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Wednesday, 2 November 2011

Greeks Call for Referendum on Euro Bailout

Greeks Call Referendum on Euro Bailout—But Will It Actually be on the Euro and the EU?

The shock announcement by Greek prime minister Georgios Papandreou that his people will be asked to vote on the euro “rescue plan” before it is accepted, is little more than a referendum on the existence of the euro and even Greece’s further participation in the European Union experiment.

Pro-EU observers and politicians have been horrified at the announcement, and have roundly condemned Mr Papendreou. Some have even suggested that he is “ungrateful” for the aid package on offer. A spokesman for French president Nicolas Sarkozy dismissed the referendum as “irrational and dangerous,” a view echoed by most others involved in the eurozone experiment.

The announcement has put the entire bailout process on hold, said Telegraph columnist Ambrose Evans-Pritchard, who pointed out that the “markets cannot wait three months to find out the result.”

“Unless the European Central Bank steps in very soon and on a massive scale to shore up Italy, the game is up. We will have a spectacular smash-up,” the Tory blogger added.

Another observer, writing in a German publication, said that Mr Papandreou’s decision “seems like an act of desperation. Regardless how the referendum’s question is eventually worded, the Greeks will be voting on whether their country will remain in the euro zone or leave the single currency.

“How can Papandreou do this? It’s asking the same people who riot against his policies! It is already clear what the outcome will be! Such were the instant reactions to the prime minister’s announcement,” the German observer wrote.

The reality is, however, that even reverting to the drachma or leaving the EU is unlikely to help Greece in the medium term. Its economy has been so damaged by a combination of stresses caused by the common currency and, it must be said, poor domestic management, that the debt mountain will remain a problem for some time to come.

At least, however, the Greeks are actually being given a chance to vote on EU policy, and possibly even membership—a luxury denied to the British people.

Mr Papendreou’s bold move contrasts vividly with the suppression of a vote on EU membership by the Tory-Liberal-Democrat-Labour alliance last week in Westminster, despite all opinion polls showing a majority of the British public being in favour of a chance to vote on the issue.