The real reason Greek PM Alexis Tsipras wants a referendum on debt deal

June 29, 2015
Anti-austerity protesters burn a euro note during a demonstration outside the European Union offices in Athens, Greece

Anti-austerity protesters burn a euro note during a demonstration outside the European Union offices in Athens, Greece, June 28, 2015. REUTERS/Alkis Konstantinidis

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. Should Christine Lagarde, head of the International Monetary Fund, declare Greece officially in default after June 30, Athens will join the ranks of delinquent states, on par with  Zimbabwe, Cuba and Somalia. 



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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.

IMF Managing Director Christine Lagarde arrives at a Eurozone finance ministers emergency meeting on the situation in Greece in Brussels

International Monetary Fund Managing Director Christine Lagarde arrives at a euro zone finance ministers emergency meeting on the situation in Greece in Brussels, Belgium, June 27, 2015. REUTERS/Yves Herman

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?

Protesters attend an anti-austerity rally in front of the parliament building in Athens

Protesters attend an anti-austerity rally in front of the parliament building in Athens, Greece, June 29, 2015. REUTERS/Marko Djurica

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.

12 comments

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This article is dishonest and tendentious. It fails to mention permanent depression and skyrocketing debt since austerity has begun. Greece is beyond the point of no return, and austerity only makes things worse. See http://ec.europa.eu/eurostat/statistics- explained/index.php/Unemployment_statist ics – 52% youth unemployment (2014).
Mr Tsipras was not elected to preside over agreement to a “lost generation,” but the Troika has maintained ironclad insistence on exactly that. He can be criticized for trying as long as possible to keep the door open to the euro, or for naively hoping that the Troika would negotiate in good faith.

Posted by Larry_Dickson | Report as abusive

This article attempts to favors those actions by Greece which the Troika hopes will come about. They could care less about the people of Greece. Bankruptcy and withdrawal from the EU is the3 very best thing Greece can do. The banksters are scared to death Portugal, Spain, Ireland et al will follow suit, and best they do.

Countries other than those in the EU will be glad to help Greece without imposing odious terms. A new tax structure and improved enforcement, aid to the needy, employment in infrastructure improvements, closing the borders to imports, enhancing export production, alliances with the BRICS nations, the EEU and the AIIB will greatly help their future. Europe as the EU has damaged Greece badly….they should never look back.

Posted by owlafaye | Report as abusive

The Irish should have been so lucky. They had to vote twice when they turned down the bank bail out on the first vote.

Posted by Laster | Report as abusive

Very one sided. Probably paid for by Mr. Vicenzino’s clients who have a vested interest.

Posted by BidnisMan | Report as abusive

Whatever the outcome of the referendum Greeks must work a little harder and spend a little less to balance the national checkbook after all the dust settles. Mr. Tsipras will be remembered as a clown who understands no politics and economics.

Posted by jlpeng | Report as abusive

Zimbabwe’s hyperinflation took extreme incompetence from the government and the ability to keep going unhindered by the opposition when failures finance/economic policies and foreign relationship where painfully obvious. Greece cannot be compared in any way, shape or form to Zimbabwe.

http://www.breakingviews.com/zimbabwes-1 5-digit-money-woe-is-mercifully-rare/212 03151.article

Posted by Hulls | Report as abusive

Tsipras has played great moves in the Chase game.All are in fix except himself.

Posted by gentalman | Report as abusive

It seems my honest comments as an opinions are not palatable to the writer or Reuters!! Naturally the truth is always bitter.

Posted by gentalman | Report as abusive

Good Comment.

Posted by gee.la | Report as abusive

Outsourcing responsibility to the Grrek people ? It’s called a democracy, multi-party coalition system, for crying out loud, please educate yourselves.

Posted by ozium | Report as abusive

Democracy scares western Governments, the idea that the people have the right to choose their own future might spread.

Posted by Sinbad1 | Report as abusive

“Whatever the outcome of the referendum Greeks must work a little harder and spend a little less”

Typical right-wing nonsense that things all issues are a ‘spending’ problem. No, Greece’s problems are a tax and corruption problem. Nothing more.

Posted by pyradius | Report as abusive