By: Dr. Robert Zaller
This past week has been one of the most tumultuous in Greece since the restoration of democracy in 1974. It began with Prime Minister George Papandreou suddenly proposing a popular referendum on the bailout terms imposed on Greece by the European Union, the European Bank, and the International Monetary Fund as a condition of further payments.
Apparently, Mr. Papandreou had not consulted with senior members of his own party, including Finance Minister Evangelos Venizelos, prior to his announcement, let alone the parliamentary opposition. To make matters more confusing, if possible, Papandreou did not offer a text for the referendum, or anything more than the vaguest description of it. Nor did he indicate whether its results would be binding on the government.
The result was a firestorm of international criticism, a day or two of market freefall, and a revolt within Papandreou’s own Panhellenic Socialist Party (PASOK), which clings to a narrow margin in Parliament. Papandreou was summoned to the G-20 Summit Meeting at Cannes, whose proceedings he had thrown into turmoil, and pistol-whipped into submission by German Chancellor Angela Merkel and French President Nicolas Sarkozy, the prime political mediators of the bailout deal. By Thursday, he had called off the referendum. After a confusing day in which it seemed he was prepared to offer his resignation, and after surviving a confidence vote in Parliament on Friday by a margin of 153-145, he proposed a national unity government. So far, this proposal has been rejected by Andonis Samaras, the leader of the main opposition party, New Democracy. Apparently, however, Papandreou intends to pursue the idea.
What are we to make of all this? The fury of Greece’s creditors can well be understood. They have already made substantial payments on the bailout agreement, and a further payment had just been negotiated with some difficulty. Papandreou had agreed to the terms required, and he had steered unpopular legislation embodying past agreements through Parliament in the teeth of massive street protests. To make these agreements subject to a popular referendum at this late date appeared the height of irresponsibility. It might almost have been called demagogic, except that it was not clear what result Papandreou hoped for. A grudging popular acceptance of the universally despised terms of the bailout would hardly accrue to the benefit of the Prime Minister or his party. A rejection of them would compel his resignation, leave the country bankrupt, and risk an international financial crisis.
A popular referendum would have made sense at the beginning of the bailout negotiations, when the implications of putting Greece’s economic future in foreign hands exceeded the mandate of the Papandreou government. It would have made sense later, when a second bailout was required, and the severity of the austerity regime being imposed on the country had fully sunk in. But what possible purpose could it have served at this late date, except to further stigmatize Greece and its political leaders in the eyes of the world, and certify doubts that it could be relied upon to live up to its obligations?
The simplest explanation for the debacle is that an exceptionally weak leader made a desperate throw without reckoning the almost certain consequences, including his own public humiliation—the picture of Angela Merkel wagging her finger in Papandreou’s face circulated wide. But there is another explanation that does Papandreou’s intelligence, if not his character, more justice. I would suggest that the referendum was launched just as it was, without consultation and without specifics, as a ploy designed to backfire, but also to force a specious “unity” government on the country. Up till now, New Democracy has been in the enviable position of being able to oppose the bailout terms and vote against their ratification in Parliament without having to offer an alternative. This has left Papandreou and PASOK to bear the brunt of popular outrage as unemployment rose, public programs were cut, and taxes were increased. A unity government would force New Democracy to accept the bailout terms—and, also, its retroactive share of responsibility for the fiscal improvidence and phony accounting that led Greece to its economic crisis in the first place.
The only problem with this is that there would be one enormous loser: Greek democracy itself. In the general outpouring of wrath on Greece for the referendum proposal, there was an interesting dissent by the business writer Floyd Norris (“Why Not Give the Greeks Their Say?,” The New York Times, November 4). The collapse of the referendum, Norris wrote, “should be a cause for sorrow in the rest of Europe.” This was only partly because it would hardly encourage ordinary Greeks to accept the bailout, “now that it has been made clear [to them] that their opinions are irrelevant to the people who run Europe.” The implications for other populations now being sized up for austerity jackets were no less dire; indeed, those implications extend to the future of European democracy itself. The real crisis that faces Europe, that is, is not monetary but political.
The European Union was crafted as an economic association with an administrative bureaucracy that had no real connection to the political apparatus of member states: in other words, as a banking consortium. Bankers are only concerned with one thing when their loans go bad: to be repaid, no matter at what economic, social, or political costs to the parties involved. That is precisely what has happened in the case of Greece. The “austerity” imposed on Greece is really an amputation. The Greek economy is being crippled in ways with which it cannot cope except by drastic contraction, and which suggest permanent peonage. This is bad business, to begin with. When the Roman master of the Greek slave Epictetus, who had already broken one of his legs, was about to break the other, Epictetus pointed out that while he could recover from a single fracture he could not recover from a double one, and would therefore lose his utility. That is the position Greece finds itself in, and what is true of Greece today may well be true of Portugal, Spain, or Italy tomorrow.
The larger issue, however, is what say the peoples of Europe, beginning with Greece, will have in their future destiny. The European Union got itself into difficulty by lacking political accountability; that is, by running the continent as a bank. A piecemeal surrender of national sovereignty to the dictates of market manipulators and anonymous bondholders—American? Chinese? Saudi?—is no less a threat than that of any military aggressor, and likely to be more difficult to undo. If Papandreou was indeed merely baiting a hook in offering the Greek people a direct voice in their fate, then he is guilty of something worse than mere demagoguery: he has mocked the democratic process itself, affirming the rule of corrupt oligarchs who dance to the tune of their financial masters. A “unity” government based on acceptance of the bailout terms would, moreover, render new elections nugatory, because both major parties would be locked into a policy position that gave voters no alternative. Thus would both direct and representative democracy be mocked at the same time.
But do circumstances actually permit a choice? I would say they compel one. No people can surrender its future, which is what has been effectively demanded of Greece. Better bailout terms could certainly have been negotiated, given the potential for a general financial meltdown in the event of an unstructured Greek default, and perhaps a commission of inquiry can someday put the question to Papandreou of why he did not seek to protect his nation’s interests. Better terms might still possibly he had by another leader. If that is not possible, then a departure from the eurozone and a return to the drachma must be considered. This would certainly mean hard times for Greece. But it would also mean a serious national debate about the future of the country, the scope and function of government, and the essential social investment needed to support a free economy whose tasks and rewards would be justly shared. That is what democracy should be doing all the time anyway. Relative, voluntary, and temporary reductions in living standards as a condition of political freedom and national independence is a sacrifice Greeks have made in the past, all the way back to Marathon; compulsory impoverishment that brings only enslavement by foreign interests is one it need not submit to. One period of Ottoman rule was enough.