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The real reason Tsipras wants a referendum on debt deal

11 Comments

As the government of Prime Minister Alexis Tsipras closes banks and imposes capital controls, Greece is closer than ever to the euro exit door. Tsipras' decision to call for a referendum effectively ended negotiations with euro zone and international creditors, at least for now.

In addition, a last-minute request for a one-month extension of Greece's bailout program was unanimously rejected by euro zone members. After the International Monetary Fund declared Greece officially in default after June 30, Athens joins the ranks of delinquent states, on par with Zimbabwe, Cuba and Somalia.

Greece will effectively be reduced to economic pariah status in global markets, coupled with rogue-state status on the international diplomatic stage.

According to Tsipras' Syriza party, the referendum's purpose is an exercise in democracy. Euro zone leaders and international creditors, Syriza claims, are conspiring to bring down Greece's democratically elected government. So a referendum is needed to restore democratic decision-making to the Greek people. It will allow them - and not Brussels - to determine Greece's future.

This compelling narrative fuels Syriza's support base and the 36 percent of eligible Greek voters who voted the party into power. Tsipras will likely frame the referendum as a vote for national dignity versus austerity. It essentially amounts, however, to deciding whether Greece remains in Europe.

The underlying reason for the referendum is that Tsipras' five-month game of high-risk brinksmanship with creditors has backfired. At a time for responsible leadership and hard choices are called for, Tsipras has abdicated responsibility by calling a referendum, in effect outsourcing it to the Greek people in extreme circumstances.

Tsipras is clearly placing Syriza's short-term interests - political survival and party unity - above Greece's long-term national interests. Signing a deal with Europe risked Syriza's fragmentation and the collapse of the Tsipras government. Syriza's hardline left faction clearly threatened to oppose any deal imposing more austerity measures.

If the Tsipras government had been guided by national interest, it would have embarked on serious negotiations with creditors immediately after assuming power in late January. If necessity required, a referendum would have been appropriate by May 2015 - right before June's relevant creditor-payment deadlines.

The Greek political opposition maintains that Syriza was always planning Greece's euro-zone exit. Whether by intent or ineptitude, Grexit is on track.

Tsipras' reckless disregard for the economic security of Greece and Europe has taken both into an extreme danger zone. As the government pursues this snap referendum, the risk of a meltdown remains real. It will likely determine Greece's future in Europe, and shape the European project itself.

In fact, Greece could even technically default and exit the euro before the July 5 referendum.

Considerable ambiguity still surrounds the plebiscite. The first question is whether the Tsipras government has the finances and logistical means to conduct a referendum within a week.

Second, Tsipras' referendum looks more like a surreal exercise in democracy than the real thing. After all, Greece failed to sign any binding agreement with its creditors. This begs the question: What are Greeks voting for? The creditors' final offer that was never accepted? A broad statement of principle for or against austerity?

Third, if the referendum takes place and the Greek economy is still standing, then what? A Tsipras anti-austerity victory would amount to the final nail in Greece's euro-coffin. A pro-Europe bloc victory would amount to a popular vote of no confidence in the Tsipras government. Logically, it should trigger new elections and the formation of a temporary government to administer important affairs of state during the interim period.

Tsipras may interpret it otherwise, however, and refuse to leave power. His possible argument: The people have spoken and it is his responsibility as prime minister to return to Brussels and negotiate a final deal with European leaders.

In other words, the referendum is technically based on the merits of austerity and not a parliamentary vote of confidence in his government. Yet this means that the referendum could potentially be followed by a constitutional crisis.

A referendum could also offer Tsipras the chance to leave government in a face-saving manner. Even in defeat, he would be hailed by supporters as the defender of democracy and protector of common citizens. Devotees would glorify him as the patriot who fought the good fight for national dignity, pride and sovereignty. Furthermore, he would remain the leader of his party, which would emerge intact.

Without a referendum, Syriza risked implosion. Accordingly, in Tsipras' long-term strategic vision, a referendum defeat would be a tactical setback. As the new opposition leader, he would overhaul his party over time, gradually phase out old-line Marxists who have proved a liability, and rebrand himself and Syriza as mainstream center-left.

Should he be defeated on July 5, Tsipras will live to fight another day. In the meantime, Greece struggles for its survival and risks descending into the abyss. Potentially dragging the other nations of Europe with it.

© (c) Copyright Thomson Reuters 2015.

©2021 GPlusMedia Inc.

11 Comments
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I hope Greece is forced to leave the Euro, and thereby starts a process to bring the whole damn thing down.

-3 ( +3 / -6 )

Greece has always been a borderline case, economically, to be part of the EU. They are not hungry like the eastern European countries. Now we will see Russia trying to maneuver to be a 'good' country to make themselves look good to the Greeks and attempt to split Europe. Expect them to pay millions to set up a naval base in Greece who will gladly accept the offer.

0 ( +1 / -1 )

actually, it is in greece's long term interest to leave the euro instead of continuring to put the screw to the greek people until they are bled dry by austerity. tsipras was elected on a anti-austerity platform so it is only natural that he go back to his constituents if he did not succeed in negotiating what he was elected for.

0 ( +2 / -2 )

Welcome to Putinization of Greece.

-1 ( +1 / -2 )

Yeah, because the IMFization has worked out so well. But I guess some like being debt slaves. Ukraine will soon be begging Putin to welcome them back now that the US has changed their tune.

0 ( +2 / -2 )

Let me clarify that. The same sort of irrational propaganda that demonized Putin and Russia is not demonizing the Greek government and Greece.

-1 ( +0 / -1 )

Ukraine will soon be begging Putin to welcome them back now that the US has changed their tune.

By this desperate act, Greece gives UE chance to develop a procedure for any country-member to leave the Union. Though this won't make Greeks wealthy. (As for Ukraine/Putin issue, everybody in Ukraine, even small kids, know that "Putin - xyilo! (c) ;) )

0 ( +0 / -0 )

Tsipras is tossing a coin. Heads he loses, tails he loses.

1 ( +1 / -0 )

Tsipras is tossing a coin. Heads he loses, tails he loses.

Quite so, though I'd suggest that he lost a long time ago by playing to the popular "anti-austerity" side of the political spectrum and spending his way into the trouble that he now finds himself in.

To be honest, I am thinking that Greece will vote "no" not because they want to leave the euro but because they believe that they have a right to spend their way into further trouble and expect to be bailed out. It's then just a matter of if the troika follows through and boots their sorry arses out of the euro, possibly even out of the EU, and into the med.

I could be wrong though...

0 ( +0 / -0 )

It's political suicide and he's taking everyone down with them.

This is what happens when the radical left sweep to power promising unicorns, just usually they take a little longer to screw the entire country.

2 ( +2 / -0 )

In short, Tsipras could very soon face a vote of no-confidence in the Greek Parliament and could be tossed out of office. He made the problem worse, not better.

Maybe a massive reform of taxation so it reduces the incidence of tax evasion and massive reforms of labor and pension laws so it encourages more agriculture and industrial development in the country is the only way out for Greece. Instead, the country is about to have much of the population turn to extremist factions, and the prospect of another civil war like what happened just after the end of World War II may not be completely far-fetched. Or even the prospect of a coup d'etat with military rule taking over the country like what happened from 1967 to 1974.

0 ( +0 / -0 )

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