Probably not but it may well be a close run thing! Depending on how you view it calling a referendum on the EU based rescue package for Greece is either completely insane, reckless or just a canny political gamble being played out by Greek Prime Minister George Papandreou. The most negative view is that if the result of the vote was ‘no’ this would be seen as Greece finally throwing in the towel on debt and its future in the euro. Assuming the vote is now to occur and that the rescue plan really is thrown out by over 60% of the Greek electorate the real risk is that this then brings down other European sovereign deck cards. It is a difficult call to make but I suppose if one was still in a mood to be positive in any aspect of this whilst at the same time assuming that a vote on the issue in January should be taken as given we could perhaps assume that even if the vote decides a resounding ‘no’ that the EU and others would likely stand firmly behind Greece whilst they conjured up a more acceptable plan. On the negative side of the coin we may consider that failure to support the plan in the referendum vote could well lead to the creation of what one person called earlier today a national salvage government – albeit one that quite frankly would not have very much left to salvage but national pride!
Whether or not the decision to put the rescue plan to the vote is democratic or not I for one prefer to leave in the hands of Plato. One would of course prefer to believe that the idea of putting the rescue plan to the vote in Greece is not being done out of spite to those that for all their many respective failings have worked hard to secure some sort of survival plan for Greece. I rather doubt too that George Papandreou is hoping that failure to back the plan will of inevitability bring the euro to its knees leading to a return to the currency status quo although he might be! Be in little doubt though that what Papandreou announced last night in terms of putting this rescue plan to the vote will lead to a permanent change in the attitude and approach of the rest of the world to prevailing European sovereign issues. By proposing an ‘unsound’ move that asks the Greek electorate to vote on something that given the history of how they got into this mess in the first place they clearly have insufficient expertise to decide my own view is that all of a sudden there is a ‘new’ kid on the block with respect to the future handling of the European sovereign debt issue. At worst the ‘new kid’ appears to be talking about capitulation and maybe the potential of Greece and others potentially walking away from debt. I hope not but don’t rule anything out. What a sorry state we are now in and what untold damage has been done to European financial market credibility by what seems a devious political plan announced in the false name of democracy!
On the face of it George Papandreou has played a very dangerous hand of cards and one that could, if proved to be bad, rock the very foundations on which the euro was founded. That though is probably a worst case scenario and I somehow doubt it will come to that yet.
I make no further comment with regard to the legality of the Papandreou referendum plan but given the visibility of unrest and the tide of early industrial action against previous rescue plans I doubt many will be prepared to put money on the Greek population voting in favour of the latest rescue plan. Thus the die is cast and politically having suggested the notion of a referendum in the first place George Papandreou has now nailed not only his own political future to the mast but quite possibly any remaining credibility that the Euozone and EU areas still has in the eyes of the rest of the world. Democracy is one thing of course but the process of democracy is supposed to be that once voters have gone to the polls at an election and that the result is sufficient for one or other parties involved to form a government (even if this ends up as a loose form of coalition) that from that point onward governments are supposed to govern. George Papandreou is either concerned to save his own political skin, for other and maybe wider political reasons given the national emergency that Greece is in or that he may possibly be concerned about the potential of political insurrection.
On the subject of referendums in my book these should be like children – seen but very rarely heard – meaning to be used only very occasionally and with great political care. In this one respect the United Kingdom has just about always judged the referendum issue right. In the case of the current referendum plan by placing such an emotive and yet crucially important financial and economic issue such as the current EU rescue plan before voters he has rightly been perceived as having blown it. As it currently stands and by instant recognition that within the austerity package that runs alongside will require significant personal financial sacrifice by voters means that chances that Papandreou receiving a yes vote are all but impossible in my view. Indeed, by putting the idea of a vote forward suggests to me that George Papandreou might not even be seeking a yes vote. I may well be wrong of course but the alternative view could be a sense that what the Greek PM really wants is to determine a political future not only for himself but one in which those that invested in Greece really are to be left with nothing. Speculation of course and mainly from a cynical mind and one that does not wish to see the whole pack of euro cards come down in a disorderly manner.
Howard Wheeldon is the Senior Strategist at BGC Partners
