Greek Expectations

natalie hamill, 2 November 2011

If there is one thing we should learn from the Eurozone crisis it is to expect the unexpected and, whatever you do, don’t breathe a sigh of relief too soon. With every hard-negotiated plan to keep the euro area afloat another twist emerges; for who could have predicted that Greece – given a lifeline just a week ago after an eleventh hour summit – would be so ready to cut its own rope and potentially take the rest of Europe down with it. Mere days after the markets bounced back and headlines declared there was ‘light at the end of the tunnel’ the Greek Prime Minister George Papandreou has left many in the EU horrified by his decision to put the latest bailout package to a Greek referendum.

With leaders worldwide clamouring for ‘decisive action’, Papandreou’s decision to put the question of the bailout to the public vote is a massive set back to any sense of crisis resolution. Greeted by shock and anger – hell hath no fury like Eurozone leaders left in the dark – Papandreou has been summoned to an emergency meeting today, ahead on the G20 meeting in Cannes, where we can be sure President Sarkozy and Chancellor Merkel will use their full force to try and reverse his decision.

But then again they might be jumping the gun. Despite gaining the unanimous backing of his Cabinet overnight the question of a Greek referendum could still dissipate before our very eyes. Papandreou’s determination to continue down this path threatens to split his beleaguered party –with 6 senior party figures writing a letter outlining their disagreement with the decision. The resignation of another MP leaves the Pasok Party with an even slimmer majority.  Furthermore, for the referendum to be put into action the Greek PM has to survive a vote of no confidence this Friday.

And so we find ourselves once more playing the will they/won’t they game which has dominated so much of the drawn out crisis negotiation (think Slovakia and the vote on extending EFSF, or Finland and their persistence for a collateral guarantee). In the end, so far, external pressures have always ensured the will of the national government is bent to continue in-line with the supposed crisis-solving measures and, perhaps after tonight’s crunch-time meeting in Cannes, Greece’s calamitous idea will also be quashed.

Or perhaps Papandreou has nothing left to lose. Today he fired the military commanders in a bid to stave off a possible coup. A generation of youth are leaving Greece to seek work elsewhere and in a bold but humble move Papandreou can be seen as simply bringing democracy back to the borders that conceived it. For now, for Papandreou, the choice is simple: ‘make sure democracy is above market appetites.’

No doubt the public in the UK will be divided by such an unexpected and possibly destructive decision. Whilst jeopardising the future of the Eurozone and with the potential to derail the rescue package Papandreou is unafraid to turn to the popular will to decide on his next course of action. ‘We trust citizens, we believe in their judgment, we believe in their decision,’ he declared when announcing his decision: something few in the UK could have imagined our leaders saying last week when the possibility of a referendum to renegotiate the UK’s EU membership was on the table.

The Greek Prime Minister has yet to master the art of cultivating Eurozone friendships, but it seems when one rebels others will follow. The Czech are tentatively considering a referendum, the Dutch Parliament admits it is not yet ready to approve the package and the Polish have openly criticised the details of the deal. Whilst the path to resolving the crisis was never going to be a simple one, few could have predicted the number of challenges that would appear along the way.