Some thoughts on the Greek referendum

Posted by on Jul 4, 2015 in Blogposts, Latest News, Opinions | No Comments

In 2014, I wrote that to get out of its bind, Greece might have to be willing to leave the Eurozone (“Greece–the Open Circle, MR Quarterly, Summer 2014).  The prediction has come true.  Acting in the manner I prescribed, the Syriza government seems to be willing to leave.  That may or may not produce some changes in the Eurozone.

The greatest obstacle to change in the Eurozone is that Germany benefits economically from the way things are now, and it may feel it can only lose by making concessions. It has the benefit of a low Euro and a ready market for its exports.  It also feels the responsibility to act as the policeman of the Eurozone and to set an example for following the rules. It reckons the Eurozone can survive a Greek exit, and for all these reasons, it refuses to give Syriza any lee-way.
So the choice comes down to what my daughter says Syriza should have stated at the beginning– accept austerity and the Eurozone or you may have no austerity and possibly no Eurozone. What you cannot have is what Syriza promised— Eurozone and no austerity—that is not being offered. The Berlin-Brussels axis continues to resist but conceivably it could give in   on some provisions in the end.

The U.S. has trouble understanding why a group of 29 European leaders cannot negotiate an agreement.  The reason may be that some of them do not want an agreement. They want regime change. Eurozone’s agenda is not simply austerity. Some elements are actually aiming at deposing Syriza. They want to punish it for challenging the orthodoxy of austerity, and they want to make an example of it. Any country that challenges austerity is ostracized and its government may be replaced—no one  can challenge Berlin and Brussels.
Of course there is a difference between the way Greeks in Greece see the problem and the world outside sees it. It is as though there are two parallel universes. In the world abroad, economists like Paul Krugman and Joseph Stieglitz clearly say they would vote no. In Greece, Greeks who plan to vote yes don’t understand what Krugman and Stieglitz are on about.

Though I live a lot of my life in Greece, I share the views of the people abroad. I find it hard to believe that Greece will ever get anything out of the Eurozone except pain, so I think it’s worth a try to see what we can get on the open road. A no-vote keeps up the pressure on the Eurozone and takes the prescribed strategy to its ultimate conclusion. If we’re willing to take that road, the Eurozone may blink. That way there’s a chance. The other way it’s more of the same. We take the chance tomorrow.


Mario Draghi and the Greek "accident"