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It Is Time for Greece to Decide: With or Without the Euro

Published on , , Sofia

Does Greece want to remain in the euro area - that is the question that the Greeks will have to answer at referendum, scheduled by Prime Minister George Papandreou. The plebiscite will take place around 4 December, and until then Greece will not receive the sixth tranche of 8 billion euros of its bailout loan.

This became clear after the special meeting on Greece in the margins of the G20 summit in Cannes. It was convened in response to the surprising statement of the Greek Prime Minister that he intended to call a referendum on the rescue programme, agreed by the eurozone leaders on 26 October. After the meeting, the leaders of France and Germany clearly stated:

Angela Merkel: "The referendum will be for nothing less than the question: Does Greece want to remain in the euro area, yes or no?"

"We would rather achieve a stabilisation of the euro with Greece than without Greece, but this goal of stabilising the euro is more important."

Nicolas Sarkozy: "The question is whether Greece remains in the eurozone, that is what we want. But it is up to the Greek people to answer that question."

"Our Greek friends must decide whether they want to continue the journey with us."

Greek Prime Minister George Papandreou reiterated: "… This is not a question only of a programme, this is a question of whether we want to remain in the eurozone."

Pushed by his European partners, Mr Papandreou had agreed to reschedule the referendum a month earlier than initially planned - around 4 December, instead of early next year. Two months is too long a period to live in obscurity whether the second rescue programme for Greece will be implemented. It includes a 50% write-off of the Greek debt by the private creditors, "sweetened" with 30 billion euros from the euro area, as well as a second loan from the EU and the IMF, amounting to 100 billion euros.

So Athens was subjected to pressure to decide more quickly, in order to receive the next tranche of its current loan and to make a final choice - not simply whether it agreed with the new rescue plan, but if it wanted to remain in the eurozone at all. Only after the answer to this question is clear, the country will receive (or not) the payment of 8 billion euros. According to the Greek prime minister, Athens has enough money to survive until mid-December, when it has to make its next debt payments.

European officials quoted by Reuters said that George Papandreou had sent a letter to the EU leaders requesting the details on the second rescue package to be negotiated before the referendum. This angered the European officials, increasing the mistrust toward Greece. In response, European Commission President Jose Manuel Barroso issued a statement urging "the government and the political leaders of Greece to show that they are ready to work for national political unity and for achieving the broad support needed for the implementation of the programme." According to him, "without the agreement of Greece to the EU/IMF programme, the conditions for Greek citizens would become much more painful, in particular for the most vulnerable."

George Papandreou said that his people had the democratic right to take this decision and expressed confidence that "the Greek people are wise and capable of making the right decision for the benefit of our country". "The Greek people want us to remain in the eurozone. We are part of the eurozone and we are proud to be part of the eurozone. Being part of the eurozone means having many rights and also obligations. We can live up to these obligations. I do believe there is a wide consensus among the Greek people and that’s why I want the Greek people to speak."

In this situation, there is every reason Mr Papandreou to prove right. Surely the Greeks are sufficiently aware that the only reason the country is still not formally bankrupt is its euro membership. The return to the drachma will automatically make Greece a third world country and won't bring back the living standards of the Greeks, of which they suffer so dramatically and that are precisely a result of the EU membership. As a country which forged its statistical data to enter the euro area, Greece is certainly aware that there is much to lose. As media joked these days, if it is needed it should falsify the results of the referendum too.

However, I still believe it is pointless at this stage to guess what would happen if Greece decided to leave the eurozone, which would not be possible under the existing European treaties. Ultimately, such a treaty change would enjoy warm support from all the Europeans, angry with Greece's behaviour. For the euro area it would also be useful to have an expulsion mechanism, because it would motivate the other countries to make additional effort. And a Greek exit would hardly cause the collapse of the eurozone – obviously Europe is ready to take that risk, as it is clear from Angela Merkel's words.

The outcome from the referendum will benefit the Greek Government, giving it a clear mandate to continue to fulfil its commitments to the creditors. In turn, it will give an argument to the creditors to go on paying the Greek debts. And regarding whether the strikes would stop and the Greeks would accept the inevitable difficulties – I doubt it.

In a sense, Prime Minister Papandreou is right to give his people a choice: you are blaming the government then decide for yourselves. Because, yes, the Greeks have a democratic right to decide on their fate but they have had this right for years, and now simply refuse to take responsibility for their decisions. The Greek prime minister is right that you cannot benefit from a democracy without taking responsibility. This is a lesson that Bulgarian society also needs to learn. However, this seems difficult to perceive in our region. Democracy may have been born in Athens, but it has never felt comfortable in the Balkans.

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