Let the voters put an end to Greece’s misery

 

The Greek Prime Minister's proposed referendum on the EU bail-out could break the logjam that threatens the global economy.

Mr Papandreou’s plebiscite is unlikely to see the light of day, if France and Germany have anything to do with it Photo: REUTERS

By Telegraph View 7:58PM GMT 01 Nov 2011

The eurozone’s sovereign debt crisis appears to be moving towards the endgame. The unexpected decision of George Papandreou, the Greek prime minister, to call a referendum on the bail-out deal agreed at last weekend’s Brussels summit has merely fast-forwarded the inevitable. Few seriously believe that Greece can ever restore its finances while shackled within the eurozone to an overvalued currency. The latest rescue package simply buys a little more time. Yet the eurozone’s political leaders – by which we mean Germany and France – refuse to contemplate the end of their precious monetary union. The issue needs to be brought to a head: a referendum would do that.

If the Greeks were to vote in favour of the austerity package, it would give democratic legitimacy to the painful adjustments the country has to make. Given the fragility of its corrupt civic structure, that is an important consideration. If there was a No vote, then Greece would default on its debts and leave the eurozone – which are, in reality, the two prerequisites for its recovery. Argentina, facing a similar sovereign debt crisis a decade ago, defaulted and decoupled the peso from the dollar to devalue its way out of trouble. Its economy has grown by 8 per cent a year since then. Only this scale of bounce-back could possibly rescue the Greek economy. True, such a course would be fraught with risk: which heavily indebted eurozone member would the markets pick off next? But is that really a greater threat than Greece limping on, festooned with sticking-plaster solutions, possibly for years?

Such an exercise of popular will is anathema to Europe’s leaders, which is why Angela Merkel and Nicolas Sarkozy have summoned Mr Papandreou to a pre-G20 meeting in Cannes later today. It will be what the Army would call an interview without coffee. France and Germany, who are stumping up most of the cash for the Greek bail-out, will make clear to the Greek prime minister that they do not appreciate his resort to democracy, and while they are writing the cheques, they will call the shots. It is little wonder Greece is boiling with resentment.

Mr Papandreou’s plebiscite is unlikely to see the light of day. He faces not only Franco/German displeasure but also a difficult confidence vote later this week. In addition, getting the referendum legislation enacted would be tricky. But if it were to go ahead, it would offer the prospect of breaking a logjam that now threatens the global economy. The single currency is beginning to devour its own members, yet its political elites remains in denial. It would be fitting if an outbreak of democracy were to jolt them out of this suicidal mindset.

Let the voters put an end to Greece’s misery - Telegraph