The facts as of today (1st of Nov 2011) are:
- The agreement that was announced a week ago regarding the reduction of the Greek sovereign debt has not been put on paper with all the terms and conditions. Estimations are that this agreement will take about 2 months to finalize in all details.
- The Greek political scene has nothing to do with the German or French or English scenes. Greek political parties are depending heavily on popularism and opposition to the government. But without proposing any alternatives.
- Greek citizens are vulnerable to the "easy words" and cheap promises spoken by the political parties. It is very rare to see citizens with real knowledge and understanding about the promises and proposals being made by politicians.
- The Greek government has very few weapons in the effort to negotiate the details of the restructuring of the Greek sovereign debt, within the next two months. One of them is the threat of public up-rise and social instability. EU knows that images from social turmoil in Greece can be easily contagious to other European societies.
- Greece is only the tip of the iceberg of the Eurozone crisis. Italy, Spain, Belgium and subsequently France are just hiding under the surface...
The announcement of a referendum by prime minister George Papandreou will create the following reactions:
- Will force several Greeks to study the agreement, once made available. Therefore will increase the level of public awareness of the situation the country is in. It is addressing bullet #3 presented above. I do not need to stress how important this is for a society about to take important decisions!
- It is a straightforward message to the European Union, that the content of this agreement will be subject to public investigation and voting and it will not go through as easily as the agreement of 2010 when it was passed by the sole signature of the minister of finance (under great time pressure but also with undemocratic methods). So PM Papandreou is exploiting one of the few weapons he has available in his negotiations with the EU and the IMF. He is hitting bullet #4 presented above.
- Once the agreement is made public, the political parties in Greece will have to talk (more than before...) about the essence of the two choices that will lay ahead. And these will be: Stay in the Eurozone, or exit the Eurozone. And the choice that will be voted by the majority on the referendum will be binding for any future government. Thus dismissing any easy attempts for cheap promises and easy words by the political parties in Greece. This way it is addressing bullets #2, 3. And this is to the best interest of the EU...
With these facts in mind, I think that the announcement of the referendum was a smart political move by Papandreou and will serve the most important purposes of his administration. Of course, given the fact that the Greek political parties are treating voters as clients, this choice will be heavily contested since it is making their road more rough and their "sale" more difficult.
Many will say that governments should be responsible for their choices and they are elected to take decisions. This is true. But this relies on a foundation of a wise electorate and responsible political scene. These two foundations do not exist in Greece. And maybe it is not only Greece that is missing these foundations...
European governments should step back, do their job (prepare a fair deal with Greece) and let Papandreou deal with the Greek society. Also they should start looking at their own mess and stop putting Greece in the front line. There are way more serious problems in the Eurozone than the Greek sovereign debt. And those who talk about the lies of the past, should start looking at their own lies as well. Eurozone was built on lies and they knew it. Is it too late to start talking about truth and claim whatever chances exist to advance the EU to the next level? If there are some chances towards this direction (personally I am pessimistic), then this referendum is in the right direction.