Friday 4 November 2011

Referendum’s “positive shock”

Referendum? What referendum?
Margaret Thatcher once said "You turn if you want to. The lady's not for turning." (10 Oct 1980). Papandreou on the other hand did a U-turn and took back his Referendum decision. He more or less explained his U-turn as a clever ploy to flush out all those who opposed the agreement both inside and outside his party and to form a consensus. I find that argument very weak and unconvincing. More plausibly this is an attempt to justify his political blunder by laying claim to some higher esoteric and convoluted logic.
Mr Papandreou is a hard nut to crack. Both his father and grandfather were prime-ministers and he was born within an environment of intriguer, chaos and political manipulation. So, it was naturally for him to refuse resignation and dare his timid party to overthrow him. The vote tonight would be pass the bedtime of most markets so we would have plenty of time to reflect on Greece with the Sunday papers. Chances are however, that he would not survive the vote of confidence and a new administration would be formed. If they decide on elections then the most likely date would be the 4th December.

Whether we believe Mr Papandreou’s  motives or not the truth is that it has exposed some very inconvenient truths about Greece and the EU.
In Greece
  • Contrary to his repeated claims, the main opposition to the austerity measures came from inside his own party; the union leaders he bred and caressed for so many years, and the socialist utopia which he has promoted with other people’s money (EU subsidies and borrowing). Unfortunately he did not beg forgiveness for promoting the wrong policies all this time 
  • It exposed the bipolar policies of the conservative party which tried to capitalize on the popular discontent by suggesting that there is an easier and a more painful way to take the poison pill. 
  • It also exposed the double speak of the communist party which for many years advocated exit from the EU.
In Europe
Yesterday’s announcement by Merkel and Sarkozy that any referendum would be taken as YES/NO for Greece’s continuing EU membership was chilling. Merkozy represent individual EU member states NOT the EU. They have no right to issue threats or ultimatums to Greece or to any other state. This is EU democracy and accountability at its worst. Throughout this crisis the EU tried to force the independent ECB to do their dirty work for them. Then the ECB overruled any default or restructuring of the Greek debt in 2010 (and the Irish in 2009). After that they tried to bend the market and attacked the bad rating agencies and the immoral CDS. Together with the IMF they imposed an austerity package upon Ireland, Portugal and Greece. Talk of fiscal union was brushed aside or was quickly given to Van Rompuy so that they can control it. All this time the people of Europe were never asked for their opinion. Now that the Greeks whispered the offending word “Referendum” the masks were dropped. Greece would be “allowed” to have one only - if the wording is dictated by Merkozy.

Europe needs to wake up. This resolution of this crisis does not lie with a Greek  exit from the Eurozone. Greece without wanting it has unmasked many of the serious weakness of this Union and its treaties. The lack of accountability, the democratic deficit, the impotent Europarliament, the lack of fiscal and political union, the ECB’s limited capabilities, the changed relationship to creditor/lender from partner state, all need to be addressed.