectors each year: in agriculture alone, the country has received 2 billion Euros in aid and 1 billion Euros in EU investments, according to Le Monde.
 
In Spain it's "Podemos"; in Greece, "polemos"
 
"Incalculable consequences" for the technical chamber, "impending agony" for the agricultural union ... With stakes this high and clarity this low, it is no surprise that the referendum is being credited to be the "most divisive ballot since the end of the military junta" of the 1970's, as Zeit Online reports. 
 
A large poll conducted on Tuesday shows that 46 percent of Greeks favour a no and 37 percent demand a yes, with 17 percent still undecided. Both sides accuse the other of conjuring up the apocalypse, whether through austerity measures and capital controls or through state bankruptcy and "Grexit."
 
"It will not be easy with another programme, but it will be better than losing the euro and going bankrupt," a yes voter assured Zeit Online. But when the paper asked a no voter about the humiliation that such a bankruptcy would entail, the answer is equally adamant: "Let me ask you: How humiliating was it for all these people in the past five years, without work, money or future?"
 
Yet as this rift spreads in Greece, as well as in Europe, Athens has remained remarkably calm on the surface. There have been demonstrations and heated discussions, but these have been civil. Whether this calm will survive the referendum is unclear, yet it is a reassuring sign from a democratic perspective. 
 
Furthermore, it appears to mask a consensus that is completely absent from the political discussion: the Greeks want to stay in the EU. This is obviously the stance of the yes side, encouraged by the troika's polarising position that a no means a no to the common currency. But the no voters are denying this, Tsipras insisting on Twitter that "NO doesn't mean breaking with Europe, but returning to the Europe of values."
 
In essence, this can be seen as an attempt to democratise the discourse about the European Union. "We are not fighting the Old Continent, we are fighting practices that Europe should be ashamed of," Varoufakis told La Repubblica last Sunday. It is a claim that the discourse on Greece has been limited to economic terms, whereas the EU should be much more than that, and above all more permeable to polemic discourse. 
 
In retrospect, it is painfully clear that Tsipras and Varoufakis have failed to alter the discourse in such a way; yet their failure does not make the attempt any less democratic.
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